Your Complete Guide to Subscription Billing Systems
Launching a new venture using the SaaS model? You’d be in good company. Adobe, Splunk, Ariba, and Tableau are just a few examples of the many multinational companies who have fully transitioned to selling their services through subscription billing systems over the last few years.
There’s no shortage of reasons why. Whether it’s to improve customer retention or to reduce costs, storage space and maintenance expenses, a cloud-based business model has more than enough benefits. And for startups and business owners, it all begins with choosing the right subscription billing system.
What Are Subscription Billing Systems?
Put simply: they’re tools that help you bill your customers regularly instead of via a one-time fee. It sounds simple enough, but consider that each recurring payment should make use of the following core components:
- Payment gateways: The tool you will use to receive payments. They should allow customers to pay through a variety of options, such as credit card (Mastercard, Visa), alternative payment methods (PayPal, Amazon payments), or even cryptocurrency and offline.
- Merchant accounts: You will need a bank account that recognizes card payments, processes them, and transfers them to your business account.
- Subscription Management (also called “Recurring Billing”): The tool that will work alongside payment gateways and ensure the right customers are charged (and get charged the right amount).
- Analytics: One of the great benefits of the SaaS business model is that all the payment and user data can be tracked and leveraged. Analytics can give you a complete picture of who your customers are and how well your business is performing.
- Dunning tools: Ever wondered how SaaS companies make sure payments don’t bounce? They use dunning tools to actively remind customers to update a card that’s about to expire, or to implement an extra charge for failed payments.
How to Choose the Right Billing Software
Since processing recurring payments is more complex than it seems, many companies used to create their own pick-and-mix solution (also called a billing stack). You’d find hybrid solutions that would combine payment gateways with extra features, chosen on an as-needed-basis.
However, a new breed of billing software is introducing features and functionalities that could make it much easier than ever to create a complete end-to-end solution for processing recurring payments. You just need to determine if it’s right for you by asking the following questions:
- Ease of integration: How quickly and smoothly can you integrate the billing software into your own platform/website/business?
- Flexibility and scalability: What size is your company, and how easy will it be to process more payments as your business grows?
- Payment methods and payment gateways: Does your payment gateway allow for all payment methods you’d like to make available to your customers, or will you need more than one payment gateway?
- Security: are payments secure for customers? And are they properly processed — for instance, in compliance with PCI regulations?
- Customer support: does the billing software company offer 24/7 support? Who can you contact if something goes wrong?
- Pricing: are you after specific features, or do you want a customisable pricing model that adapts to your business needs? Do they charge you per transaction, a monthly fee, or both?
- Business requirements: will you need to enable multiple subscriptions per customer? Or pricing add-ons? Multiple currencies?
An Overview of Three Subscription Billing Systems
When you look at all of the above, it’s easy to be overwhelmed by the available options. Here are three noteworthy options that can narrow it down a little:
Rebilly claims to help businesses get the most profit from every customer, and they have the features to back this claim. Whether you’re a new entrepreneur or an established company pivoting towards SaaS, the number of ways in which you can leverage your sales data with Rebilly can help you gain a true competitive edge.
Strengths of Rebilly
- Payment gateway integration: You can choose from 50+ different gateways, so you can choose a gateway (or multiple gateways) that fit your business, instead of forcing your business to fit a gateway.
- Generous free trial period: Rebilly offers everyone a free trial, and lets new businesses try for free until they earn $1000 in monthly revenues.
- Rich reporting and forecasting: Rebilly lets you pore over complete reports about customers and sales, so you get the complete picture of your business, its strengths and how you can increase profits.
- Rules engine: The killer USP that no other billing software seems to have: Rebilly’s rules engine lets you automate behavior based on key events. For example, you could configure Rebilly to assign a risk score to a transaction based on any parameter(s) you set – location, device type, IP address, etc. The options are limitless, and are built to help your business increase profits and minimize costs.
Weaknesses of Rebilly
- Not currently ideal for ecommerce: If you ship physical goods, Rebilly doesn’t have features like shipping rate calculators or inventory tracking yet.
A subscription billing and management platform focusing on payments that fluctuate in price. If your company often updates its pricing or needs complex billings, this could be an option. Like Rebilly, they work in tandem with payment gateways (although the trial is shorter) and offer a number of integrations and features for managing the customer lifecycle.
Strengths of Chargify
- Quick product and service launch: Creating a new billing offer with Chargify is fast and easy.
- Good for pricing experimentation: Handling complex billing could mean increasing your revenue by combining multiple services and products, for instance.
- Subscription analytics: Getting the complete picture of your subscribers is done through the excellent Chargify analytics dashboard.
Weaknesses of Chargify
- Reporting lacks flexibility: For instance, consolidating reports for multiple currencies isn’t available in Chargify.
- Scalability issues: While perfectly suitable for small startups, Chargify becomes more cumbersome as you expand into new markets and multiply international customers and currencies.
Recurly prides itself on its ease of use, making it a great option for new businesses and smaller startups. They can integrate with a number of payment gateways, and could be a good option for a SaaS business in the growth stage.
Strengths of Recurly
- Easy-to-use subscription management system: Recurly makes it easy to add and remove payment options.
- Good for businesses that are just getting started with a billing system: If it’s your first SaaS venture, Recurly is extremely beginner friendly.
- Many options for quick integration: It doesn’t take long to add new payment gateways to ensure you can accept most payment channels.
Weaknesses of Recurly
- Limited reporting capabilities: While you can export your data to CSV to analyze it elsewhere, it’s a shame the native options are so limited.
It shouldn’t come as a surprise that the billing software market is growing at breakneck speed – predicted to top $16.59 billion by 2021. As an increasing number of startups choose the SaaS model, a new challenge arises: the variety of options to process recurring payments.
Luckily, services like Rebilly and the wide range of features available will make it easier, faster, and more efficient to create recurring billing systems. After all, selling services as software is currently the fastest growing business model for modern companies worldwide – it’s about time you were give the proper tools to reap its benefits.