What is Subscription Payment and How Does It Work? Definitions, Benefits, and More
Subscription billing is a payment technique utilised by most internet businesses, particularly subscription-based enterprises, in which clients are automatically charged at predetermined intervals such as monthly, quarterly, yearly, bi-annually, and so on.
Subscription billing is gaining traction in a variety of industries, including e-commerce and retail stores, OTT platforms, gaming apps, e-learning platforms, employment portals, online grocery stores, and more!
Subscription Billing System Benefits Improved Payment:
Many organisations are finding it challenging to process and accept payments on time for a variety of reasons, including lost or delayed payments, subscriber churn, and other concerns. There are also additional concerns that could develop, such as changes in subscription plans, mid-cycle changes in the products or services used, and so on. All of this is handled seamlessly by a subscription billing system. For example, if a customer forgets or misses a payment, a billing system can prolong the subscription plan renewal period by one or two days or pause access until the payment is received. As a result, such late payments will no longer be accepted.
Customers will have more options:
With the help of subscription billing software, you can provide your clients with a variety of payment and content alternatives that benefit your organisation. For example, you may provide various plans with escalating value in terms of price and content, such as silver, gold, diamond, and so on. Customers can select the options that best suit their needs and upgrade or downgrade as needed. This also reduces the likelihood of subscriber churn due to factors such as increasing prices, extra undesired material, and so on, because customers can simply switch to another plan rather than cancelling your service! Like many OTT platforms and other businesses, you can provide bundled services or bespoke subscription plans based on user demand.
Advantages in the Market:
With a subscription billing system in place for your company, you'll be able to easily set up numerous monetization plans, promotional offers, and more language, currency, and payment method options that are all readily implemented on your platform. Without a doubt, it will provide your company with a competitive advantage over the competition.
Customers have more control:
Gone are the days when customers were solely responsible for all billing-related tasks, such as altering billing frequency and monitoring subscription plans. Customers that use a top-rated subscription billing system have more control over their billing activities, such as upgrading or downgrading subscription plans or selecting a new currency or language for invoice generation. Most subscription billing systems provide consumers with self-service portals, which are frequently used to attract customers who desire to have more control at their end.
So, now that we have a better understanding of why a subscription billing system is a must-have for online businesses, let's look at the most popular subscription billing models in various industries.
What are the most popular subscription billing models?
Now, let's take a look at the most common subscription billing methods that the majority of organisations employ-
Billing for B2C Subscriptions
In B2C subscription enterprises, B2C subscription billing methods are widely employed. Customers sign up for a subscription to items or services, and they are charged at regular intervals until they cancel the subscription. The majority of these B2C subscription payment methods fall into one of two categories:
Subscription Billing at a Fixed Price
Customers are charged a predetermined fee for a fixed set of products, services, or features under flat-rate subscription billing models. Flat rate subscription models have gained a lot of traction since they are simple for businesses to handle when it comes to adding more items, features, or services to the subscription.
Subscription Billing on a Scale:
When customers choose numerous products, services, or offerings, subscription billing models are extremely effective. Businesses can utilise tiered subscription billing models to offer different bundles or combinations of products, features, and services to different user tiers. Customers can gain access to more features, services, or better products by paying a higher price.
Billing for Overage Subscriptions
Customers can access limited features or offerings at a base fee or for free using overage subscription billing methods. And if they want access to more, they'll have to pay extra.
To sum it up:
Subscription billing is a broad topic that has been debated, researched, and utilised in a variety of businesses. Every other firm is adopting subscription billing models because of the infinite benefits, wide range of charging models available, and flexibility. And, in order to stand out from the crowd, you must choose one that is not only efficient in terms of all of the above-mentioned functionalities and billing models, but also easily integrable, allows you to customise its various feature-rich solutions, and, most importantly, facilitates globalisation and business scaling.
