Accounting terms
Dictionary of all accounting terms
What is a Subscription?
A subscription is a signed agreement between a supplier and customer that the customer will receive and provide payment for regular products or services, usually for a one-year period.
A subscription is a relatively new business model by which a customer agrees to pay the company for products or services throughout a specified time-period. For example, the customer may agree to purchase a one-year subscription to a magazine which he receives on a regular basis (monthly, weekly, etc.). The customer may pay the entire sum upfront, or he will pay on a monthly basis. The payment is usually applied automatically, and therefore the customer will need a credit or debit card and agree to be charged.
The subscription model can be applied for various businesses, including:
- magazines and newspapers
- Software as a Service (SaaS) businesses
- gift packages
- membership (club, gym, etc.)
- and any business that provides recurring products or services
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