Subscription payments vs. one-off payments: which option is better for your business?

When you decide to start a business or consider offering a new product or service, one of the most important decisions you need to make is how you’re going to charge your customers. This is the moment when you need to ask yourself: should I go for a one-off payment or is a subscription model better?

It’s not the same to receive a small amount of money consistently and predictably as it is to receive a larger sum at once. Both have their pros and cons, and choosing the one that best fits your business can make a big difference in terms of profitability and revenue.

In this article, we’ll explain what subscription payments and one-off payments are, their advantages and disadvantages, and what factors you should consider to decide which one suits your needs best.

What is a subscription payment?

A subscription payment, also known as a recurring payment, is when the customer pays a fixed amount of money at regular intervals (this could be weekly, monthly, biannually, annually, etc.) in exchange for continued access to a product or service.

How do recurring payments work?

To make a recurring payment, the customer must authorise the business to charge a specific amount automatically at set intervals, without the need to manually make each payment. This type of billing is common for services used on an ongoing basis.

To accept recurring payments, you’ll need a recurring payment gateway with the right tools to manage it easily and quickly, automating payment plans.

Common examples of subscription models

This model has become increasingly popular in recent years across different sectors. One of the most common examples is digital entertainment services, where users pay a regular fee to access content such as series, films or music.

It’s also often found in gyms or tutoring academies where customers pay for regular access to sessions.

In professional settings, many companies use digital tools on a subscription basis, such as design, editing or management platforms.

Lastly, more and more businesses are applying this payment model to the sale of frequently used physical products, such as beauty or food items, delivered automatically at pre-set intervals.

What is a one-off payment?

A one-off payment involves the customer paying the full amount for a product or service in a single transaction. It’s the most common and traditional payment model, and the one we’re all used to using in our daily purchases.

For businesses, it means receiving the full value of the product or service on the day of the sale. Unless the customer buys again, there won’t be any more income from that individual. This is where customer loyalty strategies come into play.

Characteristics of one-off payment transactions

With this model, each customer represents a single sale. Once the purchase is made, no further payments are made unless you manage to retain the customer or attract them with a new offer.

Typical use cases for one-off payments

One-off payments are what we usually make in physical shops. For example, when you go into a store and buy a T-shirt, or when you eat at a restaurant and pay the bill. It’s also common in one-time professional services, such as hiring a photographer, or buying a ticket for a concert.

It’s also the most common payment method for online purchases. For instance, when you buy cosmetics from a drugstore website, or when you order a pair of trainers from a sportswear site.

Advantages and disadvantages of subscription payments

This system benefits both the business and the customer when the product or service meets a recurring need.

Advantages of subscription payments for the business

• Stable income: it’s easier to know how much money you’ll earn, which helps you improve your business’s financial planning.
• Customer loyalty: having an ongoing relationship with the customer creates a bond and makes it easier to retain them.
• Higher customer lifetime value: generally, a customer who pays on a recurring basis ends up generating more revenue than one who makes a single purchase.
• Lower acquisition cost: it’s cheaper to keep an existing customer than to attract a new one.

Advantages of subscription payments for the customer

• Convenience: the customer doesn’t need to remember to make payments manually. The process is automated based on the available payment plans.
• Budget planning: knowing how much and how often they’ll pay helps customers anticipate expenses and manage their budget.
• Continuous access to service: as long as they pay the subscription, they’re guaranteed access to the product or service.
  Possible challenges and considerations

To maintain a subscription or recurring payments model over time, it’s essential to understand customer feedback and behaviour to improve your product or service. Providing high-quality service that meets customer expectations, along with personalised support, is crucial to prevent cancellations.

On the other hand, having a reliable payment gateway that simplifies the process is key. PaynoPain‘s recurring payment gateway is designed to meet the needs of all types of businesses, allowing them to manage payments quickly and easily—whether regular, usage-based, or tied to promotional or trial periods.

Advantages and disadvantages of one-off payments

This model also offers benefits for both businesses and customers:

Advantages of one-off payments for the business

• Simple management: transactions are independent; there’s no need to implement recurring billing systems or automate processes.
• Immediate revenue: you receive the full amount on the spot, improving short-term cash flow.
• Lower technical complexity: easier to integrate with your payment gateway.
• Less investment in customer support: fewer queries, since they’ll be about the product or service itself, not recurring charges.

Advantages of one-off payments for the customer

• Transaction transparency: the customer knows exactly how much they’re paying and only pays once.
• No ongoing commitments: they’re not tied to recurring payments or automatic renewals.
• No need to manage subscriptions: they don’t have to cancel renewals or worry about billing dates.

Limitations and risks

This payment model doesn’t provide guaranteed recurring income, which can make long-term financial planning more difficult. It also requires greater investment in marketing and sales efforts to continuously attract new customers. Furthermore, it makes customer retention harder, as there’s no long-term relationship.

Factors to consider when choosing between subscription and one-off payments

When launching a business, choosing between a subscription model and one-off payments depends on several factors:

1. The type of product or service you offer

You need to understand how frequently your product is used. Is it something the customer uses regularly or just once? It’s not the same to run a gym, where clients attend regularly, as offering photography services for one-off events.

You should also ask yourself whether a subscription makes sense. For example, it wouldn’t make sense for selling appliances, as customers don’t need them regularly. But you could benefit if you sell food items, since customers ideally repurchase once they’ve consumed them.

2. Your customers’ behaviour

It’s important to know how your customers feel about your product or service. Would they be willing to commit to a subscription or would they prefer to pay only when needed?

For example, if you offer a full pottery workshop that people can book individually, they may value the flexibility of paying per session. But if they attend weekly, a subscription might be more convenient and cost-effective.

3. Your financial and operational goals

Are you looking for long-term stability or quick cash flow? Do you have the resources to maintain an ongoing relationship with customers?

For instance, if you’re just starting to sell a product and need to recover your investment quickly, a one-off payment model can help you generate immediate revenue. But if you already have a stable customer base and want sustained growth, subscriptions can help you achieve predictable income.

Can you combine one-off and recurring payments in the same business model?

Many businesses choose to offer both payment options depending on the service and customer type. For example, an online shop selling food supplements might offer one-off purchases and subscription plans with regular deliveries. This flexibility allows you to cater to different customer profiles and increase your revenue opportunities.

What’s the best payment solution for your business?

Both one-off and subscription payments have a big impact on how you manage, sell and grow your business. Choosing the right model depends on the product you offer, your long-term strategy and the experience you want to give your customers.

Do you need a recurring payment gateway?

If you’re looking for an online payment gateway, our solution is ideal for businesses of any size and sector, whether you need to accept subscription payments or one-off transactions. We also offer all the necessary payment options to boost your sales, from Virtual POS, Physical POS, mobile payments with Tap to Pay, and much more.

If you’d like to speak to a payments expert, leave your contact details in the form below and we’ll get in touch as soon as possible.