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April 2025

The Subscription Economy Index

This 2025 edition of Zuora’s landmark report features new data from the 12 months ending December 31, 2024.  

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findings that interest you most.  

The Subscription Economy® Index™ (SEI) report analyzes the growth and resilience of businesses leveraging various monetization models designed to provide recurring growth. Comprised of anonymized, aggregated, system-generated activity on the Zuora Billing service along with publicly available data from 17 selected subscription-based companies, the SEI measures the change in the volume of business for more than 600 companies. In addition to continued growth over the years, the Subscription Economy® has significantly evolved, which has impacted a shift in the scope and approach for this SEI report. This year’s report also includes consumer data, from a Zuora-commissioned survey conducted by The Harris Poll of 3,087 adults in the United States. 

Thriving in the Next Phase of the Subscription Economy: Unlocking Growth through Flexibility and Balance

For two decades, the Subscription Economy has fundamentally transformed how the world consumes products and services. We’ve seen that recurring revenue models can fuel lasting growth by cultivating ongoing customer relationships.  

Yet, looking ahead, sticking to the old subscription playbook may not be enough to optimize growth; having a recurring revenue stream is only part of the equation. AI continues to disrupt how products are built, value is delivered, and new functionalities are monetized. At the same time, as household and corporate budgets tighten, customers are demanding more flexibility and more value for their money. 

In this next phase of the Subscription Economy, growth isn’t just about scaling existing recurring revenue models. Sustainable growth can come from reimagining and remixing business models to align with the rapidly shifting demands of businesses and consumers. Finance leaders, in particular, are on the front line of this evolution, with increasing responsibility to introduce new, sustainable revenue models without breaking the ability to forecast accurately.

For our 2025 report, we detail the top three success levers today’s Subscription Economy leaders, particularly in finance, can employ to capture fresh opportunities and inform their strategies.

Subscription Economy Success Levers

1. Embrace More Flexible Business Models Supported by the Right People, Processes, and Systems

Macroeconomic challenges and tighter capital markets have encouraged businesses to emphasize operational efficiency and sustainable profitability—and companies in the SEI have risen to the challenge.

While there are indications that economic uncertainty may continue, companies in the SEI continued to grow faster than the broader economy over the last two years (represented by the S&P 500), outpacing it with an 11% faster revenue growth rate (Table 1).

Bar chart comparing average growth rates of Subscription Economy Index and S&P 500 sales from 2022 to 2024, showing higher growth in the Subscription Economy each year.
Table 1

This momentum is underscored by a 25% increase in unique subscribers for companies within the SEI over the past two years (Table 2). Recent data from Zuora and The Harris Poll corroborates this trend: an impressive 68% of consumers surveyed said they subscribed to a new service for the first time in 2024. At the same time, most consumers still find their current subscriptions worthwhile: 84% say they’ve received the same (50%) or even greater value (34%) over the past year. And 39% of consumers surveyed have maintained at least one favorite subscription for five or more years, revealing how sustained value builds loyalty and longevity.

Pricing remains a critical component: nearly half (47%) of those who canceled a subscription in 2024 did so because of a price hike, highlighting the importance of balancing pricing strategies with value delivery. 

This was also the most common reason consumers surveyed said they canceled a subscription in 2024. Subscription services are still fueling growth across sectors—from streaming and SaaS to manufacturing and IoT. For example, the percentage of consumers who said they use Generative AI (GenAI) services increased from 28% to 40% in less than a year (from May 2024 to January 2025), with work-related tasks reported as the most common use case. However, monetization remains a challenge, as 64% of consumers say they still aren’t ready to pay extra for GenAI tools, although that figure is gradually decreasing (70% in Zuora’s previous study).
Bar chart showing Subscription Economy Index growth: 100 in 2022, 113.8 in 2023, and 125.1 in 2024. Data from public sources and Zuora for 732 companies.
Table 2

2. A Mix of Revenue Models Improves Resilience and Growth

Last year’s SEI report noted how inflationary pressures in 2023 pushed companies to shift from chasing top-line growth toward a stronger emphasis on retention and value-based pricing. Those who responded quickly by rethinking bundles, introducing usage tiers, or launching new product lines handled the disruption more effectively. This trend has continued to accelerate, with nearly half of top-performing SEI companies employing hybrid approaches, combining a dynamic mix of revenue models.

Stephen Hurrell, Director of Research, Office of Revenue at ISG predicts this number will only continue to increase, asserting , “By 2027, over one-half of all enterprises will deploy a mixed revenue model that includes subscriptions and usage pricing in addition to one-time sales as enterprises make adjustments to remain competitive.”

This strategy continues to pay off. In 2024, companies in the SEI that employed multiple revenue models grew faster than their peers, achieving higher Average Revenue Per Account (ARPA) growth and reduced churn (Tables 3 and 4). Companies with 4+ revenue models achieved 2.3% faster ARPA growth than those with 2-3 models and 4.5% faster ARPA growth than those with only 1 (Table 3). 

Bar chart showing ARPA YoY growth rates for companies with different revenue models: -2.3% for 1 model, -0.1% for 2-3 models, and 2.2% for 4+ models. Data from 715 companies.
Table 3
Additionally, companies with 2-3 or 4+ revenue models saw their churn rates improve between 2023 and 2024 by 0.5% and 0.2%, respectively, while churn rates in companies with a single revenue model worsened by 3.1% during the same period (Table 4). Mark Thomason, former senior research director at IDC, has observed similar findings:  “Implemented correctly, [the hybrid] model can provide desired predictable revenue (and predictable cost to the buyer) while creating an offering that scales in price with delivered value. This strategy also enables companies to reduce SKUs by allowing the price of one SKU to scale across buyer types, thereby reducing selling complexity.”
Bar chart titled "Number of Revenue Models Versus Churn" shows churn rate decrease with more revenue models. Data for 715 companies: 1 model (3.1%), 2-3 models (-0.5%), 4+ models (-0.2%).
Table 4

3. Tailoring and Balancing Your Product Portfolio
Paves the Way for Greater ARPA

While diversifying revenue models supports growth, adding more models isn’t always the answer. Another key lies in optimizing the product catalog to maximize ARPA and retention. Companies that invest time continuously learning from customer buying and usage patterns tend to make more informed decisions about which SKUs to add, remove, or reconfigure, and as a result, are more likely to have customers that spend more and stick around longer. 

We are introducing the Product Portfolio Balance Score (PPBS) to help companies understand if their offering catalog is optimized for ARPA and retention. The PPBS is built on two variables:

  1. The diversity of products and services being offered
  2. How often those offers are sold to customers

Companies with the right amount of differentiated products and that can sell them over and over to existing customers have a higher PPBS and, therefore, higher ARPA. Table 5 shows the relationship between PPBS and ARPA.

Bar chart showing Product Portfolio Balance Score (PPBS) on x-axis versus ARPA on y-axis. Bars increase from 1 at PPBS 0 to 4.5 at PPBS 7 and 3.6 at PPBS 8+, sourced from 715 companies.
Table 5

As a growing number of companies in the SEI have shifted their focus to more customer-centric strategies in recent years, they’ve concurrently honed their ability to balance and align the offerings in their portfolios with subscriber purchasing preferences, leading to a 118% increase in PPBS scores over the last 4 years (Table 6). 

Line chart showing the rise of Product Portfolio Balance Score (PPBS) from 2020 to 2024, with individual data points and a shaded trend line. Data from 1,080 companies.
Table 6

Subscription Economy Success Requires New Finance-Led Strategies

This year’s Subscription Economy Index report suggests that sustainable growth requires more than maintaining recurring revenue streams. Success now hinges on three key factors: embracing flexible business models supported by the right people, processes, and systems; adopting a mix of revenue models to enhance resilience and growth; and optimizing product portfolios to maximize ARPA and retention. 
Company leaders responsible for financial strategy must play a prominent role in shaping these approaches to ensure adaptability and scalability. As market dynamics continue to waver, those who take a proactive, data-driven approach to reimagine their revenue strategies will be best equipped to navigate uncertainty and capitalize on new opportunities in the next phase of the Subscription Economy. Learn more about best practices as you build for future growth.

State of SEI by Industry

Media, Entertainment & Communications companies saw the largest revenue leap in the SEI last year (Table 7). The continued popularity of streaming partly drove this, the most common new service consumers surveyed said they subscribed to for the first time in 2024 (at 37%) followed by music services (24%). This is despite concerns around password sharing crackdowns (51% of consumers surveyed have used someone else’s login; 30% in the past year, according to Zuora data from The Harris Poll).  

Bar graph showing revenue growth rates by industry. Media, Entertainment & Comms has the highest growth at 22.5% (2022-23) and 59.1% (2023-24). High Tech/SaaS has the lowest at 1.9% and 0.3%.
Table 7
Churn leveled off and declined slightly across industries in the SEI after spiking in 2023 due mainly to rising interest rates (Table 8). Particularly in the Media, Entertainment & Communications companies in the SEI, the so-called “Great Unsubscribe” that some industry experts predicted did not materialize, with 27% of consumers surveyed indicating they did not cancel a subscription in 2024.
Bar chart showing churn rate comparisons for High Tech/SaaS, Manufacturing, and Media among years 2022, 2023, and 2024. Data sourced from 599 companies.
Table 8

In 2024, SEI manufacturing companies, including the automotive sector, heavy equipment services, fabrication services, and industry-specific software providers, experienced a notable slowdown in ARPA growth (Table 9). Nevertheless, overall revenue continues to climb (Table 7), primarily driven by new customers eager to adopt software-enabled services and IoT features. While vehicle sales were uneven across different brands, some OEMs still achieved solid results, and the U.S. reached its highest level of car sales in 2024 since the pandemic began. 

Bar graph titled "Subscription Economy Index Manufacturing" showing ARPA growth. Negative values at PPBS 0 (-2.3%) and 1-3 (-7.7%), positive at 4+ (0.2%). Data from 62 companies, 2020-2023.
Table 9

Compared with other industries, High Tech and SaaS companies in the SEI likely have more experience effectively balancing broad product portfolios, which is associated with higher ARPA (Table 10). For example, a B2B software solution may include multiple components such as platform setup (one-time fee), licenses (subscriptions), and add-on fees (usage), all of which may be discounted or bundled to suit the needs of different customer segments. 

Bar chart showing subscription economy index. PPBS scores: 0 (-4.0% ARR), 1-3 (0.6% ARR), 4+ (2.8% ARR). Data from 443 companies.
Table 10

Although Media, Entertainment, & Communications companies in the SEI experienced rapid revenue growth last year, their PPBS measures are skewed towards the lower end of the scale (Table 11). This could be due, in part, to the fact that the nature of their business doesn’t necessarily require a large catalog of offerings. 
A streaming service, for example, may price one product in three different ways. On the other hand, publishing media is trending towards larger product portfolios, bundling and unbundling, or adding and removing SKUs as needed to help grow and preserve their customer base. 

Bar graph showing ARPA growth for Media, Entertainment & Communications by Product Portfolio Balance Score: 2.1% for 0, 1.8% for 1-3, and 1.6% for 4+. Data from 94 companies.
Table 11

Definitions and Terminology

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High Tech & SaaS:

The High Tech and Software as a Service (SaaS) Index includes hardware companies, providers whose software is accessed via the cloud, and monetized via subscriptions, including traditionally perpetual software shifting to SaaS. This includes SMB SaaS, B2Every SaaS, and Enterprise SaaS companies. 

A male medical professional in scrubs holds a tablet. Beside him is a CT scanner in an examination room.

Manufacturing:

The Manufacturing Index includes fabrication services, heavy equipment services, automotive companies, industry-specific software providers, industrial design, and tool manufacturers. 

Upward view of modern glass and steel buildings against a cloudy sky, framed by a circular green border.

Media, Entertainment & Communications:

The Media Entertainment & Communications Index includes content providers, over-the-top (OTT) streaming media companies, television and radio broadcasters, telecommunications companies, cable operators, gaming companies, search and navigation services, editing services, and production companies. It also includes publishers of newspapers, magazines, and books, as well as educational content providers, and corporate research providers. 

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Account Churn Rate:

Also known as the rate of customer attrition or customer churn, this is the rate at which customers stop doing business with a company over a specific period of time. This is calculated by dividing the number of attrited or churned customers over the time period by the total number of customers at the start of the time period, then multiplying by 100. 

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Average Revenue Per Account (ARPA) Growth:

This represents the quarterly growth in annualized average revenue per account, where the average revenue per account is calculated by summing up the last 12 months of billed recurring revenue and dividing by the number of active subscribers at the end of that 12-month period. 

Black and white image of an office scene. One person in a wheelchair works on a laptop, one is walking, and another person is reading on a tablet. Overlaid with diagonal lines and a teal circle.

Product Portfolio Balance Score (PPBS):

Measures the entropy of the distribution of catalog elements. An increase in the PPBS indicates a more effective, balanced portfolio as the distribution becomes more evenly spread across multiple products that both increase ARPA and reduce churn. 

Methodology

To maintain continuity with the previous SEI reports, this report contrasts the revenue growth rate of Subscription Economy companies with the S&P 500, representing the wider economy (both subscription and non-subscription businesses). However, we have expanded the relevant set of Subscription Economy companies to include—unlike previous reports—additional publicly available data for companies that are not Zuora customers, in addition to Zuora data.
As business models based around subscriptions or with a subscription component have become nearly ubiquitous, we have also decided to de-emphasize the analysis of the Subscription Economy as an alternative to “non-subscription businesses” as this is no longer a meaningful default category. 

The report also leverages proprietary Zuora data to present new metrics and analyses that allow us to discuss insights and statistical patterns through an updated analytical lens. The graphics in this report are, therefore, of two distinct types: “big picture” graphs looking at both Zuora and non-Zuora companies for a larger-scale view of trends, and “zoom-in” graphs leveraging information only available about Zuora customers. The footnote included in each graph clarifies in every case the relevant sources.
For this report, “Subscription Economy Index companies” consist of Zuora customers and specific companies and services (whenever estimates of their disaggregated revenues or size could be obtained) selected for their market significance (see the second and third bullet points below). 

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Data Sources

    
  • Revenue growth rates for the wider economy were proxied through publicly available financial data about S&P 500 revenue growth. 
  • Data for revenues and subscribers (or the equivalent concept) for the “Subscription Economy Index companies” was obtained during the first two weeks of January 2025 from public data sources (primarily Business of Apps ) for a manually selected representative set of companies and services: Amazon Prime Video, Apple Music, ChatGPT, Disney+, Duolingo, Hinge, Hulu, Netflix, Peloton, Roblox, Slack, Soundcloud, Spotify, Tinder, Tuby, Youtube.
  • To augment the “Subscription Economy Index companies” data set and to power the more detailed analysis, we leveraged billing and subscription information for 1890 Zuora customers.
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Metrics

Common metrics

  • Revenue and subscriber (or equivalent) metrics for SE/all graphs are drawn directly from external sources.
  • Revenue metrics for Zuora customers are taken from their billing/payment data in our internal databases and converted to USD at that month’s exchange rate.
  • ARPA metrics for Zuora customers are calculated by the ratio between total annual revenue and the number of subscriptions active during the year.
  • Churn metrics for Zuora customers are calculated based on the number of accounts active in a calendar year and not active in the following one.

 

Revenue models 

The individual charges used to build every subscription in Zuora are marked by the customers’ team with a type corresponding to a given revenue model: One time, Recurring, Usage, etc. Metrics related to the Number of Revenue Models count the distinct revenue models present across all charges in all subscriptions in a given year.

 

Product Portfolio Balance Score

The Product Portfolio Balance Score is a proprietary metric that looks at how many charges of each type (not revenue model, but the individual charge name) are present across the subscriptions of a customer during a given year, and calculates from this data a single number that balances between the size of the portfolio (the more different charges, the better) and its balance (the more charges used very sparingly, the worse).

In formal terms: 

Mathematical equations and explanation of the Product Portfolio Balance Score (PPBS) with examples of subscription sales and calculations.

The Harris Poll Consumer Data

Consumer research included in this report was conducted online by The Harris Poll on behalf of  Zuora between January 8-10, 2025, among 3,087 U.S. adults 18+. Data were weighted where necessary by age, gender, region, race/ethnicity, household income, education, marital status, size of household, and propensity to be online to bring them in line with their actual proportions in the population.

Respondents are selected among those who have agreed to participate in our surveys. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. The sample data is accurate to within ± 1.8 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest.

All sample surveys and polls, whether or not they use probability sampling, are subject to other multiple sources of error which are most often not possible to quantify or estimate, including, but not limited to, coverage error, error associated with nonresponse, error associated with question-wording and response options, and post-survey weighting and adjustments.

 

Forward-Looking Statements

This report contains forward-looking statements that involve a number of risks, uncertainties, and assumptions, including but not limited to statements regarding the expected growth and trends of recurring revenue-based companies, such as subscriptions (including companies in the SEI report) and non-recurring revenue-based companies. Any statements that are not statements of historical fact may be deemed to be forward-looking statements, and actual results could differ materially from those stated or implied in forward-looking statements.
This report also includes market data and certain other statistical information and estimates from industry analysts and/or market research firms. Zuora believes these third-party reports to be reputable but has not independently verified the underlying data sources, methodologies, or assumptions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and may differ materially from actual events or circumstances.  

Definitions & Terminology

The Subscribed Institute

Zuora’s Subscribed Institute is a dedicated think tank that supports 1500+ business executives across 1000+ global companies with critical research, ideas, events, and connections. Research provided by the Institute helps business leaders and their organizations maximize the opportunities of the Subscription Economy. More at subscribedinstitute.com.

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