In this context, the client is charged based on their product usage.
But here is the thing. You can apply this model in the traditional manner, calculating usage and billing accordingly or you have the option to use a hybrid option.
In this variation, you can set up thresholds with a flat price. Once those thresholds are exceeded, different fees are then applied.
Freemium Model
One of the stars of subscription marketing strategies, called freemium, is a popular choice for SaaS businesses.
Freemium pricing provides interested users with access to a product uae whatsapp number data version with limited functionality at no cost. The intention is to convince them to upgrade to a paid tier and enjoy the full power of the app for a price.
However, you mustn’t confuse free trials with freemium. While they are both solid strategies for attracting and upgrading customers, they differ in approach.
Free trials have limited time access and a greater urgency to convert, whereas the freemium model can be used over prolonged periods of time.
5 Subscription Billing Challenges
5-Subscription-Billing-Challenges
Unadaptable Billing Structure
The subscription-based business model offers significant advantages in flexibility for both users and brands, driving faster business growth, enhanced customer relationships, and increased revenue.
However, without a scalable billing infrastructure, these benefits become unattainable.
As your SaaS expands, managing new customers, pricing changes, subscription updates, and international expansion all introduce complexity. Factors such as compliance regulations, automated tax calculations, and multi-currency payments add to the challenge.
And on top of that, you need to move fast because successful business scalability is a time-sensitive matter.
Keep this in mind: a growing business will eventually outgrow an outdated subscription management platform.
Insufficient Operational Insight
SaaS metrics are very much like success compasses. Follow the right one, and you’re bound to reach your destination (eventually).
Churn, MRR, ARR, or ACV, are just a few examples of what subscription companies should be tracking if you wish to answer critical questions like:
Is my SaaS business profitable?
Am I offering sufficient payment methods?
What’s the strongest product functionality?
Is my pricing strategy done right?
Why am I losing my subscribers?
Detailed SaaS analytics is essential for obtaining actionable insights and identifying growth opportunities. However, an outdated and unstable subscription billing system acts as a roadblock, hindering your gathering of this crucial data.
Systematic Revenue Loss
Subscription products face a persistent challenge: revenue loss due to failed payments and involuntary churn.
Whether it’s expired cards, insufficient funds, or bank errors, failed payments occur. This is part of how the world of eCommerce functions. The danger is the domino effect triggered by these lost transactions, further amplifying involuntary churn.
Additionally, with involuntary churn being a massive part of churn in general, your subscription channel could end up bleeding revenue.
Of course, there is a solution, multiple, if we’re being honest. Automated retries, backup payment methods, dunning management, and smart payment routing all qualify as effective revenue recovery best practices.
However, only a modern subscription billing platform will have these necessary features.
Growing Invoicing Complexity
Subscription brands thrive on recurring revenue, but managing invoices is a major headache as your customer base and product catalog grow.
Offering multiple pricing plans, discounts, and promotions, being able to collect payments on a global scale, switching to different monetization strategies, and handling prorated billing all introduce increased complexity.
As a result, this leads to time-consuming manual work leaving room for greater error risk and potential revenue loss.
Without joining forces with a fully-featured, comprehensive subscription billing system, this challenge will not be completely overcome, and in time, it will undoubtedly contribute to a growing churn rate.
Increased Tax Burden
