Subscription businesses are becoming more and more popular these days.
Why? There are a few reasons for this.
- First, subscription businesses are very convenient for customers. They can subscribe to your service and then forget about it – they will always have access to the product or service that they need.
- Second, subscription businesses are very profitable for business owners. They can generate recurring revenue from customers, which is extremely valuable.
Subscription billing is a great way for you to get near-guaranteed income, as you shall receive payment from clients at set intervals. Before, companies had to charge high fees for their services even those that may not be used by the clients as there was just one business model – that of flat fee, which hindered growth in many areas; now because of subscriptions they can pass on lower prices and attract a larger market as well!
If you are thinking of starting a subscription business, or if you already have one, this blog post is for you! We will discuss the billing process for subscription businesses and provide tips on how to make it as smooth as possible for both you and your customers!
Differences between traditional and subscription-based billing
It’s important to understand the differences between traditional billing systems and subscription-based ones. Traditional billing systems follow a linear flow in which an order is created with one invoice generated against it.
However, this isn’t true for a subscription-based billing system, which is a cyclical flow that provides customers with dynamic capabilities to account for any changes made and for renewals, so they can be billed correctly every time someone goes through one of the renewal paths again! The infinity symbol in the subscription-based billing system denotes exactly that – the customer may go through infinite renewal cycles.
The Figure 2 shows only two orders, add to it the complexity of multiple products, multiple orders, multiple renewals, and multiple billing cycles and you’ll understand why cloud service providers like you need a cloud subscription billing automation platform!
With automated subscription billing platforms, billing cycles have become incredibly easy to manage for all stakeholders.
Top challenges for CSPs with subscription-based billing
The billing process for subscription businesses can be tricky. You need to make sure that you are charging your customers the correct amount, on the correct date, and that your payment reminders don’t bother them. If any of these things are not handled correctly, it can cause problems for both you and your customer experience. And if not addressed timely, this can lead to revenue leakages, poor customer experience, etc.
A few challenges for CSPs with subscription-based billing are:
- Multiple billing dates and billing cycles – In a subscription-based billing model, customers have the choice of choosing their billing dates and deciding their billing cycle which can be monthly, quarterly, semi-annually, or annually. Hence, all the customers might not be billed on the same date. It will be a tiresome task for CSPs to track these multiple dates for generating invoices. Too many of such dates can lead to CSPs missing out on billing some customers eventually generating a loss in revenue. Manual billing and payment collection can make this entire process a herculean task.
- Managing customized packages and discounts – CSPs can create customized packages as solutions by bundling services that align with the business goals of the customer. Often these customized offerings are provided at a discounted price. Though this helps build a customer base, managing varied discounts and offering across a large number of customers manually is a very time-consuming task and can generate losses if not handled meticulously.
- Manual management of multiple subscriptions – Customers might not only have different billing days and billing cycles, but also multiple subscription plans. In such cases, managing, and identifying the multiple subscriptions and creating a single invoice for these can be time-consuming and prone to errors if done manually. Automation can speed things up and lead to an increase in efficiency.
- Poor customer experience and inability to scale – CSPs should reduce the operational inefficiencies at the customer’s end as each customer interaction can be a potential source of revenue but providing a seamless user experience can be a challenge. Manually managing a large customer base is tedious, costly and error-prone. If CSPs want to achieve scalability along with offering a good customer experience, they must switch to subscription billing automation software.
How can CSPs benefit from an automated subscription billing system?
- Smooth handling of multiple subscriptions and error-free billing with automation: As a subscription-based billing model gives customers the choice of choosing their billing dates and deciding their billing cycle, a subscription billing automation system can efficiently track the dates and generate a quick, error-free invoice for each customer. By using a billing automation system, whenever any information is updated or added, like subscription plan types, it will always be correct every single time someone gets billed regardless of how many customers there are in total serving them at any given moment. Billing automation enables you to drive and grow businesses confidently as you can rely on automation for accurate billing!
- Make payments simpler: A billing automation system can help CSPs easily edit or modify subscription plans and create invoices hassle-free. It minimizes the work their customers will have to do to pay the bills. The billing automation software will also identify those customers who haven’t paid their bills yet so that it’s easy for providers to focus attention where needed!
- Build good customer relations: By using automated billing systems, providers can cater to their customers’ needs. This means that service providers can build good relations and retain them with the help of this system in repetitive revenue models like subscription-based businesses as it gives them more control over their budgeting needs as well!
- Gain business scalability: With automated subscription billing, CSPs can plan and scale because each month’s bills are predictable and the reports that come with subscriptions also offer insight into the product or service needs which will lead to success over time.
How RackNap fulfills the need for automating subscription billing
RackNap is the most suitable automated subscription billing software for cloud service providers. With RackNap, CSPs can automate their subscription billing with next-gen automation capabilities.
Flexibility with cloud marketplace – RackNap not only gives you the flexibility to create product and pricing plans the way you want but also enables your customers to purchase services on their terms from the marketplace. With RackNap, you can create any automated cloud plan that your customers may require. RackNap supports recurring or subscription billing management and includes pricing models like Free plans, one-time plans, recurring plans, pay-per-use plans, and contract-based plans and has the product delivered to the customer with automated provisioning and billing management.
Flexible cloud subscription billing management system – RackNap supports tiered subscription management which allows the providers to have separate pricing structures in place for different billing cycles. With RackNap’s automated and integrated cloud service provisioning and billing platform, it increases cross-sell of bundled cloud products and manages controlled discounts on the offerings.
Multi-tier partner channel management – RackNap enables you to leverage your partner network to drive more sales. Using the automated billing system of RackNap you manage multiple partner channels, and your partner can also leverage RackNap to manage and sell to his/her customers.
Order management – With RackNap’s order management system you can manage all forms of subscription orders. RackNap captures changes in the subscription order status in real-time and updates the status at all places accurately, quickly, and efficiently and helps forecast the demand with streamlined order management.
Business Intelligence – With a single click, you can view the analysis of your complete organizational data in simple graphical formats. By analyzing the key performance indicators, you can make timely decisions that aid in business growth.
Customer Panel – RackNap’s customer panel enables self-serve and helps customers to resolve basic issues on their own. Here, customers can view all their information and manage services. They can also check their resource usage reports quicky and in one go.
CSPs can overcome the challenges of manual subscription billing by adopting the automated subscription billing platform of RackNap and scale your business and grow revenue without worrying about the complexities of subscription billing. RackNap helps CSPs to automate their subscription business and accelerate their growth by optimizing costs and maximizing revenues along with gaining trust by providing customer satisfaction.
RackNap constantly updates its services to enable the providers and customers to buy and sell services easily. For example, RackNap supports the latest Microsoft NCE subscription model allowing providers ad customers to efficiently choose plans and easily pay for the new services.
Know more about how RackNap’s automation subscription billing supports Microsoft NCE here.
Book a demo to know how CSPs can benefit from RackNap’s automated subscription billing platform.