For many years, durable-goods brands have relied on financing to lower the upfront cost of premium products. Companies like Apple, Dyson, Thermomix, Peloton, Samsung, and Weber all offer instalment plans because they recognised one simple truth:

Customers love high-quality products, but not always the steep upfront price that comes with them.

Financing stepped in as the solution: it enabled more customers to buy what they wanted, even if they couldn’t afford to pay the full amount immediately.

Several industry insiders say that for high-ticket durable goods, financing has become the default acquisition path for many new buyers. In fact, internal estimates from a major consumer-appliance brand suggest that roughly 70% of its customers opt for a financing plan rather than paying the full amount upfront.

Financing solved a very real problem: premium durable goods were often out of reach for large parts of the population. By making high-quality products affordable through instalments, brands successfully removed one of the biggest barriers to customer adoption.

Today, however, the challenges businesses face look very different from the ones financing was designed to address. Durable-goods brands are navigating a landscape shaped by:

• Rising production and material costs, which make manufacturing and inventory more expensive
• Volatile and costly supply chains, still feeling the effects of global disruptions
• Inflation, which reduces consumer purchasing power while squeezing business margins
• Stricter sustainability regulations, holding companies accountable for product life, reuse, and waste
• Shifting customer expectations, especially among younger consumers who increasingly prefer flexibility and convenience over long-term ownership

With so many forces reshaping the landscape, relying only on traditional sales models is no longer enough to fuel growth. Business model innovation is needed again; innovation that helps companies stay engaged with their customers, extend the life and value of their products, and operate more responsibly within the limits of global resources.

This is why many durable-goods companies have turned toward as-a-service and subscription-based models. What initially started as an environmental or customer-experience conversation has rapidly become a strategic answer to multiple challenges at once: recurring revenue, stronger customer relationships, access for new audiences, operational control over assets, and product lifecycle optimisation.

And as subscriptions move from niche experiments to mainstream strategy discussions, one question keeps coming up inside many organisations:

Isn’t paying monthly basically the same as financing?

This is where the confusion begins and where the real difference between the two models becomes crucial to understand.

Subscriptions aren’t just another way to buy and the data proves it

At first glance, subscriptions and financing can look similar. You pay every month and get the product. So it’s easy to think:

Isn’t a subscription just financing with a different name?

But what customers actually do shows a different picture. Across circuly customers (manufcaturers and retailers who offer their physical, consumer durable products in a subscription model ), most businesses do offer a “buyout” or "purchase" option, meaning the customer can purchase the product at the end of their minimum subscription term.

Yet only about 1 in 7 subscriptions end with the customer buying the product.

That means:

• Most people don’t subscribe because they want to own the product later and do not see subscriptions as a path to ownership
• They subscribe because they want access, flexibility, and less commitment

If customers can finance, why offer subscriptions at all?

If financing already helps boost sales, why should a company consider subscriptions at all? Because subscriptions don’t just help customers who want to buy. They help you reach customers who wouldn’t have bought in the first place.

From conversations with durable-goods brands, we see three main reasons companies add subscriptions:

• Bring in new customers
• Build ongoing relationships
• Match what younger customers want

Bring in new customers‍

Financing helps people who want to own a product but can’t afford the full price. Subscriptions attract a different segment: people who want flexibility, people who only need the product for a period of time, or people who don’t want the responsibility of ownership. Many brands report that subscription customers are mostly new customers, not converted buyers.

“It’s not cannibalisation… the majority are new segments, often younger customers.” says a German ebike manufcaturer offering bikes on a subscription basis. ‍

Build ongoing relationships‍

With financing, the relationship ends once the last instalment is paid. With subscriptions, the relationship continues. You get monthly contact, service, repairs, upgrades, and opportunities for add-ons like insurance or consumables. That creates more revenue opportunities over time, even though the product remains the same.

"To build loyalty, trust & to engage our customers we provide guidance and expertise around bike sizes so the subscribers feels confident in their choice." says Franz Niebler, Digital Operations Manager at Bike Club Germany.

Match what younger customers want‍

Younger consumers increasingly prioritise convenience, flexibility, lower commitment, and the ability to switch or upgrade quickly. Subscriptions fit this mindset perfectly.

“Younger customers strongly prefer flexible subscription options.”

In addition to reaching new customers, building ongoing relationships and appealing to younger buyers, many brands are turning to subscriptions because the subscription model offers several concrete business advantages:

• Steady, predictable revenue
  With subscriptions, you don’t just count on one big sale. You earn every month or every period, making your revenue stream more reliable.
• Less pressure on new sales
  Since you’re earning from the same customers over time, there’s less need to constantly find new buyers. That reduces marketing and acquisition costs.
• More value from each customer
  Subscriptions open the door to add-ons like maintenance, upgrades, consumables or insurance. It’s no longer just “product sale” — it becomes “product as a service”.
• Better use of physical assets
  For durable goods, owning the product and getting it back means you can refurbish, reuse or redeploy. That boosts the lifetime value of each product and supports your circular economy goals.
• Deeper customer insight
  When you’re in a longer-term relationship with the customer, you learn how they use your product, how often they upgrade, what they buy next. That data helps you improve your offer, tailor your services and build stronger loyalty.

Financing vs Subscription — What’s different besides who owns the product?

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Who actually owns the product — and does it matter?

Yes. Ownership matters because it defines who carries the risk, who captures the value, and whether the product can create revenue again.

In financing, ownership is designed to transfer to the customer. But there are two common structures:

#1 Standard Financing

• The customer makes monthly payments.
• A financial institution technically owns the product during the term.
• Once the contract is paid off, ownership transfers to the customer.
• If the customer defaults, the finance partner carries the risk and repossesses the product.

#2 Lease & Sell-Back (Financing Variant)

• The OEM sells the product to the financing partner.
• The finance partner owns the product and its depreciation.
• The OEM leases it back and sub-lends to the customer.
• At the end, the OEM may buy back the product — but ownership risk during use sits with the OEM.

In subscription, the goal isn’t ownership transfer but ongoing access.

#3 Subscription with Full Brand Ownership

• The OEM keeps ownership throughout the lifecycle.
• The product returns when the customer no longer needs it.
• The OEM can refurbish, redeploy, or recycle → multiple revenue cycles.

#4 Subscription with Finance Partner (Asset-Backed Subscription)

• A financing partner may temporarily own the product “on paper.”
• But the OEM owns the customer relationship, the service, and the future value.
• If the customer wants to buy out the product, there needs to be a mechanism to settle the financial structure (e.g., replace with a refurbished item).

Don’t ask “Will customers subscribe?” Ask “What problem does this solve?”

When a business evaluates subscriptions, the first instinct is usually uncertainty and doubt: “But will customers actually subscribe?”

That’s understandable. For decades, ownership has been the norm.

But business model innovation doesn’t start with what people already do. It starts with what’s changing in their lives.

Today’s customers are dealing with:

• Higher living costs
• Smaller living spaces
• More uncertainty and mobility
• Growing environmental awareness
• pressure to choose smarter, not more

So the real question isn’t whether customers will subscribe. It’s whether there is a problem in their life that ownership no longer solves well.

If yes → subscription isn’t a “payment alternative.” It’s a better solution.

Example: Bike Club - A model that made even more sense in hindsight

Take Bike Club.

Today, everyone can clearly see the logic of subscribing to kids’ bikes:
kids grow fast → bikes don’t.

But when Bike Club started?
There were plenty of reasons why this model shouldn’t have worked:

• Anything involving kids has emotion attached
• Families love the feeling of gifting something “new”
• Kids build memories — and want to keep the bike
• Buying secondhand is cheaper, logically
• Renting bikes? That wasn’t “normal” yet

On paper, it was risky. In real life? It was exactly what parents needed — even before they knew it.

Because the unspoken reality was:

• Kids outgrow bikes constantly
• Good bikes are expensive
• Modern homes are smaller
• Selling or storing bikes is a hassle
• Parents want sustainability without effort
• Safety and maintenance matter more than ever

Customers didn’t adopt Bike Club because it was cheaper. They adopted it because it made their lives easier.

And the proof?‍

"Most new customers come through word-of-mouth and recommendations from friends and family." - Says Bike Club

Example: L.G. - Making a Complete Home Possible From Day One

Appliances were long the ultimate ownership purchase. You buy a fridge, a washing machine, a TV, maybe over years, and you live with them for a long time.

But that’s exactly the point: Homes don’t become “complete” overnight.

People prioritise:

• What they can afford now
• What’s most urgent
• What’s on sale when they need it

Over time, this creates a mix-and-match home, different brands, different ages, different conditions, and those gaps stick around longer than anyone likes to admit.

LG spotted the real friction:

• A new home can take months to fully furnish
• Large upfront spending blocks the perfect setup
• Upgrades get delayed for “later”
• Repairs and replacements are never planned — just painful

So instead of asking customers to wait for the home they want, LG flipped the script:

LG Subscribe gives customers a fully equipped home on day one:

• Premium LG appliances — all at once
• Monthly payments instead of one big investment
• Installation + maintenance included
• Easy upgrades when life evolves
• Products come back to LG for reuse — reducing waste

Suddenly, a customer doesn’t have to choose which appliance to get first. They get the whole solution — now.

And for LG?

If they can help customers complete their homes faster, customers naturally choose LG for everything — not one product at a time, but the whole home experience.

This has driven strong commercial results — the home appliance subscription business at LG surpassed KRW 1.134 trillion (≈ US $840 million) in annual revenue, growing approximately 33 % year-on-year.

Example: Mister Spex - Turning eyewear into an ongoing service

Eyewear has always been essential — but the buying experience hasn’t evolved much. You buy a pair, you wear it for years, and only come back when things get blurry again. Brands relied on the assumption that customers would eventually come back, maybe in two or three years, hopefully to the same store.

But that's not the reality:

• People’s vision changes regularly — and when it’s time to adjust or upgrade, they don’t always return to the same store.
• Premium lenses and frames are expensive, making necessary updates feel like a luxury instead of a health need.
• Convenience and flexibility have become universal expectations — especially for younger shoppers.
• Brand loyalty in eyewear is weak — customers often choose based on price or speed.
• Traditional eyewear sales lack continuity — once the sale is done, the relationship ends.

Mister Spex, long known for changing how eyewear is sold online, spotted this gap. If glasses are something people rely on every day, why is the buying model still designed as a one-off event?

Their answer: Switch, a subscription that turns eyewear into a continuous service. Customers get multiple frames, upgraded lenses sooner, and a simpler path to staying visually confident — without the upfront cost barrier.

Strategically, Mister Spex transformed: A low-frequency purchase into a high-frequency service relationship.

Early results show that customers are responding not because subscriptions are trendy, but because this solves real, everyday problems.

And in less than six months, the results they’ve achieved are already very impressive — nearly 3× higher average order value compared to retail purchases, around 10% of store revenue driven by the subscription model, and strong demand for premium lenses like progressives and prescription sunglasses.

What this teaches us

There will always be arguments against subscriptions: “It’s not how people buy today.” “It’s more expensive in the long run.” “Customers like to own their things.”

All potentially true.
But irrelevant if a bigger truth stands:

When ownership becomes a burden, subscription becomes the better product.

The businesses winning with subscriptions aren’t asking: “Will customers adopt this model?” They’re asking: “What pain can we remove from their life?”. “Where can we deliver more value than ownership can?” That’s where subscriptions thrive. Not as a trend but as a strategic answer to real-world problems.

What subscriptions unlock that financing never could

Financing helps a customer buy a product — and then the business relationship ends. Subscriptions do the exact opposite. They unlock a new way to build value that continues long after a product is delivered. Here’s what changes when a company owns the product lifecycle instead of selling it once:

#1 More revenue from each product‍

A subscription spreads value over months or years — often exceeding the one-time retail sale. Every renewal, upgrade, accessory, and service touchpoint becomes additional revenue.

#2 Products become designed for the long run‍

When a product eventually returns, companies must build for quality, durability, and refurbishment — making circular design a commercial advantage, not a compliance burden.‍

#3 One product can generate revenue multiple times‍

Returned products can be refurbished, re-subscribed, resold, or recycled — turning linear sales into multi-cycle margin opportunities.

#4 Service becomes a differentiator — not price‍

Maintenance, swaps, upgrades, insurance, and performance matter more than discounts. Customers stay because the experience is better — not because the item is cheaper.

#5 The business learns how customers actually use products‍

Every subscription is a data relationship: behaviour, usage, upgrade timing, care needs — insights that aren’t available in one-off sales.

Financing supports a transaction. Subscriptions support a relationship — one that keeps paying back commercially and environmentally.

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