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Best Practices for SaaS Billing

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Last editedSept 20212 min read

There is a huge range of SaaS pricing models, from usage-based pricing and per-feature pricing to freemium and tiered pricing. Broadly speaking, however, the SaaS space is moving away from traditional business models and towards more flexible, consumption-based billing models. Consequently, it’s important to implement SaaS billing best practices to take full advantage. Take a look at our top five SaaS billing solutions, right here.

Use a simple SaaS billing model

First up, be sure to choose a simple, logical pricing model. Complicated pricing can confuse potential customers, leading them into the arms of your competitors. Even if you do convert a lead into a customer, complex billing can place increased demands on your customer service team, producing churn. Select a simple SaaS billing model that will enable your customers to directly connect the services they’re using with the prices they pay.

Take steps to prevent revenue leakage

Eliminating revenue leakage is one of the key benefits of switching to an automated billing system, but it’s still important to put guidelines in place to minimize the amount of revenue leakage you’re dealing with. Be sure to send regular reminders to customers about upcoming payments, automate your invoicing/payment collection process, send automatic reminders about expiring credit cards, and let your customers know immediately if their card is declined. All of these SaaS billing best practices should ensure that your company is always able to collect payment for services rendered.

Focus on reducing customer churn

Another important SaaS billing solution revolves around the reduction of customer churn. It’s important to take steps to minimize churn wherever possible. SaaS recurring billing software should enable you to automate payment collection, while you should also leverage data to predict customer trends. Then, update your prices or provide discounts/offers that may help to convince wavering customers to renew their subscriptions. It’s all about identifying customer needs/desires as soon as possible.   

Leverage billing data for insights

If you’re in the SaaS space, there’s a good chance that your enterprise systems are collecting a significant amount of data regarding your customers and the way they use your services. One of our key SaaS billing best practices is to leverage this data to investigate customer trends and explore the impact of billing/pricing changes on these trends. Depending on the SaaS billing software you’re using, you should be able to forecast how changes in your billing processes are affecting product demand over time. Then, use these insights to optimise your billing system.

Simplify the billing process for customers

Finally, it’s important to make your invoicing process as simple as possible. The aim of the game is to get customers to pay their bills quickly, while also providing them with a positive experience of your brand. SaaS billing software should make the billing process extremely simple. Whether you want to provide a broad range of payment methods or give your customers the opportunity to adjust their billing dates, simplifying the billing process can help improve customer experience and encourage your customers to stick around for the long haul.

As you can see, taking advantage of usage/consumption-based pricing models requires an effective, automated billing management system. There are a broad range of services like this available, including GoCardless, which enables you to collect recurring and one-off payments directly from the bank accounts of your customers.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

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