Evaluating a SaaS Subscription Billing Service

By Subraya Mallya - February 2014 | Topics - SaaS

With increasing number of software solutions moving to SaaS, the way to charge, collect the fee for the service Subscription Billingis also changing. License (lump-sum) fee is being replaced by (monthly/annual) subscription fee. If the architecture, data management, service uptime (SLAs) are not challenging enough, SaaS companies now also have to deal with subscription pricing, billing and tiered offerings which is not the core competency of most SaaS businesses. To meet this this challenge, a new category of software offering called Subscription Management (aptly also SaaS) which specialize in providing robust billing, pricing capabilities has emerged.

A  friend who runs a SaaS company, which is growing fast and has outgrown their in-house process/technology of managing subscriptions,  was beginning to evaluate a Billing Service. He asked me to help with characterization of what an ideal service should be capable of and baseline the needs that they need to assess. Thought it might be useful for others.

Table Stakes (Qualifiers)

  • Must be a Software-as-a-Service
  • Has to support APIs for all the key actions (REST, JSON, SOAP)
  • Role-based Dashboards
  • Regular Certification of SAS-70 Type II/SOC Type II, PCI-DSS Mandates
  • Integration with major SaaS CRM applications, Accounts Receivables/Financial applications
  • Easy and Cost-effective Implementation
  • Great Customer Support (do we even need to mention it)
  • Mobile interface

Main Course (Must Have)

  • Support self-service creation of Users
  • Support for definition of roles (Billing Agent, Billing Manager, VP of Revenue etc) and associate tiered Permission sets
  • Support delegation of authentication to identity services (Corporate Active Directory, Okta, Symplified, Ping Identity), two-factor authentication
  • Create, Manage Customer Accounts
  • Support definition of product/services, value-added services (offline-backup, escrows), combo-offerings
  • Support for multiple pricing plans, promotions, discounts, freemium, grace period, dynamic pricing
  • Support per-user, enterprise, fixed price, metered/usage based pricing, percentage sales, transaction based
  • Support definition, versioning and management of multiple billing plans
  • Support for different payment frequencies
  • Accept payments (partial payments and full)
  • Integration with Payment Gateways
  • Support for different payment methods (ACH, Credit Card, PayPal, Square, Bitcoin )
  • Support for bill-presentment, branding/customization/internationalization of invoices
  • Support for computation of localized sales tax, value-added tax
  • Support for charges (one-time setup, recurring charges, late-penalties)
  • Support for Payment Reconciliation
  • Support Batch/Online processing
  • Support for scheduled statements, receipts for customers.
  • Ability to process refunds/credits
  • Ability to define terms and conditions
  • Ability to track customer LTV, ACV
  • Ability to manage Renewals

Dessert (Nice to Have)

  • Internationalization
  • Ability to delegate billing function to a shared service/outsourced team
  • Generate ledger/sub-ledger entries
  • Support the entire Quote-to-Cash process
  • Custom app extensions for industry specific needs
  • Blue-prints with needs for companies of different sizes (in revenue) and different industry verticals
  • Accept micro-payments

Governance – Must Have

  • Support Audit for PCI-DSS and other governance mandates
  • Detailed Audit Trail and ability to analyze access information
  • Ability to get customer data when/if customer decides to switch vendor

Consideration Set of offerings available in this space

  • Aria Systems
  • Recurly
  • Chargify
  • Vindicia
  • Zuora
  • ChargeBee
  • FuseBill
  • Monexa
  • Chikpea
  • CheddarGetter
  • Evapt
  • BillingCircle

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