There used to be a time when pricing for products and services was straightforward and businesses would set a specific amount to be paid in exchange. But now this method of pricing is getting old due to the availability of technologies like software-as-a-service (SaaS).

When we talk about SaaS technology, the customers pay a fixed recurring fee. The SBB (subscription-based billing) model is quickly getting popular in the hardware, IT consulting, and consumer goods and services industry. In the modern digital market, you can find almost every enterprise offering products in the form of ‘as a service’ including mining, transport, insurance, and more.

For example; Amazon allows customers to buy products in the form of subscriptions. The buyer can even subscribe to a soap purchase for a year, where the customer can enjoy reduced pricing. The payments can be easily done by credit cards.

Why look for a subscription billing platform?

When we talk about an efficient SBS (subscription billing system), then it goes far beyond just being Billing software. You need a solution that is influential and can also help in your business growth. You can look for the below-given capabilities separately.

• Product capabilities
• Service capabilities

The most common pricing models prevalent nowadays are

• Usage-Based Pricing: This is determined by the amount of service consumed. In the case of TSPs, the services are bandwidth, data, etc. The usage can fluctuate from one month to another.
• Standard Subscription Pricing: In this model, the customers have to pay the same amount for a definite interval for a defined level of service.
• Freemium Pricing: This model is to offer the customers the base features of a product/service for free. To unlock the new functionalities, the user needs to purchase the product.
• Hybrid Pricing: Here the standard subscription and usage-based pricing model are combined. There’s a flat recurring fee with an additional consumption fee if the usage exceeds a predefined level.

Enterprises that utilize managed services billing model or a hybrid model find the subscription billing model absolutely necessary. The reason is that this type of billing is known to automate the invoicing procedure. With the subscription model, there’s no need to send bills manually and if the customer agrees, the bills can even be deducted automatically from the bank account. As a result, the organization can enjoy more free time and resources and even the customers don’t have to waste time on billing messes anymore.

What about multiple payment models and pricing structures?

Enterprises that use SBB models can comfortably add new pricing structures and payment models. It can manage recurring and non-recurring payments made on the basis of renewal terms that are agreed upon by both the provider and the consumer.

How the payments are tracked and managed with the subscription billing model?

With such a billing model comes an unprecedented level of visibility accompanied by management tools for all types of payments (recurring and non-recurring). Thus, a business can view the entire billing cycle from invoice to payment in a single place. Apart from that, providers enjoy complete control over when the bills are generated and what type of notifications are sent to the users to assure timely payment.

What are the product capabilities expected of a subscription billing system?

To effectively manage the changes across a growing subscriber base, the subscription billing solution must have the following product capabilities:

• Subscription Management: The system should be able to support subscription plans based on contract length and pricing including addon benefits. It should also manage trials and offer promotions.
• Recurring Billing: Ask the provider if the solution can support one-time, recurring, and usage-based charges or not. The solution should be able to incorporate one or all the types of charges.
• Dunning Management: With this feature, the providers don’t have to manually check accounts for declined charges. The customers will automatically get updates for declined payments. This is helpful for subscription businesses experiencing a high volume of transactions.
• Accounting and Taxes: It is expected from the billing platform to automatically calculate tax based on the region the services are being offered.
• Reporting and Analytics: The solution is already responsible for collecting revenue; hence it is also expected from it to deeply analyze and generate reports.
• Integrations: The billing system being a core component of the revenue operations tech stack is required to be integrated with other business software.
• Security and Compliance: Only the best-in-class security and compliance levels are expected from a billing solution.

What are the service capabilities expected of billing software?

Apart from the product features, you want to work with a vendor that can offer much more than just a good product. Here’s what your billing system should help you with:

• Go to Market Faster: Doesn’t matter if you are launching a new feature or expanding into the market, the only way to beat the competition is to move first.
• Unmatched User Experience: The solution should have user-friendly payment options including mobile payment options. The checkout page must load within the window without any need to redirect
• Self-serve Workflow: Customers want a self-service portal that can help them manage their subscriptions with ease.
• Versatile Billing: The tool must be able to automate the billing logic defined on a user so that time and effort can be saved.

With a fully-fledged SBS, you can handle all the front and back-office processes in one place. So, it’s crucial to pick the one that can help in managing tangible and non-tangible goods all in a single contract.

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