We’re big fans of the subscription business model here at Bplans—after all, our product LivePlan is subscription software that helps you write a business plan.

That being said, as popular as the subscription business model may be, it’s not foolproof. It is still completely possible to come up with a subscription business idea that just doesn’t work.

So, how can you ensure that your idea for a subscription business is a good one? We asked the experts at the YEC to share their tips for figuring out if you have an idea for a subscription business worth pursuing.

Read on to determine whether or not your subscription business idea is something customers will pay for, or if they’ll cancel their membership.

1. Ask if you’re solving a real pain point

Your business should be filling a real need for your customers, plain and simple. That much is obvious.

But, before you start your subscription business, take some time to determine whether or not the need you’re assuming people have is actually real.

Chris Brisson of Call Loop echoes this point: “Here’s the deal: You only take Advil when you have a headache,” he says. “So before thinking about whether to create a subscription company, first dive into the industry and see if there’s a real painful problem that your recurring business can solve.”

Don’t move too quickly and assume that you understand exactly what the pain point is that your business idea hopes to solve. Spend some time conducting market research and validating your business idea early on, to make sure you’re solving a real, frequently occurring pain point.

2. Determine if there’s ongoing demand

Beyond figuring out if your idea for a subscription company is actually solving a real pain point, it’s important to determine if there is high enough demand for your product or service on a recurring basis.

“Your idea would make a good subscription company if the product is a specialty item that’s in high demand and can be versatile when the market shifts,” says Bryanne Lawless of BLND Public Relations. “It could also be good if the product is a commonplace item that has been updated and is beyond convenient for consumers to purchase and use.” Think Dollar Shave Club for an example of this type of business.

You may have an idea that solves a pain point, but if there isn’t enough demand for the product or service on a regular basis, you’ll still be out of luck. The trick is to find a niche that is both in demand and solves a problem where your business can be competitive. “Find the niche market that is useful for consumers and has low competition,” recommends Lawless.

3. Consider the advantages of selling a service versus a product

We tend to think of subscription business models in terms of things that have historically been delivered by subscription—magazines, for example. Or, we think of software-based subscription services like SalesForce or Basecamp.

However, the subscription business model can also work well for businesses that aren’t product based. “A subscription business means you need to provide continual value, and your customer needs to depend on your business to get something they need,” says Andy Karuza of FenSens.

You wouldn’t think, for example, that a hair salon would be a good candidate for the subscription business model. However, Vive Salons has cleverly opted to build their business around customers’ desire for recurring hair services, and so they offer a subscription service that gives customers access to blowouts all around NYC. It’s a service that is perfectly suited for the subscription business model, as it’s something customers need again and again.

Karuza succinctly summarizes why services are often a better fit for the subscription business model than products with this example: “Business analytics are a service because businesses want continual access to them with the ability to turn it off at any given time; a toothbrush is a product that people would just want to buy outright one time and own it.”

That being said, a subscription business that delivers a new toothbrush every few months isn’t a bad idea.

4. Determine the saturation point

“As best we can tell, our company was the first city-themed subscription box when we launched in 2013,” says Sam Davidson of his business Batch. “No one was doing what we were doing, so even though the industry was becoming saturated with concepts, ours was still different.”

That isn’t to imply that the only field worth entering into is one without any competition whatsoever (spoiler alert: this doesn’t exist), but it is a good idea to get a sense of how stiff the competition will be.

“With more and more players, you’ll need a unique story, offering, or perspective to get attention amid a crowded space (that’s only getting more crowded),” says Davidson. If you plan on starting a subscription business in a heavily saturated niche (beauty subscription boxes are a great example), you’ll need to work even harder to differentiate yourself from the existing options.

5. Consider normal user consumption habits

Ask yourself: Is your idea for a subscription business something people will actually use on a regular basis? “Brands like Quip and ButcherBox have done an incredible job of figuring out exactly how often users need new products and created perfectly timed delivery schedules,” says Firas Kittaneh of Amerisleep.

Kittaneh suggests taking a hard look at the current consumption habits around your subscription business idea. “How quickly do people consume your product?” he asks “If the answer is monthly or quarterly, there is a high chance they might enjoy the convenience of a subscription service so they never have to worry about personal inventory replenishment.”

6. Run a survey and ask your target audience

An important part of the idea validation process is actually getting out and interacting with your target audience. Doing this can help highlight what exactly your customers hope to get out of your service, and can help you get a clearer sense of how to best solve their problem.

Drew Hendricks of Buttercup recommends gathering this information by asking members of your target audience to complete a survey. “Find out if they would be interested, what type of price they would be willing to pay, and how long they would continue,” he says. Doing this will offer you insights into their buying habits and thought process that your own guesswork—as good as it may be—will never be able to uncover.

7. Test with Google Adwords

Aside from reaching out directly to potential customers, there are also more passive ways to source insights on your target customer base.

“The best way to determine if the idea is solid is to invest in a testing budget using Google Adwords, where you can have a large test pool if you allocate a strong budget,” says Marcela De Vivo of Brilliance. “You can get an Adwords Campaign up and running within a day, and if your audience sample size is large enough, this test can yield powerful data for the viability of a business.”

Whether or not this suggestion will work for you depends on the size (and available funding scope) of your business, but it’s worth looking into as you’ll be able to get feedback that you wouldn’t necessarily have access to otherwise.

8. Establish a focus group

While paid testing can be a great way to get insights from a larger group that you wouldn’t have otherwise had access to, Shalyn Dever of Chatter Buzz recommends asking for feedback from “real people” in the context of a focus group.

“Before investing on paid ads or testing a small online market via advertising, I suggest establishing a focus group session with your prospective target audience,” says Dever, who recommends creating a focus group of 10 to 20 people and asking for their input.

“To save costs, try to reach out to your family and friends,” she suggests. “They should be honest enough if they think your subscription business will work or not.”

9. Start a VIP early-access program

“If you’ve investigated the market and think you have a good idea, throw up a landing page with an early-access signup form,” suggests Vik Patel of Future Hosting. “Promote the page on social media and with AdWords, and gauge the response.”

This strategy enables you to determine if there is enough interest in your product or service, without costing you too much in time and effort. “If enough people share and sign up, you’ve established that there’s some interest in the idea with a minimal outlay,” says Patel.

Have you started a subscription business? How did you determine whether or not your idea was a good one? Share this article on Twitter or Facebook and tell us about your experience!

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