# What is Subscription / Recurring Billing?

What is Subscription / Recurring Billing? A sales model based on automatic monthly/annual billing. Common for coffee, cosmetics, supplements, and SaaS.

## How it works in practice

Subscription is the single biggest change a store can make to LTV. A customer who buys once a month equals 12 purchases a year from that one customer. Without a subscription, you'd need to re-acquire them 12 times.

## Related metrics

- MRR — Monthly Recurring Revenue — the subscription metric
- LTV — subscription multiplies LTV
- Churn Rate — especially important for subscriptions
- Tokenization — the technical foundation for recurring billing

## Common misconception

'Subscriptions only work for software.' Not at all. Dollar Shave Club (razors), Birchbox (cosmetics), HelloFresh (food) all proved subscriptions work in any category with a recurring need. Ask: does the product run out or wear out? If so, a subscription is possible.

## How to fix it

High subscription churn? (1) Check failed payments — an expired card is cause #1. Add dunning emails (card-update reminders), (2) check for a pause option — a customer who can pause temporarily doesn't cancel entirely, (3) offer an anniversary discount for renewal.

## Real-world example

An Israeli coffee store added a 'monthly coffee' subscription. 280 subscribers in the first month, 8%/month churn. Adding a pause option and flavor personalization cut churn to 3.2%, with LTV 2.8x that of a regular customer.

## Where to start

Offer a subscription option (not mandatory) at least on your top sellers. Tools: ReCharge (Shopify), Subbly, Bold Subscriptions. ROI becomes clear after 90 days.

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Category: Payments · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/subscription-recurring-billing