In recent years, the subscription economy has transformed the way businesses design, sell, and distribute products and services. An increasing number of companies are shifting from one-time sales models to recurring revenue models, building long-term relationships with customers. But what exactly is the subscription economy, and why is it becoming so important?

In this article, we’ll examine the subscription economy, including its origins and notable growth trends in global and Italian markets. We’ll also explore the key features of subscription models, the benefits these models offer businesses, and important operational considerations—such as managing recurring payments and regulatory compliance—to help you build a sustainable and scalable business model.

Key takeaways

• The subscription economy is a model based on recurring revenue that is also rapidly growing in Italy.
  
• Subscription models improve customer loyalty and increase customer value over time.
  
• The subscription economy in Italy offers real opportunities for ecommerce and digital services.
  
• Recurring payments require reliable, automated technological infrastructure.
  
• Compliance with the revised Payment Services Directive (PSD2) is necessary to ensure the security and continuity of payments.
  

What is the subscription economy?

The subscription economy is an economic model in which customers pay a recurring fee to access a product or service over time. This model shifts the focus from ownership to access, and from one-time sales to ongoing relationships.

This approach is becoming increasingly common, especially among digital companies, ecommerce businesses, and startups. Customers no longer just buy a product once; instead, they enter into an ongoing relationship with the brand. As a business owner, this change has far-reaching implications:

• It changes the way you acquire customers.
  
• It requires more sophisticated customer loyalty strategies.
  
• It introduces greater revenue predictability.
  

Definitions and origins

To truly understand the subscription economy, it helps to examine its origins. Subscription-based models are nothing new: they have existed for decades in industries such as publishing—with subscriptions to newspapers and magazines—as well as in cable television services and gym memberships. In all these cases, the customer pays a recurring fee to have ongoing access to a service or to receive a product over time.

However, the modern subscription economy emerged with the digital revolution and the development of the internet. In Italy, this model was initially adopted primarily by technology companies and software-as-a-service (SaaS) platforms, and has since gradually expanded to other sectors such as retail, digital entertainment, online education, and professional services.

Today, the subscription economy extends beyond the digital realm: a rising number of Italian companies are also applying it to physical products, such as monthly subscription boxes, services involving recurring product deliveries (e.g., coffee capsules), and membership programs.

Features of subscription models

Subscription economy models have the following specific features, which set them apart from traditional models:

• Recurring revenue: The main feature of the subscription economy is the generation of recurring revenue. This means that, instead of relying on occasional sales, you can count on a steady and predictable income.

• Ongoing customer relationship: In the subscription economy, the relationship with the customer does not end with the purchase; on the contrary, it develops over time, creating opportunities for upselling and cross-selling.

• Plan flexibility: You can offer different subscription tiers to meet your customers’ needs.

• Scalability: Once the system is established, the subscription economy makes it relatively easy to scale the business without proportionally increasing operating costs.

Main subscription models

Growth and trends in global and Italian markets

The subscription economy is one of the fastest-growing business models around the world. In Italy, in particular, the market is evolving rapidly. The growth of ecommerce has created ideal conditions for the development of subscription models.

According to a new EMR report entitled Europe Subscription Box Market Report and Forecast 2026–2035, the subscription market in Europe is projected to grow at a compound annual growth rate (CAGR) of 17.5% from 2026–2035. Italy stands out as one of the most significant countries for projected growth, particularly in the digital subscriptions segment (among the categories the report considered). Europe’s forecasted CAGR indicates a rapidly expanding market, where demand is increasing steadily and sustainably over time, creating significant opportunities for companies that adopt subscription-based business models.

This explains why the subscription economy in Italy has become attractive—especially to companies looking to innovate their business models.

Another significant trend is customers’ growing familiarity with digital services and online shopping. In Italy, the growth of ecommerce and digital services—as highlighted by data from the B2C eCommerce Observatory at the Polytechnic University of Milan—is creating a favorable environment for the adoption of subscription models, especially when those models offer perceived value and ease of use.

Benefits of the subscription economy

Adopting a subscription-based model in Italy offers a number of benefits for businesses, particularly in terms of customer relations and financial management. The main advantages are:

• The possibility of increasing customer loyalty and the value generated by each customer over time

• The ability to generate more predictable cash flows and sustain more stable growth

• Upselling and cross-selling opportunities

These benefits are especially relevant if your company operates online or is digitizing its services. Let’s take a closer look so you can better understand how these benefits might translate into measurable results for your business.

Customer loyalty and value over time

One of the main benefits of the subscription economy is its ability to boost customer loyalty. When a customer signs up for a subscription, they are not simply making a purchase; they are entering into an ongoing relationship with the company.

In the subscription economy in Italy, this translates to an increase in customer lifetime value (CLV)—that is, the total value generated by a customer over time. The longer a customer remains active, the greater the financial return for the company.

In addition, subscription models allow you to collect valuable data on user behavior, which you can use to customize your offerings, improve user experience (UX), and reduce the risk of churn.

Predictable cash flows and revenue growth

Another important benefit of the subscription economy is the predictability of revenue. Unlike traditional models, where income can be variable and difficult to estimate, subscriptions provide a clearer picture of future flows. This means:

• Being able to plan business activities more accurately
  
• Managing costs better
  
• Investing in growth with greater confidence
  

Furthermore, stable revenue makes it easier to assess business performance and identify any issues, allowing for timely action to optimize results.

Upselling and cross-selling opportunities

The subscription economy also creates the ideal conditions for developing upselling and cross-selling strategies. With an existing relationship with the customer, you can do things such as:

• Offer premium versions with additional features (i.e., upselling)
  
• Propose related services or complementary products (i.e., cross-selling)
  

This approach can boost revenue and strengthen your relationship with the customer, by making your offerings more comprehensive and customized.

Being able to increase the average revenue per customer without having to constantly acquire new users also means reducing your acquisition costs.

Management of recurring payments and regulatory compliance

The subscription economy must comply with European payment regulations, specifically the revised Payment Services Directive (PSD2), which introduces security requirements such as Strong Customer Authentication (SCA) that can affect recurring payments. In the subscription economy in Italy, it’s important to:

• Ensure the security of transactions: You can do this by implementing compliant authentication systems which reduce the risk of fraud.

• Properly manage SCA exemptions: This is especially important in cases of recurring payments initiated by your business, to avoid interruptions in renewals.

• Protect customer data: You must ensure compliance with the General Data Protection Regulation (GDPR) and use secure payment infrastructure.

Another important aspect of the subscription economy is managing recurring payments: With subscriptions, simply collecting payments is not enough. You must manage the entire customer lifecycle, from the initial sign-up to renewals to possible cancellation. This involves coordinating invoicing, payment methods, and customer communications in a streamlined and automated manner.

The main operational challenges include:

• Automatic renewals: These must occur seamlessly, ensuring uninterrupted service and a smooth user experience.

• Expired or declined cards: These require systems for automatically updating payment information and intelligent strategies of repeated payment attempts to reduce unintended cart abandonment.

• Invoice management: This involves the automatic issuance of invoices in compliance with Italian tax regulations. These regulations require Italian businesses to perform proper accounting and to issue electronic invoices.

• Recovering missed payments: This is important so as not to lose revenue; it requires optimized reminder systems, customer notifications, and payment attempts.

Effectively managing these aspects is important to ensure the sustainability of your subscription-based business model, especially in a market such as Italy’s, where regulatory compliance and operational reliability are key to growth.

How Stripe Billing can help

To address the challenges of regulatory compliance and recurring payments, it’s important to use the right tools. Stripe offers advanced subscription management solutions, such as Stripe Billing, which help automate these processes, reduce the risk of errors, and simplify compliance.

Stripe Billing lets you bill and manage customers however you want—from simple recurring billing to usage-based billing and sales-negotiated contracts. Start accepting recurring payments globally in minutes—no code required—or build a custom integration using the API.

Stripe Billing can help you:

• Offer flexible pricing: Respond to user demand faster with flexible pricing models, including usage-based, tiered, flat-fee plus overage, and more. Support for coupons, free trials, prorations, and add-ons is built-in.
  
• Expand globally: Increase conversion by offering customers’ preferred payment methods. Stripe supports 100+ local payment methods and 130+ currencies.
  
• Increase revenue and reduce churn: Improve revenue capture and reduce involuntary churn with Smart Retries and recovery workflow automations. Stripe recovery tools helped users recover over $6.5 billion in revenue in 2024.
  
• Boost efficiency: Use Stripe’s modular tax, revenue reporting, and data tools to consolidate multiple revenue systems into one. Easily integrate with third-party software.
  

Learn more about Stripe Billing, or get started today.