Why Billing Frequencies Are Important for SaaS Businesses?

Business

Billing frequency means how many times the customer is billed in a specific period of time. And billing frequencies are important for SaaS businesses because they are linked with recurring revenue. When billing frequencies are increased, the flow of recurring revenue also increases. Billing is the foundation of revenue. In the subscription business market, the billing frequencies matter because of various reasons. In this blog, you are going to find all these reasons so that you can maintain the flow of revenue in your business.

Billing Cycle

Many people say that the billing cycle and billing frequencies are the same things. But they are not. There is a difference between these two. The billing frequency is the number of times the customer is billed. However, the billing cycle means how long the billing cycle continued and the events that a customer went through during this time. So, they are quite interlinked concepts, but they have their own significance. But SaaS companies target to prolong the SaaS billing cycle so that the customer lifetime value (CLV) may increase.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) means the advantage or the profit that you earn from a customer. If a customer stays longer with you, it is for sure that you are going to earn more from that customer. So, here customer retention is the factor that matters. Customers stay onboard and they increase the CLV. Also, the activity of the customer also matters. If the customer is not active but dormant, then CLV will not be satisfactory. So, your need to adjust billing frequency in a way that the customer remains active.

Customer Satisfaction

The crux of the billing frequency is customer satisfaction. Customer needs to be satisfied in the subscription business market. If the customer is not satisfied, he will simply cancel the subscription and move to your competitors that of course, you do not want. So, to satisfy the customers, you need to bill them as per their affordability and offer them the time when they want to pay you. And your billing frequency will decide when the customer is going to pay you. For instance, monthly billing is the preferred billing frequency by many SaaS service providers. Also, it is popular among the customers. Magazines, OTT platforms, and other businesses often opt for monthly billing.

Flow of Revenue

Right billing software is the basis of recurring revenue. If you want to increase or maintain the flow of the recurring revenue, then you need to focus on the subscription billing frequency. If billing is straight, then the flow of the revenue will not only be maintained but also the flow will increase. Today, it is not easy to increase recurring revenue in the subscription business market. There are so many retailers offering the same product and services with the same subscription plans. It remains a challenge for entrepreneurs to make their place in the subscription market. But your billing frequency plays the role in maintaining the flow of revenue. So, decide your billing frequency wisely.

The importance of the billing frequency would now be clear. When you are paying attention to your billing model, you should also pay heed if you are going to opt for monthly billing, annual billing, weekly billing, or hybrid billing frequency. Some businesses even divide these billing frequencies into different subscription plans. In these plans, you offer services and monetize these plans. Offer these plans as per the billing frequency that you have decided. If you are looking for the right subscription management platform that can help you implement your subscription billing cycle, then go for SubscriptionFlow. Here, you can implement the billing model that suits your business.

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