Recurring payments are the preferred billing choice for many eCommerce businesses. According to Precedence Research, the global subscription management market will be worth $32.86 billion by 2034.
That’s an impressive figure that begs the question why aren’t more SaaS startups incorporating the billing model?
Subscription management has the potential to scale your company. However, the complex landscape can be overwhelming for fledgling startups.
A comprehensive billing system relieves the headache of dealing with international payments, compliance, and customer churn. We’ll explain how below.
How does Subscription Billing Work?
Customers are charged regularly for a product or service your company provides, monthly or annually.
The recurring payment model allows customers to receive invoices via manual input, or their payment details are stored and used once payment is due.
Flexibility is the subscription model’s strong point. Diverse pricing models and packages can better meet customer preferences and maximize recurring revenue.
The best way to achieve this is by partnering with a payments partner that goes beyond normal subscription management. PayPro Global suggests investing in an all-in-one platform specializing in selling SaaS.
Pricing Models
Subscription management encompasses five pricing models. Think of ways to reduce customer friction in the billing process before implementing any of these methods.
Tiered Pricing
As far as flexible pricing goes, this strategy allows businesses to offer multiple price points, or tiers, based on factors like usage, users, or features.
The key benefit of tiered pricing is its ability to target different market segments by addressing various customer needs.
Flat Rate
Sometimes, keeping it simple is the smartest move. If your SaaS business has just one price point, flat-rate pricing is the way to go.
Usage-Based
While it’s mostly used in telecom and cloud computing, the usage-based model works just as well for SaaS.
Clients pay based on how much they use the product, so you can go with a traditional approach or mix things up with a hybrid model.
Per-User
The per-user billing model is based on the number of users accessing the platform, resulting in higher prices for more users.
Freemium
Freemium pricing appears to be the prevailing choice for SaaS businesses. This model offers users free access to a limited version of a product. The goal is to encourage them to upgrade to a paid tier for full functionality.
Adapting Subscription Management to SaaS
The subscription-based model isn’t a one-size-fits-all. In the SaaS landscape, there are many moving parts.
That’s why it’s crucial to implement a scalable billing system. What does this look like for your company? Your payment system must adapt to your business needs as it grows.
When expanding worldwide, it will be able to support global currencies. Many companies think that growing their business to reach a wider audience is the ultimate show of success.
Unfortunately, bureaucratic red tape, international tax laws, and compliance can hinder your progress. By removing payment barriers like accepting most currencies and localizing pricing, you meet your customers halfway.
Customer Support
Don’t make the mistake of neglecting customer support. If you’re going to implement subscription billing into your strategy, a solid customer support team complements and strengthens your game plan.
CustomerThink reports that the trend towards the usage-based model is gaining traction in the SaaS market. Transparency is an attractive drawcard for customers and businesses.
There is a catch. With revenue linked to service usage, businesses can't afford to neglect customer support. Poor support impedes growth by blocking issue resolution and product use.
How do you get around it? AI is your friend. Natural language processing (NLP) is a type of superpower for SaaS startups.
Machine learning’s ability to understand and communicate with human language is fast moving the goalposts. It gives customer support centers the leverage to handle customer complaints by literally speaking their language.
A Good Day at the Office
Nobody said it was easy to grow a SaaS startup. It takes a positive outlook, a progressive business plan, and an adaptable billing platform for selling SaaS.
Choose a pricing model that works for you and your customers. Use the subscription-based model as your foundation and take things from there. Manage your customer support team with finesse and harness the power of AI.
At the end of the day, your final goal is a return on investment and increased revenue streams. Keep that in mind when making decisions that affect your business, clients, and employees. And always choose the path that leads to a sustainable future.
Many companies have transformed their global growth journey. Choose one solution to rule them all.