Zuora released its 2025 Subscription Economy Index (SEI) this week, offering fresh insight into how subscription businesses are navigating a period of economic uncertainty and rapid technological change. Drawing from data across more than 600 companies and a consumer survey of over 3,000 U.S. adults, the report finds that companies in the SEI grew revenue 11% faster than the S&P 500 over the past two years.

Despite macroeconomic headwinds, demand for subscriptions remains strong. The report highlights a 25% increase in unique subscribers and finds that 68% of U.S. consumers subscribed to a new service for the first time in 2024. Meanwhile, 84% say they’re getting the same or more value from their subscriptions year-over-year, signaling that well-managed services continue to deliver.

Still, the SEI warns that simply offering a recurring model isn’t enough. Consumers are becoming more price sensitive, with nearly half of cancellations attributed to price hikes. And while the adoption of generative AI services is on the rise (40% of consumers used GenAI services in early 2025), 64% remain unwilling to pay extra for them—creating a monetization puzzle for providers.

Zuora’s new Product Portfolio Balance Score (PPBS) adds another layer of analysis, measuring the diversity and frequency of product offerings to evaluate ARPA (Average Revenue Per Account) potential. Companies with a high PPBS saw a 118% increase over the past four years, correlating with stronger ARPA and retention rates.

INSIDER TAKE

The 2025 SEI confirms what many in the subscription space are already sensing: growth is still very much alive—but it’s more nuanced than ever.

Three strategic shifts stand out:

1. Hybrid monetization models are outperforming: Companies using four or more revenue models saw 4.5% faster ARPA growth and lower churn compared to those with a single model. The lesson? Diversifying your revenue streams—whether through one-time charges, usage-based billing, or bundles—is a critical hedge in today’s environment.
2. Pricing can’t be set and forget: With 47% of cancellations tied to price, subscription leaders must walk the line between margin and value. The report reinforces the need for finance teams to lead pricing strategy alongside product and customer experience teams.
3. Smarter product portfolios drive retention: The new PPBS metric is a timely addition. It encourages subscription businesses to optimize—not overload—their catalogs, aligning offerings with customer behavior and maximizing return on each account.

This year’s report also notes industry-level variations: Media and entertainment saw the fastest revenue growth, but lagged in portfolio diversity, while High Tech and SaaS companies led on ARPA and PPBS—highlighting their experience in balancing modular, customizable offerings.

Bottom line: The Subscription Economy is maturing. Growth is no longer just about acquiring subscribers—it’s about retaining them with smarter monetization design. That means rethinking how value is packaged and priced, and ensuring finance is at the helm of transformation.