Subscriptions are still a well-liked revenue model in an increasing number of businesses, and this trend shows no signs of diminishing. In fact, the estimated value of subscription billing is expected to more than double to $1.5 trillion by 2025 from its present estimated value of $650 billion. There are benefits and drawbacks to every revenue model, and subscription billing is no exception. Due to the inherent complexity of the industry, businesses encounter several difficulties that can result in customer attrition, low acquisition rates, and revenue loss—the exact opposite of what you want to do when implementing subscription billing solutions.
The Benefits of Subscription Billing Solutions Are Numerous
Subscription billing solutions are appealing to both businesses and customers because they give enterprises a predictable revenue stream and give customers what they want on a regular basis for a fixed price. But more than just pure chance is required to develop a successful and profitable subscription billing business strategy. Let’s examine its main benefits before delving into the factors that will aid ensure revenue growth.
Major Business Advantages
dependable cash flows Simply calculating the number of clients by the average monthly payment made by each customer yields the revenue (or year). Revenue loss is unimportant if customer churn is low. You may more easily plan and invest in new growth areas when you have a steady cash flow because you won’t have to worry about having the appropriate funds on hand.
Higher collections and client retention: Subscription billing systems ease the worry associated with unpaid payments. Customers’ payment methods must be current for you to be able to automatically collect the outstanding money. You will gain from a higher percentage of invoices paid than businesses that rely on one-time payments. Furthermore, subscription revenue models often result in higher customer retention rates because they tend to foster consumer loyalty more quickly.
Automate billing: One of the best features of subscription billing is the ability for businesses to set up automatic billing. Automated workflows can be used to carry out crucial billing processes including invoicing, collections, and dunning, which would streamline billing management. You may concentrate more on how to stay ahead of the competition and less on administrative responsibilities with the proper subscription billing solutions. Your subscribers are repeat clients who, over time, get accustomed to your platform and won’t need as much hands-on care, which is key to this benefit.
Important Client Benefits
Customers enjoy predictable spending, which is like how subscription-based revenue models give businesses stability in their cash flow. Each billing cycle, they precisely anticipate when and how much the identical set of services will cost. Bill shock is eliminated, and clients are better able to plan their finances around their set subscription payments.
Access at a reasonable price: In the past, many services and products required clients to pay expensive upfront licensing fees. Customers now have access to goods and services that would otherwise be out of their price range thanks to subscriptions. Customers don’t have to fork over exorbitant sums of money to access or buy high-quality, complex offerings thanks to subscription billing options. They can break up their fees into more manageable payments. Additionally, clients pay less in penalties when they choose automated payments because they are less likely to forget to make a payment.
Greater convenience: Subscription billing is very simple and convenient after a customer signs up for your goods or services. Customers who use autopay don’t have to bother about sending checks, making phone or online credit card payments, or even writing checks. Instead of needing to make physical payments, consumers still have access to the goods and services they value.
The correct subscription billing solutions are the first step in putting you and your clients on the road to enjoying the mentioned advantages and more.
Grow Your Business with Subscription Billing
Check out the six factors you should think about before installing new subscription billing solutions before diving into the world of subscription billing.
Automation of procedures
While billing automation is crucial for almost all revenue models, it is especially important to support the rise of subscription revenues. As your company expands, conducting the billing process manually becomes too difficult, time-consuming, and error-prone, which can result in lost revenue. Processes including billing notifications, payment reminder emails, dunning management, payment reconciliation, and others are automated by subscription billing solutions. They take away the complications, giving your personnel the time, they require to concentrate on tasks that generate income. Legacy billing solutions are also difficult to integrate with your other systems and continue to operate in isolation. You can easily combine upstream or downstream systems with cloud-based subscription billing solutions, or you can expand the platform to support any business function.
Control Dunning
Dunning is a reality, particularly for companies that bill subscriptions. Subscription billing systems can help you reduce involuntary churn even though dunning can happen for several reasons, including credit cards that have expired or reached their credit limits or even connectivity problems. You can lessen customer turnover due to dunning when dunning management is automated, as reminder emails with the required information are automatically sent.
Lower churn
A beginning in the right approach is offering clients the goods and services they want and flexible business models, but long-term customer retention demands a smooth payment process. By using purpose-built, automated subscription billing solutions, you may lower the risk associated with handling delicate customer contacts, invoices, and payments while still giving your clients top-notch services that will raise their lifetime value. Additionally, an automated subscription billing system can automate regular payments, accept payment retries, and send notifications of payment failures when it comes time for renewal. Automation of collections will streamline the renewal process and cut down on revenue loss.
Be flexible
Companies must have the ability to quickly innovate and bring new products, services, and pricing models to market faster than the competition in a world where change is the only constant. Cloud-based subscription billing platforms, as opposed to conventional billing solutions, offer the instruments required to instantly respond to market developments. With the flexibility offered, you may quickly alter items, packages, and prices rather than waiting days or weeks for changes to take effect.
Measure Metrics
Contrary to firms with a one-time sale or perpetual license business model, where it is reasonably simple to evaluate financial success, subscription businesses need more information to get a clear picture of their financial situation. Subscription billing organizations need to keep an eye on additional data in addition to monthly recurring revenue (MRR) and annual recurring revenue (ARR), such as average revenue per user, renewal rates, days sales outstanding, etc. The ability to translate your discoveries into workable plans have the tools to extract relevant information at scale and be able to share insights within the organization are all necessary for having a clear understanding of your overall business health. Analytics, dashboards, and reporting can all be useful in this situation.
Use Data to Generate Income
It can be made money if you can measure it! However, to optimize your revenue potential and differentiate yourself from the competition, you may begin with straightforward subscription-based offers. You can gather and transform raw consumption data from many sources using strong yet simple subscription billing systems. To diversify product offerings and create various pricing models, this data can then be used. The ability to simply switch from straightforward subscription-based pricing models to innovative metered and usage-based plans is provided by the correct subscription billing systems.
The process of starting a subscription-based business is not simple. However, with the appropriate subscription billing system, you can remove obstacles, generate recurring income on a consistent basis, innovate to capitalize on new opportunities and set yourself up for future success.
Put the growth of subscription billing revenue on autopilot
You need to be able to monetize all revenue opportunities and provide a frictionless customer experience from the conception of the product to revenue recognition. With the help of its comprehensive cloud-based solution, Work 365, any product, service, or business model is supported. You get unparalleled adaptability from us to handle shifting company and client needs. Work 365 is a subscription billing management solution for Microsoft partners and SaaS companies to streamline recurring revenue.
