The Subscription Trap: Why Recurring Revenue Isn’t Always King.

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Oct 2, 2025

In this discussion, Richard Lindner, an expert on recurring-revenue businesses, sheds light on the pitfalls of subscription models. He warns about hidden churn, especially involuntary churn, that can silently undermine profits. Lindner also highlights how subscription services increase customer support demands and necessitate continuous innovation. He suggests pairing content with community to enhance retention and stresses the importance of customer value over just the subscription model itself. This conversation is a treasure trove for anyone considering a shift to recurring revenue.

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INSIGHT

Subscriptions Aren't Universally Right

Recurring revenue looks great because it smooths cash flow and increases valuation.
But subscription is not always the right model for every business or customer base.

ANECDOTE

10,000 Subscribers Then A Wake-Up

One portfolio company rapidly hit 10,000 paid subscribers and celebrated.
The next month they realized churn outpaced new acquisitions and the win felt much smaller.

INSIGHT

Involuntary Churn Is The Silent Killer

Churn has two parts: voluntary cancellations and involuntary failures like declined or expired cards.
Involuntary churn can silently eat a subscription business if you don't proactively manage billing retries and card updates.

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In this episode of the Business Lunch podcast, Host Roland Frasier and guest Richard Lindner break down the subscription trap and why recurring revenue isn’t always the ultimate solution it’s made out to be.

From the outside, subscription models look like a dream: predictable cash flow, higher valuations, and a business that doesn’t start at zero each month. But as Roland and Richard reveal, the reality can be far more complicated.

They dive into real stories from their portfolio companies, showing how recurring revenue can backfire through hidden churn, customer support debt, and endless innovation demands. You’ll hear how even big players like Netflix constantly battle to keep customers engaged, and why smaller businesses often underestimate the true cost of service.

This episode is a must-listen if you’re considering shifting to a subscription model—or if you’ve already launched one and want to make sure it’s sustainable.

HIGHLIGHTS

“Recurring revenue is great… until you’re losing more members each month than you know how to gain.”

“There’s voluntary churn, where people cancel. But the killer is involuntary churn—declined payments, expired cards—that can quietly eat your business alive.”

“If you’re creating content subscriptions, pair them with community. Access is the real value that keeps people sticking around.”

“Don’t fall in love with the model. Define your business by who you serve, not just how you charge.”

Mentioned in this Episode

The difference between breakage vs. consumption models (think Netflix vs. gym memberships)

Why AI in customer support is changing the economics of subscription businesses

How to tell if your business should pursue a bolt-on subscription or avoid it altogether

🎧 Whether you’re launching your first subscription offer or scaling an existing one, this episode will help you see beyond the hype and make smarter decisions for long-term growth.

Timestamps:

00:00 – Intro & The Subscription Trap

02:10 – Should Every Business Go Subscription?

04:58 – Understanding Churn & Retention

07:52 – The Innovation Challenge

10:23 – Cost of Service & Support Debt

13:35 – Smarter Models: Community + Content

19:31 – Key Questions Before You Launch

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Mentioned in this episode:

Join Roland & Ryan at Get Scalable Live

If you’re a founder, CEO, or operator running a 7- or 8-figure business, Get Scalable Live was built for you.

This is not your typical business event. It’s 3 days of hands-on strategy, real-world frameworks, and next-level networking with the smartest operators in the game.

Event Link: https://business-lunch.captivate.fm/gsl

🗓 November 18–20, 2025

📍 San Diego, CA

🎉 Hosted by Ryan Deiss, Roland Frasier, and Richard Lindner

🎧 As a Business Lunch listener, you get 25% off your ticket.

Use code LUNCH at checkout.

Get Scalable Live

Mentioned in this episode:

Join Roland & Ryan at Get Scalable Live

If you’re a founder, CEO, or operator running a 7- or 8-figure business, Get Scalable Live was built for you. This is not your typical business event. It’s 3 days of hands-on strategy, real-world frameworks, and next-level networking with the smartest operators in the game. 🗓 November 18–20, 2025 📍 San Diego, CA 🎉 Hosted by Ryan Deiss, Roland Frasier, and Richard Lindner 🎧 As a Business Lunch listener, you get 25% off your ticket. Use code LUNCH at checkout.

Get Scalable Live