Subscriptions come for everything, even sleeping

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You’ve heard of subscriptions to entertainment services, music platforms, and fitness centers, but what about skiing, sleeping, or using the self-checkout line at the grocery store?

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If you have not heard of it yet, you will soon as it is already here:

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• Vail Resorts reported that 75% of their skiers paid for the Epic Season Pass ($82/mo) instead of purchasing non-subscription lift tickets
• Eight Sleep launched a subscription service ($24/mo) to track your environment and sleep that you are required to buy for 12 months with the purchase of an Eight Sleep mattress
• Walmart plans to limit the self-checkout line to Walmart+ subscribers ($12.95/mo)

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Most U.S. businesses pursue a subscription model because it appeals to their team and investors.

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Businesses adopt subscription models because recurring revenue provides more stability and predictability in forecasting for strategic planning and investment purposes.

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Additionally, the data shows that investors prefer recurring revenue from subscriptions over one-time revenue. For example, when evaluating a purchase price, a software company's recurring portion of revenue is typically valued at 7-15x, while the non-recurring revenue is valued at 1-3x, per Vista Point Advisors.

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While subscription models are trendy, they don’t work for every business. The requirement to sign up for a recurring payment dampens customer demand, per McKinsey & Company. For example, Eight Sleep received a lot of pushback from customers who didn’t want to sign up for their subscription service by purchasing the Eight Sleep mattress.

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I completely empathize with them; there is no way I would pay a subscription to sleep. I don’t care what Andrew Huberman has to say.