Turns Out Billing Isn’t Too Complex for SaaS

Broadband subscriptions are very competitive. Last week I received a flyer in the mail offering ‘Your First 6 Months FREE!’ Sounds good. The small print says that I must sign up for 12 months and pay the basic line rental upfront. Hmmmm, ok, I’ll have to mull that over. This marketing campaign may be effective for some, or maybe not. Who decided this offer might be more effective than other offers? Consider the options the marketing team could have run with:

  • Buy 6 months & get the next 6 months free.
  • Get the first 6 months free when you sign up for 12 months
  • Get 50% discount for your first year
  • Buy 12 months for the price of 6
  • Buy an annual subscription and get another subscription for free for your second home.

Assuming consumers sign up for a minimum of 1 year, at the end of the year, each of these subscription models has the same annual financial outcome for the broadband provider. However transactional, each model is quite different in reporting and recognizing revenue throughout the year. Old-school media/Telco companies consider using their legacy on-premise billing systems to try solve this billing challenge, however we’re often told that it would take too long and cost too much using their existing ‘Telco’ billing system. In some cases we’ve been quoted 6 months to configure and setup a product plan for sale!  Some enterprises feel their billing models are too complex/bespoke to consider a SaaS billing system. If you’re in one of these two camps, which of the 5 models above would you implement/configure just to trial a marketing campaign?  Each model would have to be implemented differently. They would operate differently. The would be managed differently. The invoices would look different. The month end reporting to the GL would be different. With some SaaS subscription management systems, each of the 5 options is simply a different type of subscription plan that can be set up in hours or days.  Marketing teams can then easily split test different marketing campaigns and have customers sign up any of the 5 subscription plans. Integrated business analytics will soon highlight the more effective plans, so the marketing teams can tweak and tune their offers, prices, incentives, discounts, etc., focusing on the more effective offers. Sounds like a more effective and efficient approach trying to monetize a new service, right? So it turns out that while SaaS billing systems can support complex billing models, perhaps the more important issue is agility—getting that new service to market more quickly, then being able to easily/quickly change how to monetize it until you find a model that gets traction in the market. Hmmm, I’d choose the 50% discount for my first year.

Luke Glen

Just learning about subscription billing? Download the new Subscription Billing for Dummies book and learn more. Are you concerned about buying the right subscription commerce solution for your company? Consider downloading the Six Key Buying Considerations e-Paper and make an educated decision on the future of your recurring revenue offering.