What should you look for in a SaaS subscription billing solution?
These days, SaaS subscription billing solutions are everywhere. And I mean, everywhere. As a premier SaaS subscription billing company ourselves, we’re excited about the immense growth in our industry. If the industry is growing, that means the market is, which means there’s a pretty good chance we are, too.
It’s not all sunshine and rainbows, particularly for someone building a SaaS subscription business, because the unfortunate reality is this:
As the number of SaaS billing solutions has risen, the capabilities and overall efficacy of these platforms have largely stayed the same.
In other words, the market’s become oversaturated by a sea of sameness. Here at Zone, we’re okay with this because—shameless plug incoming—our capabilities far exceed other SaaS billing software. We know we’re providing a product that can’t be matched by anyone else.
The real risk exists for the buyers—the entrepreneurs, C-suite execs, and folks in finance who seek simple, time-saving, and automated solutions for complex, time-intensive, and manual recurring billing work.
Wading through the waters of SaaS subscription billing solutions can be daunting, and, if you don’t know exactly what you should be looking for in a platform, then it’s easy to become enamored with a seemingly good product that actually falls short of your needs, doesn’t give you enough bang for your buck, or adds unnecessary complexity to your recurring billing process.
And when most of the platforms on the market do one of those three things, then it becomes exceedingly likely you’ll end up with a subscription billing platform you’ll need to replace in short order.
And nobody wants to have that conversation with their boss or CFO.
Which leads me to why I wrote this blog. To help you understand what you need to look for in a SaaS subscription billing solution, so when it’s time for you to make a decision, you can be confident you’re making the right one.
And then, instead of having that conversation with your boss, you can pop a bottle of bubbly and share a couple of laughs.
Because life is a movie after all, right?
Why should you get a SaaS subscription billing solution in the first place?
More like, why shouldn’t you get a SaaS subscription billing solution?
Honestly, if your business is subscription based—SaaS or not—I can’t think of one good reason you shouldn’t invest in a billing platform.
Internally, subscription billing platforms can automate and optimize the most demanding and error-prone manual processes, saving you loads of time and money and giving you years of your life back (#StressReducer).
Externally, the right billing platform will provide an excellent buying experience for your customers, helping your company appear the way you want it to, which is polished, professional, and trustworthy.
Now, let’s look at some of the must-have and nice-to-have features of a billing and subscription management platform.
What are some must-have features of SaaS billing solutions?
First thing’s first: What’s your product and fee structure?
These days, many SaaS subscription companies offer their customers different tiers of their product and service.
Each tier costs a certain amount in exchange for a certain level of product and/or service, and customers are charged on a fixed recurring billing schedule (typically monthly or annually). This billing model is called a fixed plan.
If this sounds a lot like the type of SaaS business you’re running, then you need a subscription billing and management platform that can handle movement between tiers and payment schedules. Not only does this help you provide a superior customer experience, but it also gives you the opportunity to test different tier structures, bundling options, pricing, and discounts, which are vital experiments to run for any SaaS business with its eye on growth.
Another subscription model that’s been growing in popularity over the past few years is the usage-based subscription model.
A usage-based subscription—sometimes referred to as a pay-as-you-go subscription—is exactly what it sounds like: Customers get billed on a recurring basis based on how much they use a service within the billable time frame (e.g., one month). The more they use a service, the more they pay. Simple as that.
Now, fixed plans and usage-based may be two of the most popular subscription billing models, but they’re not the only games in town. Here’s a quick look at some of the most common models we see today:
Common Software Billing Models
Fixed price billing is when you have a single period price that includes everything.
This is the most common type of subscription billing used by companies today. It allows you to offer multiple plans with a fixed cost (e.g., monthly, annual, basic, professional, premium, enterprise, etc).
This is a pricing model where your users are charged for each unit of measure that has access to the account. The more users your client has, the more they pay.
Usage-based or Pay-as-you-go
The usage-based (or pay-as-you-go) pricing model is similar to Fixed Plans except that your customers are only billed for the exact amount of the service that they use. The more a customer uses your service in a given month, the more they’ll have to pay you that month.
Prepaid Usage or Credits
This pricing model allows you to charge your customers for estimated usage or consumption upfront. Then, as they use your product or service, they’ll be depleting from their credit bucket.
One-time or Professional Services
This model could be related to fixed or time & materials professional services, installation fees, early termination fees, and other services of that nature.
Hardware billing is found in companies that offer a physical item that needs fulfillment with other services. This could be a one-time shipment or recurring.
When looking at subscription billing options, make sure you’re only considering solutions that are agile.
In this context, that means your billing solution needs to be capable of integrating with your entire tech stack—the combination of all the software tools and apps your company uses, including, but not limited to, those for CRM, inventory management, and human resources (often included in an ERP, like NetSuite).
But there’s more to flexibility than seamless integration.
Beyond merely working well with your other tech solutions, the best SaaS billing software is flexible in its scalability.
In other words, your subscription and billing management platform needs to be able to handle the ups and downs and twists and turns as your company grows, pivots, and reinvents itself over the years.
If it can’t do that, then you’re looking at a long, costly road ahead. The last thing you want to have is a billing platform you need to replace every time your business grows or restructures.
Instead, take your time sourcing your options and remember: Your billing platform is an investment in the future as much as it’s an investment in the here and now. If you can’t see your company using the same platform ten or twenty years from now, then it’s not the right choice for you today, either.
Ease of Use
On the surface, billing is a simple relationship between buyer and seller.
But dig a little deeper, and you quickly learn this simple relationship is built on a complicated foundation of interconnected networks which must operate in accordance with each other.
Otherwise, well, it just ain’t gonna work out.
And you can’t afford to invest in a subscription billing platform that isn’t going to work out, which means you need something that makes everything easy for everyone involved.
Transactions should be a breeze for your team and your customers.
Invoice-building should be a stress-free experience regardless of use-case complexity.
Revenue recognition (hello ASC 606) should be a walk in the park.
And pulling data reports and analytics should require a couple of clicks at most.
Okay, now that we’ve covered the must-have features of a SaaS subscription billing and management platform, let’s talk about the nice-to-haves.
What are some nice-to-have features of a SaaS subscription billing platform?
Automation could be considered a must-have feature of your billing solution, but I’ve included it as a nice-to-have because different products have different automation capabilities.
Regardless, automation is hugely helpful when it comes to creating invoices, billing customers, and recognizing revenue. It not only makes each process easier, but it also helps prevent manual errors that could be costly to your top and bottom lines.
In fact, we recently surveyed 100 FinOps leaders and found that nearly half of them had made at least one error on a customer invoice, billing statement, or transaction in the last 12 months. And, believe it or not, nearly one-fifth of them admitted to having errors on at least 10% of those vital financial documents.
So, yeah...automation for the win.
Sure, we’re talking subscription billing solutions here, but imagine if you had something a little less, well, one-dimensional.
Imagine having the swiss army knife of billing solutions:
A platform that easily handles invoicing and billing, revenue management and recognition, subscription renewal management, and everything else within the entire order-to-cash process:
Contract, subscription, and order management
Reporting and data management
Wouldn’t that make life a whole lot easier for you and your team?
If yes—if a simple, unified platform that can handle just about anything sounds good to you—then I highly recommend looking into an all-in-one billing solution.
Reporting and Analytics
These days, you can get real-time visibility into financial performance to see exactly how your billing platform is impacting your business.
Plus, some billing platforms have customized and pre-built reports to help you analyze performance and usage data as well as monitor KPIs.
So, if you want to see the relationship between business performance and your billing solution, then look for one that offers a robust reporting and analytics feature.
What are some other features I should look for in a SaaS billing solution and subscription management platform?
Typically, as you grow across borders, your complexity does, too.
But with a subscription billing platform that supports global growth, your complexity will be at a minimum thanks to native tax and localization functionalities, cross-country price configurations, currency flexibility, and more.
This is why global capabilities are another feature you might want to consider as you begin vetting billing solutions.
A number of SaaS subscription billing platforms charge you a percentage of your revenue. (Hey, I know. It’s BS. But I’m just the messenger.)
This is far from ideal and only gets worse the more you grow.
Leave those options behind if you can. Instead, look for a billing solution with flat pricing. Even if it seems pricey now, it’ll save you money in the long run.
And if you do go with a flat-price solution, make sure it’s a price based on your company’s needs, not some arbitrary metrics that trick you into paying for things you don’t need.
Support and Service
You’re in SaaS, so you know you’re going to need expert support and technological service for your billing solution.
As I’m sure you already know, this is not the area to try and save a few bucks, especially when it comes to core functions like billing and subscription management.
So, I recommend investing in a platform that offers substantial support and services so you can feel confident knowing if something does go wrong, it’ll be taken care of quickly, sans the headache and hassle of trying to figure it out yourself.
Plus, it doesn’t hurt to have experts at the ready when questions or new use case scenarios arise.
By the way—have you ever considered that, with an all-in-one solution like NetSuite + SuiteApps, you get all of this support and service for less?
What...why? Is there, like, some all-in-one cost-savings genie?
Well, no, not exactly. But it’d be really cool if there was.
The real reason is this: Having an all-in-one solution means you can eliminate the added costs and chaos that come from a multi-platform approach.
Think about it. For every additional platform you choose to use, you have to consider the training, support, and services costs that come along with it. That’s another process to get accustomed to, another customer service team to deal with, and another unnecessary hit to your bottom line.
Multiply that by two, three, four, five, and pretty soon you’ll be inundated.
But with an all-in-one solution?
No chaos. No added costs. Just a lot of smooooth sailing.
How to find the best billing service for your SaaS business
First, bookmark this tab and refer back to this article as you research, demo, and vet various subscription billing platforms.
Otherwise, all I can really advise you to do is to choose a billing solution that is right for your company and its future.
Do not—I repeat, do not—buy a solution that’s only good for today because it seems like a good deal.
Make sure you invest in a platform that will grow with you and be by your company’s side for five, ten, fifteen years and beyond; one that can adapt as you change your pricing, add new products, or enter new markets.
Jon spent almost a decade managing finance and accounting teams, helping companies with their digital transformation and integrating various monetization platforms. He then worked as one of the key solution architects at NetSuite/Oracle with an emphasis on Subscription billing and Revenue recognition. He helped build ERP and billing solutions for some of largest and fastest growing tech companies before joining Zone & Co. As Sr. Director of Sales, Jon consults with large enterprises to startups to help design and implement their recurring billing models within NetSuite leveraging ZoneBilling.
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