As the web and mobile becomes more widespread, people will start embracing subscriptions for every imaginable service and product.

Jose Paul Martin is a private equity investor & advisor currently focused on Fintech & Healthcare sectors in the Middle East, US & Asia. Based in Bahrain, he is also MD of Eqoris Group & Author of The Pitch Process Framework.

The other day, I was trying to explain to a friend, what fintech was and why fintech companies are going to change the way we transact and even do business, as software eats the world.

In order to get the message across, I told him about a hyperlocal grocery delivery company that I’d been advising.

As we were talking, he downloaded the app, and I started to explain how it worked. Immediately impressed, he proceeded to the checkout to make the payment. When it suddenly hit him—the problem of cash-on-delivery.

You can’t scale a company with cash-on-delivery. There’s just too much friction. If you can nail payments and pricing, you can make or break a company.

“You can’t scale a company with cash-on-delivery.”

Which brings us to one of my pet peeves with some B2C startups—they offer everything for free, get funded, become heavy ad spenders and THEN try to figure out how to make money from all the eyeballs.

Now, I typically use Google Docs to write my notes, and while it’s probably the best and easiest for collaboration, not to mention the cheapest (it’s free by the way)—it is indirectly supported by an advertising model.

But I recently wanted that nostalgic feeling of writing in #markdown on an app. In the past, I’ve experimented with various note editors, from Evernote to Byword, Sublime Text and heck, even Textmate—but something recently gravitated me to Bear Writer.

In fact, I’m writing this post on it.

After enjoying the user interface and experience, I explored going Pro with Bear, and what struck me as strange was that they were following a subscription model.

The Subscription Economy

This is an emerging trend, not just on the App Store, where more and more people pay for their software with subscriptions rather than one-time payments. And we’re not talking about SAAS (Software As A Service) here.

Ok, back to our story—so just to be sure, I started comparing it with probably the next best note taker that had similar features—Ulysses, which had a one-time price of $45 for the Mac app and another $25 for the iOS app!

That’s almost 5x the cost of the subscription based Bear software.

That’s when it dawned on me, for something that needs to be continuously updated, rather than pay for upgrades, why not price it low enough to entice more people to try it out.

The purpose of a price is to tax usage of a product.

That’s how companies generate revenue. And that’s how they validate their product idea.

For Bear notes, I have no idea how many are subscribed—but I guess at $15 per year for use on both Mac & iOS—very few would think twice about it!

And you might say that even Evernote has a subscription based model, and you’re right. But after they increased their price to $70 per year—I’m guessing many are considering alternatives given that Evernote hasn’t improved that much over the years.

Look, people are ready to pay with their wallets when you create something that is of value to them. For everything else, there’s advertising!

But here’s the thing—while digital media companies are struggling with lower CPMs and declining ad revenues—many are now turning to subscriptions as a way to become profitable again.

Even Medium has started tinkering with subscriptions (they call it ‘memberships’) as the way forward.

“Look, people are ready to pay with their wallets when you create something that is of value to them. For everything else, there’s advertising!”

If you didn’t know already, behemoths like Amazon have had subscription services such as Amazon Prime for a long time and now enjoying the benefits of it regarding valuation.

Spotify, Netflix, and many others have already woken up to this.

And as the web and mobile become more widespread, people will start embracing subscriptions for every imaginable service and product.

But what does this mean for fintech companies, well, because of the subscription economy we’re in—payments are going to be recurring and instantaneous, and so are ways of storing value in the form of eWallets or cryptocurrencies.

If you haven’t figured it out yet, the world is moving at a faster pace, and the traditional ways of spending, lending, saving, investing, and holding money are fast disappearing.