Subscription Billing and Management: What You Need to Know

The purpose of every business is to generate revenue, and this only happens when consumers pay for your product and services. In the early days of online marketing, most companies used a traditional method of billing. This often involved a rigid structure that require customers to pay the full charge up front. 

While this method allowed you to give a customer the full charge at first glance, thereby raking in more money per person, it had its drawbacks. The major challenge is that most customers found it easier to pay for a service or product in small chunks. 

Also, seeing as you’re paid in full already, there is no reason for the customer to be loyal to your brand. This and more led to the adoption of the subscription billing method.

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What Is Subscription Billing?

As a business owner, sometimes letting a customer subscribe to your service instead of paying out rightly is often more profitable. This is what subscription-based billing systems are centred around. Payment schedules differ according to various companies and could range from weekly, monthly, and yearly payments. Click here to learn more. 

Advantages Of Subscription Billing

Low Barrier to Entry

Most customers would retreat when faced with a one-time payment as opposed to a monthly subscription. Why do you think very few people pay for their cars and homes upfront? Paying for a product or service in instalments is simply easier to do because the fees are noticeably cheaper per instalment. 

This low barrier attracts more customers to your business than you might have gotten if you used traditional billing methods. 

It Generates Revenue in a Predictable Manner

If you sell electronic devices like a DJ mixer, once a customer buys your product, that is the end. You have no way of knowing when the next customer would come for your product. It is possible you might not make any sales that day again. 

Assuming customers rented DJ Mixer from your shop on a daily basis, it would be completely different. A subscription plan would assure you no matter what happens, existing customers would pay you at a set time.

Disadvantages Of Subscription Billing 

You Need Tools and Software

If it were a traditional billing system, all you need to confirm is that the customer has made their one-time purchase fee. With subscription billing systems, it’s not so easy. You need to set up software that would manage fees for you amongst other things. 

These tools are not free and might cost you a sizable sum.  

You Might Encounter Repeated Errors

Finding out the best approach for billing your customers periodically can be tricky. It is expected that during the period your subscription billing method is being set up, you will encounter challenges. In the end, it is through repeated trial and error that you would find the best approach for your business. 

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What is Subscription Billing Management?

It is easy to confuse subscription billing management with subscription-based billing, but in reality, they’re very different. When we talk about the managerial aspect, it encompasses every action the customer would take in their subscription life cycle.

In the end, both subscription management, and having a recurring billing plan are necessary for any business trying to adopt this method. Below are actions you can expect your management system to handle. 


No matter how much effort you’ve put into developing your product and marketing it, if customers don’t sign up, it’s all for nothing. The signup page is the first place to convince prospects about the value that you bring. 

There are different approaches to this, you could offer a discount for new users, or even a free trial while collecting their details. In the end, your management system will help you implement a proper strategy for this phase.

Free Trials

The beauty of free trials is that if your product is really good, you can be sure of a high turnover rate, it all starts with giving prospects a little taste. The duration of the trial period needs to be long enough to ensure the client connects with the product and short enough to leave them wanting more. These are all the things that your management system will help you set up. 

Most times, billing information is collected at this stage even though the customer won’t be charged until the trial period is over. Your management system will be responsible for contacting leads who don’t subscribe after a trial and collecting their credit card details among others. 

Subscription Changes

Along the line, it is expected that some customers will be unsatisfied with their subscription plan. When this happens, they might want to switch to a less expensive or more expensive plan while a billing cycle is active. Visit this link for more information about setting up your pricing model.

This process involves so many details that simply can’t be handled without the help of a management system. A plan change means some charges might be cancelled or more might even be added amongst others. The system would automatically calculate all these factors and apply them to the charge given to the customer. 

Payment Failures

It is natural for challenges to occur during payment. From funds that do not reflect on the client’s portal to payment reversals, there are so many avenues for things to go wrong. These issues can simply not be handled manually. 

With a management system, you will be able to set up a pre-determined action for each error that may occur. The best part is every interaction is documented from start to finish. This makes data review very easy, all you need to do is bring up the customer’s profile.

Final Thoughts 

Although subscription-based billing methods were initially dominant in the tech space, their utilization in other fields hints at their efficiency. This is a delicate matter and should be treated as such. 

It is for this reason that we encourage you to perform adequate research as you choose software to help you manage your subscription. By now, we hope that you are better informed about the role these systems can play in your business.