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What Is Subscription Billing Software?

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Last editedDec 20213 min read

Subscription billing software solutions are essential for businesses which offer subscription and membership based products or services. These include gyms, health and fitness centres and magazines. In this post we’ll go through a detailed explanation answering the question “what is subscription billing software?” to help you decide whether it’s right for your business or not.

What is subscription billing?

Subscription billing refers to the payment model whereby customers pay a company for goods or services according to a bill and invoice schedule. This is usually monthly, but can be quarterly or annually. The payment amount and the schedule are agreed upon by the customer before the payment plan begins. Subscription billing is therefore a form of recurring billing. It is used by streaming services such as Netflix and Amazon Prime. Taking out a magazine subscription also works in much the same way, and of course, membership based companies such as gyms and fitness centres also receive payment in this way.

What is subscription billing software?

Subscription billing software oversees and streamlines recurring billing for companies receiving payment via subscription. This could be monthly, quarterly or annually.

Many people pay out some sort of subscription for a service they use. A popular example of this is the paying of a monthly subscription fee for the use of streaming services.

Subscription billing software offers features to facilitate the receiving payment for their product or services, as well as allowing them to see reports, trends, and collated information on their customers.

Sometimes subscription billing software operates as a standalone product, however it can also be used as part of a suite of subscription management software all working in conjunction. This can be useful for larger companies who wish to gather data on their subscription revenue and customer profiles.

As recurring billing is becoming an increasingly popular method of payment and is used to pay for products in instalments, more and more companies are turning to using monthly subscription billing software.

Subscription billing, or recurring billing, is a fairly new concept but it’s becoming a preferably payment model. In the past, companies would usually charge a fixed sum upfront for goods and services.  However, this simple payment model is in decline, and many businesses offer subscription billing options.

The invention of the cloud incited many software companies to begin offering software as a service billed monthly, rather than as a product bought outright. This billing method then became popular in the tech sector as a whole, and gradually made it’s way into the consumer goods and services industry. Today, it’s possible to pay for nearly everything by recurring billing.

Types of subscription billing

There are different payment models for subscription billing. Some businesses will charge a fee proportional to usage of a service or product, whereas otherwise charge the same amount monthly to at intervals no matter the usage.  Below are some of the most popular subscription pricing models.

Standard subscription pricing

Clients pay the same amount on a consistent schedule, e.g. monthly.

Usage-based pricing

The amount a customer pays is determined by how much they use the service or product. Mobile data on a phone contract, for example, often works this way.

Hybrid pricing

A flat fee charged at recurrent intervals unless usage surpasses a certain limit, in which case an extra fee proportional to usage is added.

Freemium pricing

Customers are able to access the basics of a service for free, but must pay to access additional features.

How does subscription billing software manage payments?

Businesses can automate subscription billing and oversee all invoices and payments in one platform. They can set up when invoices are sent out and can automate sending reminders and notifications to customers regarding payment.

Recurring payments with GoCardless

When it comes to subscription software, GoCardless is one of the best options around. Payment will be taken instantly on the day that it’s due, so you won’t need to worry about your customers paying late and impeding your cash flow. Plus, with partnerships with accounting software providers like Xero, Zoho, Chargebee, Salesforce and more, you can seamlessly integrate GoCardless with your existing platform and start taking and reconciling customer payments with ease. Plus, there aren’t any weighty monthly fees to worry about, as businesses pay on a per-transaction basis. 

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.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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