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Products｜Understanding Product Types

In Subotiz, product types are used to categorize products. Selecting the correct product type ensures that billing, reporting, and data tracking remain consistent across all transactions.
For merchants selling digital products, subscriptions, or software services, proper product classification helps maintain structured product data, improve subscription management, and ensure accurate financial reporting.
 

Purpose of Product Types

Each product in Subotiz is assigned a product type that reflects what is being sold. This classification supports consistent handling of billing logic, reporting, and transaction data across the system.

 

Available Product Types

  1. Software as a Service (SaaS)
    • Definition: Subscription-based software delivered online without local installation.
    • Key Characteristics:
      • Cloud-hosted, multi-tenant structure with on-demand access.
      • Billed monthly or yearly through recurring subscriptions.
      • Maintenance, updates, and security handled by the vendor.
    • Tax Consideration: Typically treated as a digital or cloud service and may be subject to VAT or GST.
    • Examples: Salesforce (CRM SaaS), Zoom (video conferencing).
 
  1. Software
    • Definition: Downloadable or licensed software installed on a user’s device.
    • Key Characteristics:
      • One-time or perpetual license purchase.
      • May include update or maintenance options.
    • Tax Consideration: Classified as software sales, often subject to copyright-related tax rules.
    • Examples: Adobe Photoshop, AutoCAD, locally installed AI software.

 
  1. Online Video Content
    • Definition: Digital videos offered via streaming or download, including courses, films, or live broadcasts.
    • Key Characteristics:
      • Distributed via subscription (SVOD) or pay-per-view (PVOD).
      • Involves content licensing and usage rights.
    • Tax Consideration: Categorized as digital content services; entertainment or copyright taxes may apply.
    • Examples: Netflix, MasterClass.
 
  1. Information Service
    • Definition: Digital products that deliver data, reports, or analysis.
    • Key Characteristics:
      • Frequently updated, emphasizing accuracy and timeliness.
      • May include API access or subscription-based delivery.
    • Tax Consideration: Often treated as information service fees; rates differ by content type.
    • Examples: Bloomberg Terminal, Statista (data platform).
 
  1. eBook
    • Definition: Electronic books or publications readable on digital devices.
    • Key Characteristics:
      • Distributed in formats such as PDF or EPUB, often with DRM protection.
      • Includes novels, textbooks, and academic works.
    • Tax Consideration: Some countries offer reduced VAT/GST rates equivalent to printed books.
    • Examples: Kindle eBooks, WeChat Read.
 
  1. Digital Graphic or Template
    • Definition: Downloadable design assets such as PowerPoint, PSD, or marketing templates.
    • Key Characteristics:
      • Must specify commercial licensing terms (personal or enterprise use).
      • Commonly used in creative, marketing, and design fields.
    • Tax Consideration: Treated as digital goods sales, possibly subject to design copyright tax.
    • Examples: Canva (template marketplace), Envato Elements (design asset library).
 
  1. Video Game
    • Definition: Interactive software including downloadable games, add-ons, or subscriptions.
    • Key Characteristics:
      • Includes base games, DLCs, and virtual currencies.
      • Supports multiple devices or platforms.
    • Tax Consideration: In some regions, digital or gaming taxes may apply to in-game purchases.
    • Examples: Genshin Impact, Steam platform.
       
  2. Blockchain Digital Products
    • Definition: Unique digital assets recorded on blockchain, such as NFTs or virtual land.
    • Key Characteristics:
      • Tokenized ownership verified through smart contracts.
      • May include secondary-market royalties.
    • Tax Consideration: Emerging category; often treated as digital assets and subject to capital gains tax.
    • Examples: Bored Ape Yacht Club (NFT), Decentraland (virtual real estate).
       
  3. Other Digital Products
    • Definition: Virtual goods not covered by the above categories, such as tickets or audio services.
    • Key Characteristics:
      • Requires clear licensing and usage information.
      • Supports flexible pricing structures and classification rules.
    • Tax Consideration: Custom tax rules may apply depending on the business model.
    • Examples: Spotify (music streaming), Eventbrite (digital ticketing).
       

Best Practices

  • Select the correct product type: Assign the most accurate type when creating or updating products to ensure consistent reporting and analytics.
  • Plan for regional differences: Consider variations in VAT and GST requirements across different markets.
  • Maintain compliance records: Keep valid licensing and ownership documentation for all digital and software products.
  • Use consistent naming conventions: Align product names, SKUs, and types for easier reporting and reconciliation.
 
Choosing the right product type helps ensure consistent classification, accurate reporting, and reliable billing. A well-structured setup also makes it easier to manage your product catalog as your business grows.