Subscription plans are successful in helping small businesses grow in both profitability and customer satisfaction. However, this model is losing its charm as we evolve into a post-pandemic era, which can be harmful to companies that serve small businesses.

According to Tarci data, in 2022, there was a 49% decrease in small businesses offering subscription plans to their customers, shifting the landscape in the subscription economy. 

Why Are Small Businesses Moving Away From Subscription Plans? 

Despite their many benefits, small businesses are moving away from subscription plans. Our findings highlight various factors that impact small businesses' choices to discontinue or refrain from implementing the subscription pricing model for their clientele. Presented below are some key factors:

Influence of Consumer Behaviour in the Post-Pandemic Era:

• The landscape of consumer behavior has been significantly altered by the COVID-19 pandemic, leading to enduring effects that impact purchasing choices. As individuals transition out of the pandemic, their priorities and preferences have undergone a transformation. 

• The emphasis now lies on flexibility, customization, and a desire for greater control over expenditure. This shift in mindset has diminished the appeal of inflexible subscription plans, making room for more individualized and on-demand services.

Shifting Market Dynamics: 

• The post-pandemic recovery phase has shifted market dynamics. Such a shift transforms the business landscape as companies begin to re-evaluate their strategies to adhere to changing needs and demands. 

• Customers' evolving expectations and needs may not align with traditional subscription models, necessitating businesses to adapt in order to stay competitive and relevant in the market. To address the changing landscape, companies can consider exploring alternative revenue streams, diversifying their offerings, or adopting hybrid models that combine subscriptions with à la carte options. These approaches can offer a viable path forward in meeting customer demands and maintaining a competitive edge.

Adjusting to the New Landscape to Better Serve SMBs:

Since transitioning from traditional subscription models, small businesses have developed specific expectations from their service or product providers. 

Here are four fundamental needs that small businesses will likely prioritize:

1. Customization and Flexibility: Data has proven that small businesses anticipate service providers to deliver adaptable solutions that are tailored to their unique needs and financial constraints. The ability to select and pay for services based on their specific requirements is highly valued, as opposed to being bound by inflexible subscription plans.

2. Scalability and Growth Support: Striving for growth, small businesses prioritize service providers who can scale their offerings according to their evolving needs, provide additional resources, and support their expansive journeys. 

3. Cost Efficiency: In selecting services, small businesses place a strong emphasis on cost-effectiveness. Such businesses anticipate pricing models that are competitive, providing value while aligning with their budgets. Additionally, transparent pricing structures and the opportunity to optimize costs, are essential decision-making factors. 

4. More Innovation and Adaptation: Small businesses expect that their service providers offer innovative and adaptive solutions to simultaneously evolve with the transformative market dynamics and consumer behavior. For instance, businesses may prioritize new or improved products or services, personalized recommendations or support, or increased data-driven insights. 

Turning Insights into Action: Leveraging Data to Shape Service Offerings

The decline in subscription plans is an indication of an evolving market that demands prompt and intelligent responses. Data has the potential to identify the evolving needs of small businesses as they adjust to this changing landscape, allowing you to better understand and serve their needs. 

For instance, if you are an insurance provider, you can offer the identified small businesses a pay-per-use or usage-based insurance plan that adjusts the premium based on risk level and activity. These innovative insurance products can be charged based on the number of employees, customers, or small business sales instead of a fixed rate.