During the last decade, the reliance on subscription businesses has increased. From groceries, meals, supplements, and cosmetics to audiobooks and other software products and services – everything is just a click away.
The growing demand for subscription services is also attracting new entrants. Check out the below stats:
- By 2022, 53% of all software revenue will be generated from a subscription model. (1)
- All new software entrants and 80% of historical vendors are offering subscription-based business models. (2)
Every subscription business is built on a recurring revenue model. It is when the customers or subscribers pay for a product or service in regular periods – weekly, monthly, yearly, bi-yearly, etc. Subscription providers offer multiple plans with unique features to help customers choose the most suitable plan.
However, the process of managing a subscription business is highly complex and involves dynamic challenges – the most prominent being billing management. As a subscription service provider, you need to keep your billing processes running like a well-oiled machine.
- 48% of businesses with a recurring revenue model struggle to meet accounting and reporting challenges. (3)
So, what’s the solution?
The solution is a powerful subscription billing software.
What is subscription billing software?
The subscription billing software allows businesses to bill their customers for services on a recurring basis. It is primarily used by subscription-based service providers, such as online content providers, software-as-a-service companies, and cloud storage providers. Subscription billing software can automate the entire billing process, including customer onboarding, invoicing, support management, and revenue management.
But how do you select the perfect subscription or recurring billing software? What are the must-have features in a subscription billing tool? Rest assured, we’re here to help.
The rest of the blog will focus on the features you must look out for in subscription billing software.
Top 10 Features of a great subscription billing software
The subscription business processes are by-nature repetitive. Depending upon manual methods to manage billing and other related aspects of your subscription business – might not be the smartest decision. According to a report, 97% of process automation is vital to digital transformation. Post-pandemic, the need for automation has only risen – considering the added benefits of business continuity.
When you decide to buy a subscription billing tool, you must ensure that the tool is end-to-end automated. This will not only help you improve end-to-end visibility across different business processes but also help you cut down on operational costs and costs incurred due to human errors.
2. Invoice Management
The subscription business model is based on recurring revenues. The customer is not making a one-time purchase, but rather is subscribing to a service with regular monthly, quarterly, or even hourly payments. Hence, your subscription management tool must be able to manage invoices automatically with less or no manual intervention. Look for the following features:
a) Support for multiple pricing models
The recurring billing platform must support multiple billing and pricing models.
Flat or fixed rate: This is when you charge a fixed rate for all the features of the offering. The customer is billed the same amount in each billing cycle.
Tiered: This is when you create multiple plans for a single product or service. The features vary in each plan – and usually, the one with the most advanced features is on the topmost tier.
Usage-based: Here, you charge the customer according to the usage. This model is quite popular amongst the cloud service providers where the customer is billed according to the resources consumed.
Per-User: Per-user or seat-based pricing is when you charge according to the number of users. Pricing increases as more users are added to the platform.
Per-added module: Here, there is a base product that is priced at a fixed rate. For every additional module or feature, the customer must pay more.
Freemium Model: Apart from these, there are freemium models too in many subscription businesses. Here, the customer can subscribe to a service for free with some limited features. He/she can upgrade the plan whenever there is a requirement.
b) Automatic Invoicing
Subscription businesses need to deal with several real-time transactions. Also, different customers might have different billing periods. Generating invoices using the manual method is not at all feasible. It will not only slow down your order processing but might agitate the customers as well. Go for a subscription billing tool that supports automatic invoicing. Customers should receive a copy of the invoice within a few minutes of placing an order.
Source: Storyset on Freepik
As per a report, 64% of companies who have implemented AP (Accounts Payable) automation are processing more invoices with the same size team, 23% are processing the same invoice volume with fewer resources, and 13% have been able to reallocate staff time to other projects.
Some additional good-to-have features might be the ability to:
- See all past invoices in a single place
- Download invoices in a PDF format
- Customize invoices as per the solution providers’ requirements
- Automatic addition of discounts and coupons
c) Automatic renewals
One of the main sources of revenue for a subscription business is the renewal. In traditional billing models and manual operations, you might face challenges related to missed payment reminders.
A subscription billing tool must be able to help you set up automatic renewals for your customers. This will save you time and help your customers be aware of their next billing cycle.
3. Ability to upgrade/downgrade service
One of the most important benefits that subscribers seek from a particular subscription service is flexibility.
Whether it is a SaaS (Software-as-a-service) product or subscription to a magazine – the customer must be able to upgrade the plan i.e., move to a higher plan of the same service or downgrade it – move to a lower-priced plan.
A robust subscription management tool must give customers the ability to upgrade or downgrade service as per their requirements. All this should be one click. So, be sure to ask your billing automation tool provider if the platform supports a one-click service upgrade or downgrade.
4. Ability to pause or resume service
Like upgrade and downgrade, the pause and resume subscription feature give the customer the flexibility to pause a service when not in use.
A perfect example can be your subscription to a magazine service. If your customer plans to go on a vacation for a few months and thus wants to pause paying for the service for a few months – this should be possible with a few clicks by using the customer’s self-service portal.
The subscription billing tool should give your customers the ability to pause and resume their services. It is highly integral if you are a cloud subscription services provider. Your customer must be able to pause a resource whenever they need to and resume it when required.
5. Customer self-control panel
Customer experience is at the heart of any subscription business. An end-to-end automated subscription billing software must take this into consideration.
90% of customers globally expect brands or organizations to have an online self-service support portal according to a report from Microsoft.
It must be able to offer a dedicated customer self-control panel. It is like giving control into the hands of your customers. A self-service panel must have the following features:
- Raise support tickets: Customers must be able to raise support tickets through the panel. They should be able to see all the previous tickets along with the status – closed, in-process, or open. They should also be able to reply to the tickets through the same panel.
- Purchase additional services: Your customer must be able to directly purchase additional services through the panel.
- Access to billing information: Customers must also be able to see their entire billing history with your company along with upcoming renewals, unpaid invoices, orders, logs, and even add funds.
- Dashboards: Visual representation of data related to services, support, billing, etc. will make it easier for the customer to manage services with you.
Apart from the above features, the customer must also be able to quickly access information like a knowledgebase, email logs, announcements, etc. through the self-service panel.
6. Business intelligence and insights
By 2022, 90% of corporate strategies will highlight information as a critical business asset and analytics as a crucial competency.
In a data-driven world, the importance of tools to help understand data better cannot be stressed enough.
Modern subscription billing management tools must offer business intelligence and insights related to various aspects of the subscription business.
For the service provider, this might help in making better decisions. For customers, this will give them better insights into their journey with your brand.
Source: Storyset on Freepik
Some of the business intelligence features to look out for include:
- Revenue insights: The tool must give you insights into your company’s gross revenue via interactive graphical dashboards and customizable and downloadable reports.
- Invoice and order insights: The tool must give real-time visibility into all your invoices – fresh paid and unpaid, upcoming renewals, orders, pending, canceled, in-process, etc.
- Inventory insights: You should be able to get a complete insight into total hardware/software, unused assets, CPU load, disk space, bandwidth, memory, etc. This is a must-have if you are a cloud service provider.
- Smart forecasting: With inventory forecasting, you should be able to see the current availability of assets and upcoming demand based on your sales leads.
- CRM insights: You must be able to have real-time visibility into all your tickets.
The ability to customize key customer touchpoints is vital. These include emails, invoices, marketplace, etc.
A good subscription billing platform must offer customizability to the service providers.
For example, if you want to send personalized email notifications to your end customers – you should be able to customize the various available formats in the automation tool or even create a new one.
You can add your own logos, placeholders, CTAs, etc. in the email communications.
Similarly, on the marketplace front, you should be able to customize the product catalog, branding, plans, headers, footers, and other important page elements. You should also check if the tool allows you to customize the checkout page.
Apart from this, you should check if the platform supports various APIs and widgets to help you easily set up pricing on the website, without requiring any coding.
8. Compliance and tax support
Subscription businesses deal with a lot of customer data and information. As such, it becomes important to regularly monitor and assess the security standards to meet various corporate regulatory policies and requirements.
When selecting a subscription business tool, you must ensure that it meets all the industry compliance and regulatory requirements. This will not only keep you safe on the legal front but also help you reduce errors and add financial transparency.
Check if the platform has centralized repositories of data and the ability to download reports. This will help you reduce the audit time. The billing system should also contain multiple currencies support (if you are or plan to operate globally) along with support for multiple tax levels and rules.
9. Partner Management
At any given point in time, if you plan to scale your subscription business by building a partner ecosystem, you must be prepared to manage your partners efficiently. By creating a partner channel, you can expand the reach of your core offerings and drive higher revenues.
Modern subscription billing software also supports partner management. Look for the following capabilities:
- Ability to offer a white-labeled marketplace to the partners.
- Ability to offer a dedicated partner panel – to help your partners manage product billing, upgrade/downgrade, support, etc.
- Ability to generate partner-performance-related metrics and grant special discounts and rewards to the top-performing partners.
Finally, you should check if the subscription billing platform supports various integrations. Integrations will help you optimize your operations and engage with various third-party applications.
Your billing software must be able to integrate with additional systems like CRM software, Dynamics CRM, Tally, Livechat, etc.
Integrations might also depend on one business to another. Hence, check if your billing automation provider supports on-demand customizations.
RackNap is a cloud billing and subscription billing software with multiple modules support to help you automate your business processes from end to end. If you want to see how RackNap works, simply book a demo today.
- (1) https://www.vezadigital.com/post/the-rise-of-subscription-based-marketing-services#:~:text=%27By%202022%2C%2053%25%20of,attain%20and%20secure%20repeat%20customers.
- (2) https://www.cfo.com/accounting-tax/2019/02/recurring-revenue-rising/
- (3) https://www.cfo.com/accounting-tax/2019/02/recurring-revenue-rising/