Memberships vs. Subscriptions: How To Choose the Best Model for Your Business
Are you struggling to choose between a membership and subscription model for your business?
With the meteoric rise of these two business models over the last decade, it's crucial to understand the nuances of each. That way you can make an informed decision between these two models. This is so important because the model you choose will have a major impact on the long-term success of your business.
If you're a little confused about the differences between memberships vs. subscriptions, know that you're not alone.
In 2023, the terms “membership” and “subscription” are often used interchangeably. This makes it challenging to distinguish their key differences. However, the choice between these models is crucially important, as it directly affects the value proposition for your customers and the relationships you'll build with them.
In this comprehensive guide, we'll explore the essential distinctions between memberships and subscriptions, showcasing real-life examples to bring clarity to these unique business models. After you read this article, you'll be equipped with the knowledge to confidently choose the ideal model for your business, setting you on the path to long-term success.
Ready to unlock the secrets of memberships and subscriptions? Let's get started.
What Are Memberships All About? (Plus 3 Real-Life Examples)
To get started, let's create a working definition of the first term we're working with: membership.
The word membership brings up ideas of belonging, community, and relationship. On top of that, memberships often provide people with a new level of status or exclusivity.
Therefore, a membership is a business or organization that actively involves and includes its members. It also gives its members access to products, perks, or benefits that non-members don’t get.
Here are three real-life examples that perfectly demonstrate this definition:
Costco is a members only grocery store. That means in order to shop there, you must be an active member. When you are a Costco member, you unlock many exclusive benefits that regular folks on the street simply don't get. Where else can you get a liter of pure maple syrup for less than $15?
Have you ever jumped back into your car after an epic 15 mile hike, only to discover your battery died while you were admiring the mountain vistas? If so, you better hope your AAA membership is still active! As a member of AAA, you get some amazing benefits like roadside assistance, exclusive discounts, and much more.
24 Hour Fitness
Gyms are classic membership businesses. You pay a monthly or annual fee so that you can access facilities and services that aren't open to non-members. Most gyms won't even let you walk past the front desk without an active membership. Plus, you can get personal training and participate in group events as a member.
If you're unclear about whether or not something is a membership or a subscription, try filling in this statement:
“I'm a __________ member.”
With our three examples above, it sounds perfectly natural to say, “I'm a Costco, AAA, or 24 Hour Fitness member.
On the other hand, it would sound strange to say, “I'm a Time Magazine member.”
Time Magazine is a subscription, not a membership.
You don't belong to Time. You subscribe to their magazine.
All About Subscriptions (With 3 Helpful Examples)
Now let's take a look at the meaning of our next term: subscription.
The word subscription is primarily connected to ideas of billing, payment, and access. Subscriptions have less to do with relationships and exclusivity, and more to do with terms and intervals of payment and access.
To put it plainly, a subscription is a billing and delivery model for businesses and organizations.
Here are three examples of subscriptions that'll help ground our definition in reality:
The Wall Street Journal
Newspapers are perhaps some of our oldest and best examples of subscriptions. For each month that you pay your subscription, you'll get new issues of the paper delivered straight to your door. This is purely a transaction. There are no exclusive benefits or sense of belonging that are designed to come with your subscription (except that your neighbors might think you're smart 😉).
The latest evolution of the subscription business model comes in the form of all the emerging streaming services. If you want to rewatch all the MCU movies before buying your tickets to the latest Guardians of the Galaxy flick, you'll need to subscribe to Disney+.
Daily Burn is a fitness subscription that's designed to be done at home. For around $20 per month, you can watch a variety of pre-recorded fitness classes. While you do get exclusive access to Daily Burn's content, that's where it ends. You simply get what you pay for, rather than the extra benefits that might come with a gym membership.
Now let's create the reverse statement from above and try it out for subscriptions:
“I subscribe to __________.”
You could easily say, “I subscribe to The Wall Street Journal, Disney+, or Daily Burn.” But, you might get some weird looks from your friends if you say, “I subscribe to Costco.”
It's not a magazine. It's a membership.
Memberships vs. Subscriptions: What’s the Difference?
Now that we have working definitions of memberships and subscriptions, let's dive deeper into what distinguishes one from the other.
Memberships Are More Relational, Less Transactional
In general, membership businesses and organizations prioritize relationships over transactions. The outdoor sporting good's company REI is a perfect example of this.
REI is a cooperative organization that extends exclusive benefits to its members. Yes, you can still shop at REI even if you're not a member. However, the benefits of membership far outweigh the cost of enrollment.
You can become a REI member for a lifetime fee of $30. From there, you get exclusive member discounts, special member pricing, and reward points paid in the form of a dividend. REI really rewards its members for shopping there. They understand that by including you in their organization, you're more likely to shop there when you need a new pair of hiking boots or running socks.
Memberships Focus On Community & Inclusion
Many of the big benefits that come with a membership have to do with a sense of community and inclusion. Let's take the example of the gym. Yes, you are paying a monthly fee for access to the facilities. But you're also joining a community of people who are proactive about their health and wellness.
Even if you don't work with a physical trainer as part of your membership, you can participate in group events like pickleball tournaments or weightlifting competitions.
Subscriptions Are Mainly A Billing Model
The key difference between subscriptions vs. memberships is that subscriptions are primarily a billing model. When you sign up for a subscription, all you're essentially saying is that you want consistent access to whatever it is you signed up for. That can be anything from digital content to physical goods.
For example, the supplement company Thorne offers subscription options for most of their products. If you have trouble falling asleep at night, you can sign up for a melatonin subscription that'll send you a new bottle at whatever interval you specify.
Now you might be saying to yourself, “But look! You get an exclusive discount as a subscriber. Isn't this a membership?” When in fact, this serves as a perfect example to illustrate the difference between memberships and subscriptions.
The only benefit to becoming a Thorne subscriber is that you get a discount. It's tied directly to the transaction. The benefits of memberships extend beyond pricing and transactions. A membership gives you access to something you can't get any other way. A subscription just delivers what you purchase.
Subscriptions Always Need To Be Replenished
This leads us to our second key distinction about subscriptions vs. memberships. By nature, what you purchase via subscription always needs to be renewed or replenished. In our example above, you would get nothing by becoming a “melatonin member” if they only ever sent you one bottle. But because it is a subscription, your supply of melatonin needs to be renewed each month (unless you cure your insomnia 😴).
If Thorne wanted to offer a “melatonin membership,” they'd need to package in some other benefit to make it compelling and worthwhile. For example, they could create a community area that's managed by sleep experts. You could go there and ask an expert for advice about how to fall asleep fast and stay asleep through the night.
This sounds pretty good, actually. Maybe we should pitch Thorne on this?
Memberships vs. Subscriptions – Which Model Is Right For Your Business?
By now, you should have a clear understanding of the differences between memberships vs. subscriptions. But if you're still wondering which model to choose for your business, here are a few questions that should help clear things up for you.
1. Do you plan to offer any type of community to your customers?
2. When someone becomes your customer, will they unlock exclusive benefits unavailable anywhere else?
3. Do you want to build a tribe or create a sense of belonging in your business?
4. Is becoming a customer the only way to access your content, product, or service?
If you answered yes to one or more of those questions, then we'd say the membership model is perfect for you.
If you said no to all of those, and your product or service is simply tied to a recurring payment method, then we'd say the subscription model is right for you.
The Future of Memberships & Subscriptions
That said, as memberships and subscriptions grow and evolve, the lines between them seem to be blurring more and more.
For example, you could argue that at-home workout equipment like the Peloton or Mirror fall into both categories. Yes, you're paying a monthly subscription for access to their content. But you're also joining a virtual community as a member.
We're definitely not staking our claim as the “Nostradamus” of the membership and subscription world, but our best guess is that we'll begin to see a merging of these two business models over the next few years.
How to Create a Membership or Subscription with WordPress
Both memberships and subscriptions are wonderful recurring revenue business models. Whether you choose one over the other is entirely up to you and your business. The good news is that you can create both membership and subscription businesses with MemberMouse.
Our platform allows you to create products that bill at any interval you specify, by days, weeks, months, or years. You can even create free trials and lifetime memberships.
To learn more about how to do this, you can check out
And there you have it – your companion guide to navigating the nuances between memberships vs. subscriptions. We hope that this article has inspired and empowered you to choose the best model for your business.
To summarize, here are the main takeaways from this article about memberships vs. subscriptions:
- Memberships focus on relationships, community, and exclusive benefits
- Subscriptions prioritize billing, payment, and access without extra benefits
- The lines between memberships and subscriptions are blurring, and a combination of both models may emerge in the future
- Both membership and subscription businesses can be created with MemberMouse
If there's anything we didn't cover in this article that you're still wondering about, please feel free to leave us a comment below. We'd love for you to join our conversation and can't wait to hear your questions or insights.
Over the past 6 years, Matt Brown has worked closely with some of the world's most successful membership and online course entrepreneurs. He's seen first hand what works – and what doesn't – when it comes to starting, building, and growing online businesses. On top of that, Matt was responsible for screening all the guests we've had on the Subscription Entrepreneur podcast. This allowed him to hear the best membership marketing and growth strategies from top authors and experts. Now, he shares everything he learns with you here on the MemberMouse blog. Subscribe today so you can discover cutting-edge strategies that can help you grow your membership, subscription, and online course business.