Note: An up-to-date blog post, including updates of many of the topics below, is now available: Buy vs. Build: The Subscription Billing Iceberg Effect
Unless your startup is supported entirely by advertising, you need (or will eventually need) a billing system: a way to securely and efficiently accept payment from your customers. The only question is: build it or buy it? Unfortunately, there is no “one size fits all” answer to this question – the choice is entirely dependent on your own unique circumstances. If you aren’t sure which way to go, assess where your startup stands on the following issues:
The first factor affecting whether to build or buy a billing system is time sensitivity. Do you need a billing system immediately? How about in the next 30-60 days? If so, it probably makes more sense to buy, as your short time horizon will not be tolerant of mistakes or project setbacks. A few extra weeks of development time (which is quite common in software development) could be ruinous to your business if you need a billing system right away.
The less urgency there is, the more it potentially makes sense to build instead of buy. Delays and obstacles in the development process (though certainly frustrating) will not drag your business under.
Unique Sales Process
Some companies create an in-house billing system to save money. Others, meanwhile, have special requirements that ready-made tools won’t support. Maybe it’s an extra form field, maybe it’s a tie-in with your company’s proprietary database, maybe it’s a high level of encryption – it could be anything. If a feature you want or need is not available in existing billing services, building your own becomes attractive, if not an outright necessity.
On the other hand, if another company has already gone through the trouble of creating a billing system that does exactly what you need it to, why re-invent the wheel by creating a brand new one from scratch?
At first, it might seem cheaper to build a billing system than to buy one. If you already have full-time software developers then there’s no extra cost – right? Actually, it’s not that simple. While it’s true that you won’t be shelling out any additional money for development, there is an opportunity cost. The time spent on creating a billing system is time that can’t be spent on other things.
Put another way: this means that instead of building iPhone apps or financial tools or what have you, your time will instead be wasted building what can be easily purchased on the open market today. For most businesses, this is a very bad deal. Their time would be far better spent on company goals than on needless duplication of existing software.
Of course, this assumes that you have in-house programmers in the first place. Not all startups do. If you do not yet have software developers on staff, forget about building your own billing system. The time it would take you to find, interview, hire, train and manage new programmers toward completion of a billing system would almost certainly be wasted.
If you do have coders in-house, the DIY option is possible, but not necessarily wise. Refer to the above discussions of time sensitivity, uniqueness of sales processes and opportunity cost.
Ultimately, your decision is not merely whether to buy a billing system, but who to buy it from. Obviously, not every vendor is equally desirable or established. Some have longer track records than others. Some have better customer service than others. Some have flexible pricing plans that fit different budgetary needs – and some don’t. The only way to find the best billing system for you is to do your homework and shop around. To see how Chargify stacks up, sign up for a free demo or try it for yourself and start using Chargify for free now.
First, identify what’s most important to you in a billing system: price, functionality, support, contract vs. no contract, etc. Then, investigate each solution for how well it aligns with these priorities. If no existing billing system matches your needs, it may be best to build your own after all.
Can your company withstand a few “hiccups” from its billing system, or does it need to definitely work every single time? The answer to this question alone could make your decision for you. Realistically speaking, any billing system you build from scratch is going to have bugs. It would be astounding if it didn’t. And bugs are fine – provided that your users are understanding or that you are willing to tolerate their complaints.
But if you’d rather just have a system that works right away (without months or years of trial and error) it usually makes more sense to buy one (like Chargify ) than to build.