Thu. Feb 2nd, 2023

The Right Subscription Billing Models to Maximize Recurring Revenue

In the SaaS industry, the profitability of your subscription business relies on the long-term relations you establish with recurring customers, and this ultimately depends on the viability of your subscription billing models. Customers today want to pay only for the value they receive, or how much they have used your product. Implementing the right billing model is the key to driving your revenue and keeping customers happy!

Here, we will talk about some smart billing methods you can use for your subscription business to generate revenue!

1. Flat Fee Billing Model

Flat fee billing is great for companies that have a narrow SaaS product or service and want to set a fixed price for them. This also works well when your products are relatively uncomplicated since at the end of the subscription period the customers will have to pay the same fixed rate for the services that they want to get.

They can also simply cancel their subscription for a specific month if it is not needed during that time. Therefore, flat fee billing models are as simple as one-time billing models. Using automated subscription software for your SaaS and SMB customers allows for consistent revenue, simplified sales reconciliation, risk-fee, errorless billing, and simplified revenue forecasts.

2. Usage-Based Billing Model

With this model customers are billed depending on their usage of the product or service. For example, customers pay their phone bill as per the package they have subscribed to and therefore their usage. However, this model is best suited for the SaaS business industry, allowing it to harness its customers’ recurring needs and price them accordingly. This gives customers the feeling that what they are paying is directly linked to the value they are receiving.

Also known as the pay-per-use billing model it empowers SaaS businesses to take on new customers quickly given the fact that customers only have to invest as per the product or service they need. Due to its transparency, usage-based billing is a great option if you are looking to acquire new customers and also if you want to retain your existing customer base. The pay-per-use model also helps merchants diversify and increase the flow of the revenue stream. Even if customers prorate because they now require pay-per-use billing, everything can be handled easily using an automated billing platform.

3. Hybrid Billing Model

For many businesses including subscription businesses, a single billing model does not suit all customers. To avoid this one-size-fits-all policy you can opt for a combination of billing models to best cater to your diverse customer needs. In a hybrid billing model, you would have the option to combine or mix and match different billing models to use the best fit for your business. Implementation of this model provides you with more flexibility to modify pricing for new products, launch them quickly, earn more revenue from cross-selling and upselling and have greater control over the customer experience you provide.

Which Subscription Billing Model Should You Choose?

Now, to select a billing model that would best meet the needs of your SaaS business, you need to evaluate the nature of your tasks. Being in the e-commerce or subscription business, hybrid billing will be your best option.

Here, customers from across the borders and from platforms need to be catered to accordingly. This requires multicurrency support, integration of multiple payment gateways and various payment methods. With a hybrid billing model, your life will therefore be easier.

If you are seeking a subscription management platform that helps you implement flat fee billing usage-based billing and hybrid billing model all in one software, SubscriptionFlow is a great option. This robust subscription management software helps streamline your billing, analytics, and payment models.

Not only that but you are able to cater to a variety of customer needs due to the multiple payment gateways it provides in a number of different currencies. Resultantly you will also be able to manage revenue management, ensure unified subscription operations and generate a happy customer base.

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