Let’s say you make your own candles at home and sell them at local craft shows. Everyone loves them, you always sell out, and people are constantly requesting new scents. They also ask if they can buy them online, since you live in a touristy area. You’ve really begun to make a name for yourself, so to increase your revenue, you decide to create an eCommerce service that will send a new scented candle to customers monthly – reaching those who can’t or don’t regularly attend craft shows. Congratulations, you’ve just started a subscription box service!
So what is a subscription box service? It’s a revenue model built around product kitting – customers receive products on a regular basis and make recurring payments. This is also known as "replenishment" or "curation" subscription services, and according to McKinsey & Company, they make up 87% of the business. In this model, customers can generally select the frequency of their shipments and renew or cancel their subscription at any time.
The best subscription box services are all about building long-term customer relationships versus serving one-off customers. With a subscription box service, a customer's value to the business increases each month (or however often they receive shipments).
Whether you’re a food box subscription service or a makeup subscription service, the key to a successful subscription box business model is ensuring that customers continue to see value in your offers. If they do, they will continue to pay each month and you can maintain your profit margins.
While the subscription model based upon recurring payments is the most common service, there are three other methods employed by subscription businesses.
This is a common subscription model that offers multiple versions of each box with varying levels of value. This lets companies target a wider range of people, with different income levels or varying needs and wants. It’s also a great way to upsell; someone comes in at a lower tier, loves the product, and then upgrades to the next tier.
This subscription model has fluid rates; prices may increase or decrease between payment periods based on subscriber growth, the general economy, or rising costs. While most people will accept some increases over time, if it happens too often or the adjustment is too drastic, they may cancel their subscription.
Also known as "access subscription models" and most common in the software industry, this model lets customers try a product for free but with limited access to features. The intent is to get them to upgrade to a paid version, which will allow them full access to the service. The drawback, of course, is that many people may opt not to upgrade.
So, can you really make money with a subscription box service? Certainly! Though it varies greatly by industry, most subscription boxes have a profit margin of 40-60%. This number is often greater if you offer tiered pricing as described previously.
While subscription box services are based on recurring payments, you may have an opportunity to make more with one-time purchase options. A good example of this would be ThredUp. This clothing subscription box company sends customers ten items of hand-picked clothing each month to try out. Customers can then return all the items after 30 days or can purchase items they love for an additional one-time fee. With this model, the business is guaranteed the monthly subscription fee and can make additional revenue when one-time purchases are made.
Once you’ve validated your idea and roughly mapped out pricing, it’s tempting to jump straight into full production. A more sustainable approach is to treat your launch as its own small project: build a realistic prototype, test demand, set a clear shipping calendar, and practice fulfillment on a controlled batch before you scale.
Start by assembling a prototype that mirrors what subscribers will actually receive: similar product mix, quantity, and overall value. This doesn’t have to be your exact first-month inventory, but it should be honest.
Use this prototype for photography, influencer outreach, and early feedback. It will also help you sanity-check your cost assumptions when you see everything together in a physical box.
Before you commit to large inventory orders, run a small prelaunch. A clean landing page, a few strong images of your prototype, and a simple email form are enough to test interest. Share it with your existing audience, relevant communities, and early partners.
Your goal here is to collect a first wave of subscribers or highly interested leads, not to build a perfect website. The numbers you see, sign-up rates, waiting list size, and feedback, will tell you if your offer resonates before you scale up.
Subscription customers care deeply about “when” as well as “what.” Decide upfront when you’ll bill, when your order cutoff happens, and when boxes will ship. Then communicate those dates clearly on your product page, in your checkout copy, and in your confirmation emails.
A reliable calendar reduces “Where’s my box?” support tickets and helps you coordinate with your fulfillment center. If you work with a partner like The Fulfillment Lab, aligning your billing and shipping schedule with their cutoffs will help you maintain predictable same-day or fast turnaround where applicable.
Before you open the floodgates, run through the full process, from order import to kitting, packaging, and carrier pickup, on a smaller batch of orders. Treat this as a dress rehearsal.
Look for bottlenecks: unclear SKUs, packaging inconsistencies, label issues, or delays between billing and shipping. Fixing those early will make your first “real” launch feel smooth to customers and easier for your team or 3PL to repeat month after month.
Most subscription box services either provide people with an item they need regularly, without the hassle of trekking to the store, such as the Dollar Shave Club or the contact lens service Hubble. Others allow people to try out different products regularly; for example, Bean Box will send coffee-lovers different blends to try out each month, while Stitch Fix will send guys new attire to wear and return, always keeping them looking their best!
Here are some things to keep in mind when developing your subscription box business plan.
Although the subscription box business is booming, it’s only going to work if you have something to sell that someone needs fulfilled regularly, or allows them to try out something new. Figure out what your specialty is and then determine if it would make sense to offer it as part of a subscription service.
There is a lot of competition out there when it comes to subscription box services, but that doesn’t mean you can’t take on other companies (two of the top subscription box services, Blue Apron and Hello Fresh, offer a similar product/service).
For every BarkBox there is a Chewy, and for every Dollar Shave Club, there is a Harry’s. However, if you’re able to dominate a category from the start by offering something truly unique, you’ll be way ahead of the game.
As with any product or service, you need to know who you’re marketing toward and understand why they’d want this product or service in the subscription model format.
Is your customer a wine aficionado who wants to try out different flavors without the commitment of a purchase? What would motivate someone to subscribe? How much is your target audience willing to spend on a monthly subscription? These are questions you need to be asking yourself.
Subscription box services can live or die based on price. You need to price your box low enough to be competitive, but you need to price it high enough to turn a good profit! That’s not all. You’ll also want to consider the cost of the box itself, packing materials, inserts, postage and shipping, and transaction and platform fees. Because of the importance of getting pricing just right, we've written a whole other section on it in the next section!
Now that you know what you want to send, and who you’re going to send it to, how do you get it to them? Making regular trips to the post office or other carrier won’t sustain your business for long, especially as you grow. A fulfillment center can store your product, and ship it out at regular intervals to your customers. By allowing the fulfillment center to handle this task, you’re able to spend more time on efforts that grow your business!
Getting a customer to try your box once is a win. Keeping them subscribed for months or years is where subscription businesses really grow. The difference usually comes down to the experience you deliver around the product: the promise you make, the unboxing moment, and the follow-up after delivery.
Before anyone hits “Subscribe,” they need to understand what they’re getting and why it’s worth repeating. That might mean “a new candle scent to match every month’s mood,” “healthy snacks you don’t have to think about,” or “styling help so you always have something new to wear.”
When your promise is clear and specific, it’s easier to curate each month’s box and easier for customers to decide if they should stick around. A vague promise leads to vague expectations, and often faster churn.
For many subscribers, unboxing is the highlight of the experience. The products matter, but so does how they arrive. Well-designed boxes, consistent branding, thoughtful fillers, and a clean presentation tell customers you care about every detail they’re paying for.
Even small touches, like grouping items logically, including a card that explains the theme, or placing one “hero” product on top, make the box feel intentional rather than thrown together. Over time, those experiences can turn into user-generated content and unboxing videos that bring in new subscribers organically.
You don’t need to redesign your entire product line to make the experience feel personal. Data-backed packaging and inserts can do a lot of the heavy lifting. With the right fulfillment tools, you can trigger different box designs, postcards, or coupons based on things like location, order history, or subscriber tenure.
For example, first-time subscribers might receive a welcome message explaining how the subscription works, while long-term subscribers receive a loyalty thank-you and a sneak peek at what’s coming next. Seasonal messages, birthday offers, and tailored recommendations all help the box feel like it was built just for that customer, even when you’re shipping at scale.
The experience shouldn’t end when the box lands on the doorstep. A simple follow-up email asking, “How did we do this month?” can surface product feedback, uncover shipping issues, and highlight fans who are ready to leave a review.
You can use that feedback to refine future boxes, improve product selection, and fine-tune your fulfillment process. Over time, this builds a feedback loop where each shipment gets a little better, and each subscriber has one more reason to stay.
The average subscription box price varies by industry. Curated or higher-value boxes may go upward of $100, while some boxes start at under $10 to incentivize new customers. Here’s a good rule of thumb for pricing boxes with a list of subscription box services that fit each bill:
Of course, when pricing a subscription box, you can’t just look at comparable items (though that’s a good start). After taking a look at the competition, you need to determine your margin. There are two kinds of margins that will be relevant to your subscription box business.
When calculating your margin, you can break expenses down into three categories: product costs, operational costs, fulfillment costs, and customer acquisition costs.
After you’ve crunched the numbers, here’s how to your calculation:
Revenue – (Product Costs + Fulfillment Costs + Operational Costs + Customer Acquisition Costs) = Profit
Profit / Revenue = Net Margin
Once your subscription box is live, decisions should be driven by more than gut feeling. A handful of core metrics will tell you whether your pricing, product, and fulfillment strategy are working, or where you need to adjust.
Monthly Recurring Revenue is the total predictable subscription revenue you generate each month. To find it, multiply your active subscribers by their average monthly subscription price.
Tracking MRR over time helps you see whether your business is growing, stalling, or shrinking, and how changes to pricing or plans impact your revenue baseline.
Average revenue per subscriber shows how much, on average, each subscriber contributes in a given month. You can calculate it by dividing your MRR by your total number of active subscribers.
This is particularly useful if you offer multiple tiers or add-ons. If you improve your box content or introduce upsell opportunities, you should see this number move in the right direction.
Churn rate measures how many subscribers cancel in a specific period. To keep it simple, take the number of canceled subscribers in a month, divide it by the number of subscribers you had at the start of that month, and multiply by 100 to get a percentage.
If churn is high, it’s usually a sign that something about your offer, pricing, product quality, or experience isn’t matching expectations. Improvements to unboxing, shipping reliability, and personalization can all help bring churn down.
Customer Acquisition Cost is the average amount you spend to win a new subscriber. Add up your sales and marketing expenses over a period and divide by the number of new subscribers you gained in that same time.
Knowing your CAC keeps you honest about how aggressively you can advertise and which channels are truly profitable in the long run.
Customer Lifetime Value estimates how much gross profit a typical subscriber generates over the entire time they stay with you. A simple way to approximate it is to multiply your average monthly profit per subscriber by the average number of months they remain subscribed.
Comparing LTV to CAC gives you the LTV:CAC ratio. Many subscription businesses aim for a ratio of at least 3:1, meaning you earn roughly three times more from a subscriber than it cost to acquire them. That balance indicates that your growth is sustainable rather than driven by overly expensive customer acquisition.
Beyond classic subscription metrics, a few operational KPIs sit closer to the warehouse but still impact your bottom line: on-time shipment rate, error rate (wrong or missing items), and damage rate in transit. Higher accuracy and fewer issues usually translate into better reviews, lower churn, and higher LTV.
If you work with a fulfillment partner, these are metrics you should review regularly together. Incremental improvements can pay off quickly when you’re shipping hundreds or thousands of boxes every month.
Offering convenience, personalization, value, and novelty, the subscription box industry is booming, experiencing an even bigger lift when COVID kept people at home, and it's not slowing down. By 2023 the industry was valued at about $31 billion, forecast to exceed $145B by 2032, and people love their subscription boxes.
“I love getting packages in the mail,” says Ramona Sukhraj. “It doesn’t matter what season it is, a package makes any day feel like Christmas morning. Fighting through bubble wrap, taking inventory of the goods, maybe laying them out for an Instagram photo.”
So, is now your time to get into the subscription box business? If so, The Fulfillment Lab can help! At The Fulfillment Lab, we can help you to save money on eCommerce subscription box shipping costs. We also offer fulfillment marketing – providing tailored customer experiences through customized packaging, inserts, labels, coupons, and more.
This makes it possible to deliver a more personalized, unique customer experience that won’t soon be forgotten – it can even lead to a viral unboxing video, bringing more attention to your brand! Be sure to check out our blog 10 Reasons You Should Outsource Subscription Box Fulfillment and then contact us to learn more about how we can boost your business and your bottom line!
A subscription box is a recurring delivery of curated products built around a theme, interest, or need. Customers pay a regular fee, usually monthly, to receive each shipment. For brands, it’s a way to turn one-time buyers into repeat customers with predictable revenue and ongoing engagement.
To start a subscription box business, you’ll first define your niche and subscription model, then validate demand with a simple prototype and prelaunch list. From there, you’ll finalize pricing, choose a platform to manage subscriptions, and set up fulfillment so your boxes go out on a clear, reliable schedule. Partnering with an experienced fulfillment center can help you move quickly while keeping operations under control.
A subscription box business is any company that sells physical products on a recurring basis rather than as one-off orders. Instead of customers placing separate orders every time they need something, they subscribe once and receive regular deliveries. The business model is built on recurring revenue, long-term customer relationships, and efficient fulfillment.
A good subscription box consistently delivers more perceived value than it costs. That usually means well-chosen products, a clear theme, reliable shipping, and a memorable unboxing experience. Over time, personalization, thoughtful inserts, and smooth operations keep the box feeling fresh and make subscribers excited to see it on their doorstep each month.
Starting with truly no budget is difficult, but you can launch lean. Many founders begin by building an audience first, using a prototype box, pre-orders, and small initial batches instead of investing heavily in inventory. By validating demand early and using an outsourced fulfillment partner, you can avoid renting your own warehouse and only pay for storage and shipping as orders come in.
Creating a subscription box service involves four main pieces: your offer, your technology, your operations, and your marketing. You’ll define what goes in the box and how often it ships, choose an eCommerce and billing setup to manage recurring orders, and either build or outsource fulfillment so boxes are packed and shipped accurately. Finally, you’ll promote your service through channels like email, social media, and partnerships to bring in your first wave of subscribers and grow from there.