Last editedMay 20234 min read
Pricing, billing and collecting payments for SaaS can be a lot more complex than in other areas. What’s more, the whole area of SaaS payments is continually evolving. With that in mind, we’ve compiled some useful guidance on key considerations for choosing a SaaS billing solution.
What is a SaaS billing solution?
The nature of SaaS means that it is generally billed on a recurring basis such as annually or monthly. This means that when people talk about a SaaS billing solution, generally, they mean a SaaS subscription billing solution.
An effective SaaS billing solution charges customers with practically no effort on the part of either the customer or the SaaS vendor. Ideally, it should be able to cope with both standardized and customized pricing. It should also have the ability to charge one-off payments when necessary.
One-off payments are not a common feature of SaaS billing. They do, however, often pop up from time to time. It’s therefore useful to have a SaaS billing solution that supports them rather than a pure SaaS subscription billing solution.
How to get SaaS billing right?
SaaS billing is a key element of subscription management. It’s therefore vital to have billing that supports your SaaS pricing model. The good news is that this can actually be simpler than you might at first think.
Fundamentally, the best practice guidance for SaaS billing is much the same as the best practice guidance for billing in other sectors. There are, however, some particular nuances to SaaS billing that you need to keep in mind and address. Here is a quick guide to the three main ones.
Keep your billing transparent
Setting your prices effectively may require a lot of analysis and discussion behind the scenes. Once everything has been agreed upon, however, whatever is presented to the customer should be instantly understandable.
Firstly, the customer should be able to calculate (or at least accurately estimate) how much they will pay for the service. Secondly, they should be able to see clearly why different packages are priced differently. What’s more, these price differentials should appear entirely reasonable.
Automate your billing as much as possible
The nature of SaaS means that it’s perfect for automated billing. Most customers are simply going to want to hand over their billing details and have everything else handled for them. Most SaaS vendors also benefit from this approach since it provides the smoothest possible cash flow with the least work. It also tends to reduce the cost of billing and payment collection.
Analyse your data for business insights
Your customer data can be an invaluable source of insights into how to improve your revenue stream. In particular, make a point of actively looking for areas where you are currently leaking revenue. Even if it’s only a small leak, plugging it can make a big difference over time. Likewise, try to identify trends so you give yourself the best chance of being prepared for change rather than just reacting to it.
Five features to look for when deciding on a SaaS billing provider
Your choice of SaaS billing provider is every bit as important as your choice of SaaS billing solution. Here is a quick guide to the five key features to look for when choosing a SaaS billing provider.
General reputation
This is usually the best place to start. A little research early can save a lot of time later.
Ease of onboarding
Your onboarding is your first experience of what a SaaS billing provider can do for you. It should therefore be of the sort of standard you’d want (and expect) throughout your working relationship.
Reliable customer support
Reputable SaaS billing providers will generally make it possible for you to trial their SaaS billing solution for free. Use this time to put their customer support to the test. You might not need it often but you’ll need to have confidence in it.
Flexibility
SaaS is a dynamic environment. That means it’s massively helpful to work with a SaaS billing provider who has the flexibility to adapt to your changing needs.
Ability to support growth
Think about your path to growth and what role your SaaS billing provider could play in it. In particular, think about what will happen if you want to expand into international markets. If this is a part of your growth strategy, then you will need a SaaS billing provider who can operate in your target markets.
Key considerations for choosing a SaaS billing solution
Once you have an idea of which SaaS billing providers you might like to work with, you’ll then need to look at choosing a SaaS billing solution. Here are the key considerations you should keep in mind.
Pricing structure
Just as you should be offering transparent pricing to your customers, so you should be looking for a SaaS billing solution with a transparent pricing structure. In most cases, this is going to need to scale from fairly small (start-up), potentially to very big (Enterprise). This means you generally want a selection of price packages and the option to have custom pricing.
Ability to bill your target market(s)
Are you looking for B2B SaaS billing or B2C SaaS billing? Do you need subscription-based SaaS billing or usage-based SaaS billing? Do you need the ability to make one-off charges? Perhaps you need a combination of all of these (or will in the future). Whatever you need, make sure that your SaaS billing solution can support it.
User-friendliness
Arguably this is subjective but it can be tested and benchmarked. You can almost always get some kind of free trial of any SaaS billing solution. Use this to see how easy it is to do whatever you need to do. For example, try creating customers and payments and managing subscriptions.
See what tools are offered with the package. Make sure you’re clear on whether they’re provided by default or whether they’re optional extras. In particular, see if a potential SaaS billing solution offers intelligent dunning. This may be referred to by other names. For example, GoCardless refers to Success as a system for intelligent retries.
Robust API
You may start out by using standard cloud-based dashboards. As you grow, however, you’re probably going to want to start creating your own customisations. That means you’re going to need a robust API and proper support for it.
Support for Open Banking
Open Banking really is the new frontier in payment processing. It’s gaining attention from consumers and businesses due to its convenience. It’s also looking set to play an increasingly important role in fraud prevention. This means that there is potentially a lot of benefit in using a SaaS billing solution that actively leverages the growing possibilities of Open Banking.
SaaS billing solutions - who exists in the market?
The best place to find an up-to-date list of SaaS billing solutions providers is to check GoCardless’ list of partners. In particular, filter on the category “Subscription Billing”. This page lists all the GoCardless partners who support subscription billing. You can click on any of the partners to learn more about them. You can also enter your details and request a callback if you need more help deciding which option is right for you.
We can help
GoCardless is a global payments solution that helps you automate and schedule payment collection. With GoCardless, you can easily collect recurring payments from subscribers. This maximizes your chances of getting paid on time every time. You can also collect one-off donations using either regular bank payments.
