Your Quick Guide to SaaS Subscription Billing

by Guest Post

The basic concept of subscription billing is simple: users make recurring payments for continual access to services you offer. But if you want this flexible billing model to truly work for your SaaS business, you need to go beyond the basics and understand the many layers and components that make it work.

When subscription billing is implemented correctly, customers can pay for the services they want when they want it, enjoying predictable costs. Businesses get the ability to provide services for their customers while also streamlining invoicing, remaining responsive to needed pricing changes, and offering customers payment models that capture maximum revenue.

In this article, we’ll cover 6 key components of SaaS subscription billing that will help your brand reach its full potential.

1. Usage-Based Billing

Usage-based pricing directly links the value your platform provides to the price your customers pay. Instead of paying a fixed price, your customers pay for what they consume. This gives your customers the flexibility to scale their use up or down based on market conditions. It also gives your business the ability to bill based on the attribute(s) that capture the most revenue.

Using data generated from across your enterprise, your billing management platform should translate usage data by account, transaction, event, user, or any other metric that’s important to your business, and then apply the relevant pricing model, such as quantity-based, metered, event-based or tiered. (Chargify even allows for hybrid pricing right out of the box!)

2. Automated Recurring Invoicing

Another key feature of a good subscription billing platform is the ability to take the complexity out of invoicing with automated recurring invoicing. Utilizing pre-defined metrics, built-in APIs compile data from across your enterprise. Then, billing logic generates an invoice which shows a clear presentation of the services used, the usage levels, and tax-specific information.

This allows you to quickly accommodate modifications in subscription balances such as adding credits or promotions. You can also handle billing changes, like upgrades, with immediate or delayed impacts. It also gives you the option to prorate. In addition, you can set up various payment types to recur or prompt a customer to pay according to their billing terms.

Finally, each invoice can be personalized to display the itemized components of the total bill for that period. This can include any information you think your customers need: the services they consumed, how much was consumed, the unit rate, their overall charge, etc.

3. Customer-Driven Product Portfolios

Every customer is different. So, having the ability to curate the right portfolio of products—and associated pricing—gives your customers the power to choose the pricing model that best fits their needs. Bill on aspects like number of pageviews, user accounts, data consumed, sessions streamed, events created, or any combination of data that works for your brand.

Industry-leading subscription billing management platforms like Chargify can also give your business the ability to change these selections to match demand without coding or development. Similarly, customers can adjust services and pricing according to operational demand. Your billing platform will automatically modify and prorate pricing for them.

4. Churn Management Support

Businesses spend a lot of effort and resources onboarding customers, but if you don’t examine and address underlying causes when those customers leave, you’ll eventually see a major revenue problem. A 5% increase in customer retention can lead to more than a 25% bump in profit on your bottom line. That’s a lot of revenue being lost to churn.

Proactively notifying customers about renewals, activations, and credit card expirations helps your business minimize payment failures and maintain customers. Chargify’s dunning functionality allows you to easily send reminder emails about important billing notices, like trial and credit card expirations. You can also capture alternate or backup payment methods to keep customers from experiencing an interruption of service.

5. Comprehensive Financial Management for the Service Provider

Unlock a deeper understanding of your business and its trajectory with advanced  analytics and built-in reporting. As your brand matures, having real-time, filterable data can help you better understand your customers. Measure adoption, retention, price elasticity, and much more across your product portfolio with dynamic, visual views.

In addition to revenue forecasting tailored to subscription billing platforms, you should be able to pair standard metrics views on churn, revenue, and customer growth with customizable dashboards and templates to quickly harness the data you need to support your decision making. Find a billing management platform which allows you to trigger real-time notifications along with alerts and threshold features, so you can keep a close eye on high-value customers or churn risks.

6. Centralized Account Management

As your SaaS business grows, you need the ability to your customer data into a competitive advantage. With centralized account management, you can gather and organize all customer accounts into one place. This way, you can review everything from their usage history to potential add-on sales opportunities.

Customers can also benefit from having their real-time usage and account information in one place. Giving customers a transparent and easy-to-understand presentation of the value they’re receiving supports ongoing customer engagement.

Unlock the Full Potential of Subscription Billing for Your Business

As your business evolves, you need a subscription billing solution that can grow with you. Your customer base will inevitably change over time. However, you’ll always need a solution that eases your workload each month, adapts to your operations, and focuses on customer relationship management.

Chargify has all of these key components built right in, easily configurable without any coding or development. All you have to do is select the attributes and features that best meet your needs.

Sign up for a free demo, and unlock the full potential of your subscription billing today.

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