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- Why Smart Brands Are Ditching Subscriptions...
Why Smart Brands Are Ditching Subscriptions...
Subscription models can destroy cash flow... unless you play it smart.
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Every founder dreams of recurring revenue.
Monthly predictable income, higher LTV, really just the holy grail of DTC business models.
But there’s one factor nobody really talks about…
That subscription models kill more DTC brands than they save.
Many DTC subscription models face double-digit monthly churn rates…
Even the most "successful" subscription brands see 40-50% of customers churn within the first month.
And most founders don't run it until they're already bleeding cash.
In this email, we're breaking down:
Why subscription CAC vs retention math destroys most DTC brands
The specific product categories where subscriptions actually work & where they're sabotaged
The simple calculator that tells you if your business can handle recurring revenue
Let's dive in.
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The Subscription Math That Kills Brands
So many founders see subscription success stories and think the model is magic…
But the unit economics tell a completely different story.
Here's how it typically looks:
Your CAC is at $50, and customers subscribe for $30/month… Looks profitable, right?
Month 1: 40-50% churn immediately, and you're already underwater.
Month 2-3: Another 10% monthly churn on top of that.
Month 4: You realize you need customers to stay 6+ months just to break even.
The problem here is that eCommerce brands need at least a 3:1 LTV: CAC ratio to be profitable.
But with high churn rates, that ratio becomes impossible to achieve…
71% of subscribers cite price increases as the top reason for canceling.
40% of consumers already feel they have too many subscriptions.
And just like that, your "predictable" revenue becomes predictably unprofitable.
Product Categories That Actually Support Subscriptions
Not all products work for subscription models.
After analyzing hundreds of DTC subscription attempts, there’s clear patterns that have shown…
What works:
Access models win, with churn at just 5–8% because people stick around for the convenience they use every day.
Pantry supplies, cleaning products, and skincare essentials also work because they're true consumables with predictable usage patterns.
What fails:
Clothing subscriptions hit 10.54% monthly churn because fashion preferences are personal and unpredictable.
Curated boxes fail because novelty wears off, and 42% of subscribers cancel due to a lack of personalization.
Now, IF your business has any use of a subscription model…
You’d need to answer "yes" to all of these questions below:
Does your customer consume/use up the product on a predictable schedule?
Is reordering the same product a benefit, not a burden?
Is your gross margin high enough to absorb 6+ months of CAC payback?
If any answer is "no", subscriptions will likely hurt more than help.
The Subscription Readiness Calculator
Before launching any subscription model, run through this simple checklist:
Step 1: Calculate True CAC
Include all costs to acquire a subscriber, not just ad spend.
Factor in free trials, onboarding costs, and first-order discounts.
Step 2: Estimate Realistic Churn
Healthy subscription churn is under 5% monthly. (Below 3% is ideal for scaling)
Most DTC brands see 8-12%.
Step 3: Calculate Months to Break Even
CAC ÷ (Monthly Revenue - COGS) = Break-even timeline.
If it's more than 4-5 months, you're playing with fire.
Step 4: Stress Test
Ask yourself…
What if churn is 2x higher than projected?
What if CAC increases by 50%?
Can you still hit the 1:3 CAC-to-LTV ratio?
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Final Thoughts
Subscriptions aren't inherently bad, but they're not DTC magic either.
The brands that succeed with subscriptions have products that naturally fit the model, margins that can absorb high CAC, and realistic expectations about churn.
Everyone else is just subsidizing customer acquisition with investor money until the runway ends.
Before you chase recurring revenue, make sure you can afford the recurring costs.
Run the math right.
Be honest about the churn.
And remember… One-time profitable customers often beat loss-making subscribers.
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This is why we have:
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Some of our recent wins:
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Interested in learning more? 👉 » Let’s see if we’re a good fit « 👈
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Thank you for reading! I appreciate you.
Until Next Time ✌️
- Kody