Your intensive manual billing processes are holding you back.
You’re well aware of the problem. And you think automation is the fix: taking repetitive processes off key team members’ plates will free up the bandwidth to help your business scale as planned—and beyond!
You’ve perfected your business case. Presented it to senior stakeholders.
And here we are. The day has arrived. Finally, you’ve got the green light! Now comes the good part. It’s time to go shopping for shiny new subscription management software.
Alas, it’s not all fun times and free trials. This major purchase is a big deal; it means significantly changing processes and it’s not necessarily a small investment. Your entire revenue operations department will be impacted by this decision to some degree. The pressure’s on to get it right.
But you can breathe easy—help is on hand! So grab your product shortlist and set off on your software evaluation journey. We’ll guide you toward finding the best fit for your business. Here are some insider tips for targeted questions you’ll want to ask potential vendors along the way.
1. What happens if, over the year, I invoice for more revenue than anticipated?
First and foremost, subscription management software is designed to automate recurring invoices and manage customer payments. And as your business grows, so do your invoicing needs. In other words, increased annual recurring revenue (ARR) indicates higher usage of your subscription management software. So, it makes sense that billing software vendors calculate pricing based on how much revenue you invoice.
For example, if your subscription business invoices less than $500K in annual revenue, you may be on a basic plan with a monthly cost of $199. After you pass that $500K threshold, you’d be moved up to the next level plan. Let’s say that one costs $499.
Imagine you were to start on the most basic plan with an expected ARR of $450K. But your sales team is on fire! You’re having a great year and you fly past the $450K revenue goal after just 6 months. You finish the year having invoiced an impressive $800K. Nice work.
Great, right? Well, yes. But there’s more to it. Some large players in the subscription management space charge overage fees.
This means that if you invoice for more than what’s allocated for in the revenue band, the vendor takes a percentage of that revenue—essentially penalizing you for growth. The fee is usually somewhere in the region of 0.5 to 1%.
In our example, a 1% overage fee would result in a $3,500 fee. Not a debilitating amount, but still a weird punishment for growing faster than expected.
In contrast, a vendor like Stax Bill would simply move you up to the next pricing tier when it’s time for your contract renewal.
2. Do you integrate with the other items in my tech stack?
On its own, billing automation saves your AR team plenty of time—often as much as 40 hours per month that can be redirected to more strategic activities.
But that’s really just the tip of the iceberg. To maximize efficiency you should take advantage of your subscription billing software’s full integration capabilities, whether native or through API.
Consider the impact on internal processes if your subscription management software could communicate with elements like your:
- CRM software, simplifying data flow when a prospect becomes a customer,
- ERP system, so your finance team can easily upload invoices, track payments and synchronize information for cleaner data,
- taxation software, helping you navigate the minefield of state-specific tax laws in the US and abroad for ASC 606 compliance, saving you tens of millions plus potential legal recourse,
- payment gateway, supporting more payment methods to get cash in faster and efficiently,
- IoT devices like wearables, vehicles, or equipment, and
- your SaaS product, simplifying usage tracking, opening the door for usage-based billing, and connecting billing activity with triggered in-platform responses.
So, for more seamless operations in your subscription-based business, you should look to integrate your entire fintech stack. And you’ll want to make the right choice at the outset. Rolling out a subscription management solution business-wide only to find it’s incompatible with an essential part of your tech stack or doesn’t have an adequate API would be a huge headache.
3. How easy is it to make catalog updates or customer plan changes?
Any modern subscription management solution worth its salt has a relatively flexible catalog—but some do it better than others.
Nowadays, it’s hard to imagine a subscription-based business that doesn’t anticipate:
- launching new products or features,
- experimenting with different pricing models or pricing plans,
- offering a mix of subscriptions and one-off purchases, or
- moving customers from one plan to another.
For these things, you need a subscription management platform with exceptional catalog flexibility. With the tools to customize pricing or packaging on a customer level, you can adjust subscriptions to each customer’s unique needs. This gives you a major competitive advantage, especially in B2B sales.
Catalog agility also reduces confusion around invoicing. Sales that fall outside of your pre-determined plans don’t need to be entered into the system using a workaround—such as add-ons being treated as a separate subscription or named incorrectly. Not only could situations like that irritate customers who don’t recognize line items, but it pollutes data and quite literally guarantees inaccurate reporting.
4. Do you facilitate savings on payment processing fees?
Operating a recurring revenue model means collecting recurring payments from customers at regular intervals. And because billing happens on a recurring basis, credit card processing fees become a frequent and necessary evil. At 2%-4% per transaction, they can very quickly get pricey.
While there’s no way to totally avoid this cost, you can save a bit of money by asking potential subscription management vendors if they have special deals with preferred payment gateways.
An even better option is to choose a subscription management software with its own built-in payment gateway. Most subscription billing solutions on the market don’t offer this.
But, in practice, how would your business benefit if it signed with one who does? From the vendor’s point of view, you’re a more valuable customer. Why? Essentially, you want to buy not one but two of their products. You could stand to benefit from
- price bundling
and
- a subscription model for payment processing, which is more predictable and affordable than the traditional fee-based model most gateways offer.
All in all, you could see enough savings that the software will pay for itself!
5. How customizable are your hosted pages?
A hosted self-service portal and registration page are simple additions that can significantly improve the customer experience. Customers are empowered by managing subscriptions on a self-service portal. They prefer it—according to a recent Frontegg survey where 77% of people said they prefer to use self-served SaaS products. Data from Microsoft backs that claim up. Microsoft’s research shows that 65% of global respondents view brands more favorably if they offer a mobile-responsive customer service portal. And if we look at millennials, the number is even higher at 79%. People like solving their own issues whenever and wherever they want.
It prevents revenue leakage and eliminates the hassle of picking up the phone to do simple things like update card details or adjust plan features to suit their changing needs.
But it’s not just the customers who benefit from being able to manage subscriptions themselves. It lightens the load for your support team, too—leaving them with more time to focus on growth-driving business projects.
These pages should be hosted by your subscription management software but customizable to fit your branding and your business’s specific needs. For example, will different segments of customers have access to specific tools? In what depth will they be able to manage their subscription? Other things to consider are the various options for payments, including method and frequency, and how they will need to reflect your pricing strategy.
Customizing the features of your hosted pages is essential if you want to build trust and provide a pleasant customer experience. For example, having control over page layout lets you optimize the customer journey which can improve conversions, affecting your bottom line. By tailoring the use of colors and styles you can ensure consistency in your branding which results in feelings of reassurance and confidence among customers: essential metrics for subscription-based businesses.
Lastly, because your hosted pages will collect sensitive customer data like contact info and billing details, they’ll need to be held to the highest standard of PCI-compliant data security.
Picking the best subscription management software for your business
For most cloud-based subscription businesses, choosing subscription management software won’t be a simple case of comparing pricing online and signing up.
A recurring billing platform isn’t just a handy tool to automate invoicing and cut down on admin. It’s a holistic subscription lifecycle management solution that will become an integral part of your business operations and a super-charged vehicle for epic growth.
These five questions should help you fine-tune your selection process and whittle down your shortlist of vendors. Your final candidates should offer ASC 606-compliant revenue recognition, advanced financial reporting, subscription analytics with data-driven insights, customizable hosted pages, diverse integrations, catalog flexibility, transparent and fair pricing, reduced payment processing fees, subscription analysis, real-time revenue tracking, and a whole suite of advanced subscription management tools.
Finally, when it comes to making a buying decision, you should now be prepared to pick the right high-impact software such as video editing software and more to vastly improve every area of your subscription-based business.
