The subscription economy encompasses all business models that rely on subscriptions. What started with telephones, newspapers, and cable TV has now spread to almost all areas of life. Even groceries (including recipes if desired), printer cartridges, and socks can be purchased as subscriptions.

In this article, you will learn how the subscription economy in Germany has evolved in recent years and how you can use subscription models for your business.

What’s in this article?

• What are subscriptions?
  
• What does the subscription economy look like in Germany?
  
• What subscription models are available in Germany?
  
• How do businesses benefit from subscription commerce?
  
• What are the challenges of subscription management?
  
• What are the best practices for successful subscription management?
  

What are subscriptions?

A subscription is a contractual agreement between a company and its customers. Based on this agreement, customers receive a product or service on a regular basis in exchange for a recurring payment. The duration and payment terms can be individually defined in a contract. Subscriptions can be for a fixed term or an indefinite period. Typical examples are newspaper subscriptions, streaming services, or gym memberships.

The beginnings of the subscription economy in Germany can be traced back to the 17th century. At that time, subscriptions arose in connection with the distribution of printed products. Publishers offered subscriptions to finance their production. In the 20th century, subscription models were extended to other industries, such as electricity, gas, telephone lines, or cable TV channels. Now, with the advent of digital subscriptions, the subscription economy is entering a new phase.

What does the subscription economy look like in Germany?

The German subscription economy has been growing steadily for years. In 2022, 67% of Germans used at least one subscription service. The trend toward subscription commerce has been particularly pronounced over the past five years. More and more industries are relying on recurring revenue through subscriptions, from food or nappy delivery to mobility services.

A key driver is digitalisation, which is creating new opportunities for providers and customers. Streaming platforms, cloud solutions, and software subscriptions are part of everyday life, and the success of various services has shown how well digital subscriptions can work. For example, music streaming companies generated around €1.65 billion from German subscriptions in 2023 – an increase of 8.4% from the previous year.

Another growth driver for the subscription economy was the COVID-19 pandemic. During this period, many people increasingly sought digital solutions for entertainment, work, and fitness. This led to a boom in online fitness subscriptions, e-learning platforms, and streaming services. The inability to go to restaurants also helped meal kit delivery companies to a temporary high. At the same time, traditional providers such as newspapers and magazines have expanded their digital offerings to remain competitive.

This development has been driven by customers’ desire for convenience, transparency, and flexibility. As a result, the subscription economy in Germany is experiencing dynamic growth that is closely linked to users’ digital habits.

Global trends also point to continued growth in the subscription economy. A report by Juniper Research predicts the international transaction value of subscription services will increase from $593 billion USD in 2024 to $996 billion USD in 2028. This represents a growth rate of 68%.

What subscription models are available in Germany?

Currently, you can get practically anything by subscription. In Germany, subscription models that cover various everyday needs are particularly popular.

Media, entertainment, and software

Newspaper and magazine subscriptions are at the heart of the subscription economy. In addition to print subscriptions – which are still in demand, especially among older generations – digital subscriptions are growing in popularity.

Worldwide demand for video streaming services has been growing steadily for years, as many people want to watch films and TV shows in their free time – regardless of what’s on TV. The same is true for the music industry. In addition, many office software products, creative services, and cloud services are no longer available for purchase, but only as subscriptions. Games, books, and audiobooks are other areas of subscription commerce.

Communications

This includes all mobile, phone, and internet subscriptions. Operators are offering combined internet and mobile bundles, and flat rates and flexible termination options make these offers attractive to customers.

Consumer goods

Subscription models for consumer goods allow customers to cover almost all of their daily needs. Examples include regular grocery boxes, prepared meals, and food and beverage subscriptions. Skin care or razor blade subscriptions are available, as are sock or underwear subscriptions. Families with babies can sign up for nappy subscriptions, and pet food can be delivered at regular intervals. You can also subscribe to items that are more in the luxury category, including perfume, jewellery, or flowers.

Fitness and health

Most gyms operate on a subscription basis in the form of memberships. These are supplemented by a variety of online fitness providers, some of which specialise in specific types of training, such as yoga, Pilates, or strength training. Subscribers can, for example, take part in live classes or access training videos via platforms on their own and at any time.

Other examples of the subscription economy in the health sector include subscriptions to prescription or over-the-counter medication, nutritional supplements, or various preventive health coaching courses.

Mobility

Whether by car, public transport, or bicycle, there are many different subscription models for mobility. The best known example is public transport, but there are also car subscriptions, such as FINN. These are particularly interesting for users who want to try out different car models without making a long-term commitment.

Bicycle subscriptions are also becoming increasingly popular. Subscribers pay a fixed monthly fee and receive a mobility guarantee. If there are problems with the bike, the company takes care of repair or replacement. It’s also possible to change the model on a regular basis.

Other subscription models

Users can subscribe to e-learning platforms or take advantage of premium features on business portals to further their education. Tutoring and learning portals are aimed at students, and there are also niche options such as digital art platforms.

How do companies benefit from subscription commerce?

As a business, you benefit from subscription models in several ways. One of the most important is the steady and predictable cash flow. Your customers’ recurring payments ensure a steady flow of funds, allowing you to better plan your finances.

In addition, subscriptions allow you to retain customers and build loyalty through ongoing interaction, marketing, and value-added offerings. Individualisation increases the chances of success. Customer data and user behaviour information from active subscriptions provide you with the information you need to target your marketing efforts. This increases your return on investment (ROI) and reduces the cost and effort of acquiring new customers. When you build a stable and loyal customer base, your company’s referral rate increases.

Subscription models give you more predictability in your production, and more accurate volume calculations can often save you money in purchasing. You can also better plan your storage capacity and manage your costs based on the actual amount of product you need.

Lastly, subscription models offer you significant scalability. By offering a variety of subscription packages, you can create opportunities for growth as well as differentiate the types of options. For example, you can set up subscription models for specific target groups, such as students, tier plans according to usage intensity, or vary terms and conditions. When you introduce new products, you can assign them to your customers as a sample size and reach the target group directly in a low-intensity and comparatively inexpensive way.

What are the challenges of subscription management?

Subscription management presents a number of challenges for organisations. One key challenge is managing customer relationships. Organisations must ensure subscribers have access to the products or services they choose and have the flexibility to make changes. This includes changes to subscription terms, pauses, or upgrades. Errors in these processes can lead to dissatisfaction and, in the worst case, churn.

Another challenge is payment processing. Subscriptions require regular and accurate payments, and if the business operates internationally, multiple currencies and payment methods. If this leads to delays or errors in billing, it can damage customer confidence. The larger the customer base and the more international the company’s markets, the more complex the billing processes become.

As a payment service provider, Stripe offers a comprehensive billing solution, Stripe Billing, to automate and manage recurring payments. Businesses can set up multiple pricing models. Billing also supports multiple payment methods, including credit cards, Single Euro Payments Area (SEPA) direct debits, and digital wallets. If necessary, invoices can be customised to meet local requirements to ensure compliance at all times.

Special features of subscription models in Germany

In Germany, some special regulations apply to subscriptions. These are designed to protect customers from unclear contract terms and unwanted cost traps. For example, according to Section 309, No. 9a of the German Civil Code (BGB), contracts can have a maximum initial term of 24 months. After the minimum term has expired, it must be possible to cancel the subscription on a monthly basis.

Customers have a 14-day right of withdrawal after the conclusion of the contract if they have taken out a subscription via distance selling (i.e. online), telephone, or other means outside a retail outlet. This also applies to all other services and products purchased in this way.

Suppliers must also clearly inform customers of all costs, conditions, and cancellation periods. Online subscriptions must be completed using a clearly labelled button – such as “order for a fee” – to prevent customers from inadvertently signing up for a subscription. Since July 2022, the law requires a cancellation button that must be clearly visible. It is designed to allow customers to easily and quickly cancel a subscription online.

Unsolicited telephone calls for advertising purposes – whether for magazine subscriptions or telecommunications contracts – are strictly regulated in Germany, and agreements resulting from such conversations are only valid if confirmed in writing. Before automatically renewing subscriptions, companies must give customers advance notice. This can be done by letter or email. If customers benefit from a free trial, the company must not charge them any hidden fees and must explicitly inform them if the trial is converted into a paid subscription.

What are the best practices for successful subscription management?

A successful subscription business requires a clear strategy that addresses the entire customer lifecycle. Below, we discuss each component.

Data-driven processes

A data-driven business model is especially important in the subscription economy. Getting direct, first-party customer data allows you to better understand your target audience, engage them more effectively, and, in the best cases, convert potential subscribers into paying subscribers. You can also use this data to increase customer loyalty and revenues.

Customisation

Clear communication of value is also important. Your customers need to know exactly what the benefits of subscribing are, such as whether special features or content are available. If you can communicate this information consistently across all customer communications, you will increase perceived value and create incentives to subscribe.

Personalised experiences play a central role in the success of your subscription model. The more options are tailored to individual customer needs, the more sustainable customer loyalty will be. Intelligent algorithms can help.

Functionality and flexibility

Pricing should be transparent and flexible to meet customer needs. Clearly communicated pricing and packaging options allow your customers to choose the right offer for them. The ability to easily adjust or pause delivery intervals increases satisfaction. Regularly reviewing and adjusting your pricing strategy keeps you competitive and maximises customer value.

Easy onboarding

A simple onboarding process is important for first impressions and long-term customer retention. An easy and intuitive onboarding experience speeds time to value for your customers and reduces the likelihood of churn. Effective onboarding also promotes user retention and encourages your customers to try different features and offers.

Reliable billing

A reliable system for recurring payments such as Stripe Billing ensures transactions run smoothly. Flexibility in pricing models increases customer satisfaction. These include, for example, weekly, monthly, or yearly payment options as well as various payment methods.

Customer service

Lastly, you can build long-term customer loyalty by providing excellent customer service. Proactive and attentive support when problems arise strengthens the relationship and reduces churn. Every customer service interaction is an opportunity to reinforce your company’s value and build customer trust. And if you take customer feedback seriously and use it to improve your products, services, or processes, you have a good chance of making subscription models profitable.