By Peter L DeHaan, PhD
It seems that subscription services surround us: from Dollar Shave Club, to HP Instant Ink, to Microsoft 365. For the record, I’ve passed on all three, though I recently questioned that decision as I made another trip to the office supply store to purchase printer ink. Nonprofits also embrace this approach, preferring ongoing, automatic monthly donations, in lieu of chasing larger annual contributions. Rather than fight their paradigm, I have acquiesced to their new method of fund-raising.
The telephone answering service industry may have been the first to stumble unto this idea of monthly reoccurring revenue when it emerged some ninety years ago. I understand they followed a flat-rate billing model then, which fully exemplifies this concept. (I discount magazine subscriptions from this discussion because they bill annually, not monthly.)
Ten years ago, I first heard about the subscription model being offered by a TAS vendor. I immediately saw the brilliance of their plan. Assuming their cash flow could tolerate a transition from large system sales to reoccurring monthly revenue, they would position themselves well for the future, helping to ensure their ongoing viability.
This software subscription service is commonly called hosted solutions or SaaS (software as a service). While some claim distinctions between the two, they are essentially the same model. The concept also once went by ASP (application service provider), though that acronym now means something else.
As I said, this plan is brilliant – for the vendors. What took me longer to comprehend was that this makes sense for the answering services, too. As one firmly entrenched in the buy-once-and-use-it-forever perspective, I dislike the idea of paying a small fee every month.
Yet as I learn more about the TAS platform subscription model, I see it makes sense for answering services, too. This is especially true for startups and small to medium answering services, as well as larger ones.
Although I’ll stop short of saying that the subscription service model is right for all answering services to acquire their technology, I do assert that all answering services should look into it. The possible benefits are too big to ignore.