Last editedMar 20233 min read
If you run a customer facing business, like a hotel, then payment processing may well place fairly low in your list of priorities. This is understandable. After all, you’ve got things like keeping your guests comfortable, cleaning your rooms and managing the food and drink demands to worry about.
However, neglecting payment processing altogether, or assuming it will simply look after itself, is a huge mistake. Few things are more important to your cash flow, profit margins and net income than being able to process payments quickly and efficiently. In addition to this, a friction free payment processing and billing model will be appreciated by guests who want to concentrate on enjoying a relaxing stay in your hotel – without worrying about how to make a payment. If you’re looking for a way to achieve this, it could well lie in events-based billing.
What is events-based billing?
We may as well start by explaining what events-based OTT billing isn’t – and that’s subscription billing. Anyone with a Netflix account will be familiar with the subscription billing model, which charges a set recurring fee for a specific wide ranging service, without the individual user being able to tailor that service so that the payments reflect their usage.
The other example which many of us are familiar with is the gym subscription, which keeps leaving our bank account every month, despite the fact that we stopped going to the gym long ago. Subscription billing of this kind is ideal for the businesses that operate it, and for customers who use most or at least a significant percentage of the service being paid for. If you’re an occasional user, however, subscription based billing may feel like you’re being overcharged, and this doesn’t translate to high customer satisfaction rates for businesses.
Events-based billing, on the other hand, represents a shift to the kind of ‘pay-as-you-go’ model that modern customers tend to appreciate. Events-based billing of this kind is the ideal choice for the post-digital marketplace because it enables customers to tailor the services they pay for to exactly suit their requirements. It replicates the flexibility of online purchasing in the real-world environment, particularly when utilised in a customer-centric sector like the hotel and hospitality industry.
Events-based billing explained
In simple terms, events-based billing happens when a customer is only charged for a billable event, rather than being charged an overall charge. If the billable event doesn’t occur during a month, then the customer isn’t charged, but doesn’t have their account closed down, as would occur with non-payment of a subscription-based charge.
Many organisations in the past have operated a payment model which is split between events-based billing and a subscription charge. In other words, customers would be charged a set amount to keep their account open, supplemented by an extra fee when they actually make use of that account. This is basically a form of hybrid-events based billing, as opposed to fully fledged events-based billing which only charges for services actually purchased.
Companies such as Amazon web services (AWS) have adopted an events-based billing model for some of the services they offer, reflecting the sheer range of services on offer. If a large number of services like those offered by AWS were to be placed into two or three overarching pricing tiers, there’s a very good chance that the price, and the redundancy of many of the services being purchased, would dissuade customers from spending their money.
The flexibility of events-based billing
One of the key advantages of events-based billing is the flexibility it offers. Customers who use your services on a corporate level – i.e. a business which regularly books conference spaces within your hotel – can make use of the same pricing plans as those who only book space once or twice a year. They both simply pay per ‘event’, or usage, which is not only convenient but also makes it simple for the customers to keep track of exactly how much they are spending.
Offering events-based billing is one way in which a customer-centric business could differentiate themselves from the competition. Above all else, it is a customer-friendly billing model, maximising value for money and minimising unnecessary spend. Customers who get to enjoy events-based billing with your organisation will feel the kind of loyalty that marketing programmes and reward schemes simply can’t buy. It will be loyalty based upon the sense that you are giving them the best possible deal, even if it means missing out on regular subscription fees.
How GoCardless can help
From the customer’s point of view, the biggest plus point of events-based billing is the convenience – you pay for what you use when you use it, and only then. Working with GoCardless extends the same level of convenience across the whole payment process. With GoCardless you can take payments using the method preferred by the customer, from direct bank payments to traditional credit cards and all points in-between, and it’s equally simple for customers to pay in person as it is online. You can also take variable recurring amounts from any customer, the ideal solution for any event-based billing model.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.