The chase for obtaining outstanding payments from clients is very common among business owners. However, did you know that even those minute follow ups can gradually start taking up to 50 minutes and sometimes more? As an entrepreneur, to be stuck in a rut is the worst feeling ever. That is why Software as a Service Products that are developed specifically to eliminate the rut from business processes are becoming so important these days. One such key tool to help your business is a subscription based billing software. But, what exactly does it mean, and how can a subscription billing software help your business grow. We’re here to help you figure out all that and more.
What is a Subscription Based Billing Software?
A billing software is a SaaS product very much in demand these days from different types of business owners. Various billing softwares are created to help a business reach its true potential. A subscription service often refers to a plan with a fixed date of payment, which arrives either annually, quarterly, monthly, or weekly. So, a subscription based billing software is a SaaS solution for business owners which allows the subscription based payment model between the business owner and software provider.
While traditionally one time payment and licensed software solutions were quite popular. Gradually, subscription based payment models are growing in the SaaS industry. Especially considering that they provide a lower upfront cost as compared to traditional one time payment licensed software solutions.
Key features of subscription based billing software
This table consists of the key features of a subscription based software that makes it different from the traditional payment modes for SaaS products:
| Feature | Details |
| Unlimited Access | As long as you continue paying the subscription amount in a timely manner, you can enjoy the access to your software solution.
Take Netflix for example, you can keep bingeing, as long as you pay the bill on a set date. |
| Upgrades | When you’re paying the subscription fee, the upgrades to software are inclusive. Which means, you won’t be asked for any additional fee. |
| Automation | A key feature of subscription based billing software is that it provides automation solutions for recurring bills and invoice generation and processing. For example, the CaptainBiz billing software facilitates automation of the entire invoice processing, allowing you more free time. |
| Flexibility | All subscription based software solutions have different pricing options. This helps them reach a wider audience. So, this provides flexibility that suits small, medium as well as large industries. |
| Free Demo | Usually subscription based billing software providers give you a chance to test the model by offering a free trial. |
| Pause/Resume Options | You may even get access to a feature that allows pausing the subscription for a certain period. You can then resume the plan as and when required. This option may not be available in all different subscription based billing software. So, you should check it up with your software provider before signing up! |
Pros of Subscription Based Software
Subscription based billing software offers you a value of the price you pay. Many business owners and vendors are moving to subscription based software as their primary preferences due to this reason. It gives an edge over the traditional payment methods for which you may have to spend constant reminders. This is just one of many pros of subscription based software. Here are the other pros:
Budget Management
When compared to perpetual licensing models, the subscription based payment models tend to have a very low upfront cost. You will have to pay a certain fee on a specific date. As a result of this, you can easily manage your funds accordingly. When you know this payment is due in a month or so, you can manage the expense in a manner that does not affect your cash flow.
Flexibility and Scalability
These types of pricing models offer a great flexibility for users with multiple backgrounds. Usually all subscription plans have different sub-plans to choose from. These plans are created after consideration of the price – value balance. This flexibility, that’s missing in the traditional perpetual licensing method, also enhances your scalability. As your business grows, upgrade your billing software by improving your subscription package. Moreover, sometimes, you may even get the feature to pause and resume your subscription, on your choice.
Besides, with the different choice of plans, you can remove or add certain specific features to your subscription plan. Thus, making it the perfect size to match your needs! This advantage of a subscription based software is especially useful for growing businesses as their needs change day in and day out.
Continuous Updates and Improvements
When you subscribe to a software, it gives you certain special rights for the worth of your incurring cost. Updating your software solution can often be a task you may not enjoy as a business owner. However, with a subscription based software, you get access to automatic updates to the software. This automatic upgradation acts as an incentive for all subscribers. Moreover, it also gives all subscribers the access to improvements at the same time. Thus, in this cutting edge competitive market, it becomes easier for business owners to focus on growth, while having constant access to recent developments in technology. Here are some of the benefits that you can have with access to new technology:
- Better collaboration of various tools;
- Improve data analytics and business intelligence; and
- Enhancement of productivity and efficiency.
Simplified Management
A subscription based software simplifies the need to manage it. You wont need to worry about updates and compatibility issues. Moreover, even for the users of the software within your team, with access to free trials before subscription, it is easier to adapt to a subscription based software.
Integration
Certain software solutions also provide API access to integrate one or more tools. This step further streamlines the process by allowing you to get the best from all different tools you are using.
Cons of Subscription Based Software
Nothing in this world can be completely free of errors. With that being said, there are also some points or issues of subscription based software as its downfall. Here is the list consisting of the points of limitation. This list of subscription software cons will help you make a more informed decision.
Ongoing Financial Commitment
Even though a subscription software shows the bright and shiny picture of lower upfront costs, it imposes a retention commitment for the subscribers. Simply put, you will be liable to make a commitment to pay a subscription fee on a certain date. Failure to do so can lead to cancellation of your subscription. Hence, if the business is not performing well in a certain month or quarter, it can get difficult to manage the subscription fee for that period. So, to clarify it further you can say that in the long run, subscription model payments can backfire on your cash flow.
Vendor Dependency
Your vendor, ie., the software service provider shall retain the ownership and complete authority of the software. Hence, you need to find an extremely reliable vendor for your subscription based software. Think of the bigger picture, what if the service provider goes out of business? What if they cancel the subscription abruptly? Moreover, what happens to the confidential and sensitive data you’ve fed to the software? To get an answer for all these uncertainties, it is very crucial for you to choose a reliable and trustworthy partner.
A few implications of sudden cancelation of subscription on your data are that:
- You do not get access to your data on the software;
- Data might be retained by the vendor for a specific time;
- You may get an option to download your data; and
- Some vendors delete data completely as soon as your subscription ends.
So, before you commit to any subscription based software for billing, you should check out the terms and conditions of the software service provider.
Managing the Subscription
Another disadvantage of a subscription based software solution is that managing multiple subscriptions at once can become a tedious task over time. You may have to keep a track of the payments. Moreover, there are chances that you are paying for certain features that will never come handy, but are a part of your plan. Finally, it can also create a problem in case of an unexpected price increase. Such instances can not only affect management, but also your budget.
Neutral Considerations of Different Pricing Models
Subscription based billing software is not the only pricing model that has pros and cons. There are various benefits and limitations in the traditional models also. The key to creating a perfectly functional tech-enabled business lies in creating a balance between subscription based and other perpetual licensing models. So, let’s take a neutral view of both the types of payment models and see which suits you best:
Pricing Comparison
| Feature | Subscription Model | Perpetual Licensing |
| Initial cost | Is low because of the concept followed “pay for the value you receive” | Is high because most of the time, it has a one time payment |
| Operational cost | As a result of the recurring fee, operational cost is ongoing and can keep on getting higher based on terms. | The operational cost is NIL to low, depending on the maintenance requirements you may have. |
Also Read: CaptainBiz Pricing Plans Explained: Choose What’s Best For Your Business
Comparison of Benefits
| Feature | Subscription Model | Perpetual Licensing |
| Scalability and Growth | Subscription models are usually cloud based. Which means, these are easily accessible anywhere, as long as you have an internet connection. | If you want to scale your business after purchasing this software, you may have to buy a new licence for the software. Especially since these software licences are installed in the specific computers or devices. |
| Automatic Innovation | As soon as an update occurs, the subscribers get to try, test and use it. | In a licensing model, you will have to pay for and install updates and security measures separately. |
| User Experience | Is simple and easy to manage for all users. No installation or updation is required by the users. | With requirements like manual installation and compatibility management, this can get a little tricky for its users. |
| Customisation | Allows specific flexibility with options of different subscription plans. | You can get this completely customised for your needs. |
Limitation of Pricing Models
| Feature | Subscription Model | Perpetual License Model |
| Dependency | You’ll have to rely heavily on your service provider. Moreover, after feeding your data in the software, it is difficult to jump boats. | Here you have the open floor to switch from one software provider to another at any time. The dependency is quite less. |
| Feature Control | You can not completely customise the software to suit your needs. | You have complete control over the various features you are using. |
| Data Storage | Here the data is stored in a cloud based solution, so security measures fall upon the Software provider. | In this case, the data is stored in your device, locally. So, you have to take measures to protect your data. |
Security Concerns
| Features | Subscription Model | Perpetual License Model |
| Storage of Data | Storage happens on cloud based servers. | Storage takes place in your personal or local device. |
| Access to Data and its Control | Software service provider is responsible | You, as the business owner, are responsible. |
| Security Measures | Completely based on the policies and practices followed by the provider. | Completely depends on how you take steps to protect your data. |
| Compliance | Service Provider is responsible for compliance with the data privacy laws. | You are responsible for compliance with the data privacy laws. |
| Backup | Is provided by the Service Provider | You have to rely on your own mechanisms to create a backup of your data. |
Why Choose Subscription Billing Software
By now we’re sure it’s getting a bit difficult to choose between the two. But, here’s the thing – you will never know the answer until you try. So, to make you try out a subscription billing software, here are some reasons:
If you have recurring revenue
For subscription based business models, where the clients need to pay monthly or yearly, etc. it is quite advantageous to use a subscription billing software. By this method, they can easily keep the cash flowing at all times.
For example,
If you are running a Virtual Assistant firm where clients pay to you each year, it will be easier for you to get a subscription billing software, where you also have to pay annually.
Automation and Integration
With automation of all things like invoice generation, processing, and payment of bills and processing, you won’t have to keep reminding your customers of the payments. Moreover, the subscription billing software provides you a shot to integrate different tools, which can free up a lot of your time. You can use this time in strategizing your goals.
Better Customer Experience
With a subscription billing software, you will never have to seek updates from clients. This helps in enhancing their experience. Moreover, when you provide options for a subscription, the variety of different plans also entice the customer.
Constant Innovation and Development
With each upgrade in the tech, you will get access to your software. As a result, you will always be ahead of your competitors. Many offices that use a licensed model, often continue using it even after it becomes outdated and leaves no impact on productivity. Whereas, in a subscription billing software, you will get new changes into the software directly.
How to Evaluate your business needs for a billing software?
Now that we have seen why subscription billing software is a good option, lets see when its ideal to get a billing subscription software. The following are certain scenarios where its ideal to choose a subscription based billing software:
- When you offer recurring products and services;
- When you have a growing customer base;
- You want to improve your automation and workflow;
- You want to better your customer experience; and
- When you want to analyse the data of your business accurately and evaluate its growth.
Conclusion
To conclude, even with the different pros and cons, a subscription based billing software is ideal for businesses that want to digitise but don’t have an expertise in managing and keeping data secure online. These software solutions offer a lower price, less responsibility to keep data safe, and flexibility to grow. The highest concern can be finding reliable software providers. But, don’t worry, with the CaptainBiz Software solution, you can take the free time, without making any commitments. We’re your reliable partner for business growth. So, if you want to transform your billing process, now is the right time! Take a free trial today.
Also Read: Know Everything About GST Billing Software
FAQs
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When should I use Subscription based software?
When you feel like you need to streamline your billing process with access to integration and free updates, then you should use subscription based software.
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How does subscription billing work?
The client chooses a plan, and a specific date. They have to pay for that plan on the given date. As long as they keep paying, they receive continuous goods or products they have subscribed to.
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Is payment different from subscription?
Subscription is a type of payment. While payment may mean a one time transfer of money, subscription means on a given date, the client is automatically charged.
