TL;DR
- Understand the shift to usage-based SaaS Metering to keep your business competitive.
- Clearly define usage tiers and ensure customers understand the metered billing structure.
- Set transparent pricing that reflects the value customers get from your service.
- Incorporate volume discounts and usage alerts to reward loyalty and manage spending.
- Integrate your product with billing software to simplify processes and reduce errors.
- Maintain customer engagement with a user-friendly self-service portal for real-time data and plan management.
- Ensure proper payments and streamline billing-related communications to avoid providing services without compensation.
- Use customer data to prevent revenue leakage and adapt to market trends.
- Localize your billing system for global expansion, supporting multiple currencies, languages, and regulations.
- Automate billing with the right software to focus on business growth.
- Talk to the experts at Togai to learn more about how we can help you navigate SaaS Billing.
The world of technology is dynamic and evolving. Thanks to rapid advancements in technology, the tech landscape is ripe, with new SaaS companies springing up every day. One notable change in recent times is the shift in how SaaS businesses treat their billing strategy. Gone are the days of traditional flat rate billing, we are now seeing companies adopting more flexible, usage-based, or metered consumption billing. Of course, this benefits both the customer and the business.
If you want to keep up with this transition, it’s important that you understand the best practices in SaaS billing. So without further ado, let’s explore some key factors to consider in SaaS billing to ensure your business remains at the cutting edge of technology.
Metered Billing for SaaS - Some Best Practices
To achieve success with your SaaS company, follow these crucial best practices. Here are some top methods for positioning your business for success:
Define Usage Tiers Clearly
Start by ensuring your customers comprehend your metered billing structure and know what to expect, whether you're transitioning existing clients to a new pricing model or introducing new customers to metered billing immediately.
Begin by explaining your usage tiers in simple, straightforward terms. Determine a usage-based value metric for your clients – for instance, a music streaming service might charge based on hours of music streamed or the number of songs played. At the same time, a credit card processor could bill as a percentage of each transaction or on a per-transaction basis.
Set Transparent and Logical Pricing
A metered SaaS billing model enables customers to relate what they pay directly to the value they get from your products or services. To facilitate this, customers should be able to understand your offerings easily and associate them with your pricing.
Complicated pricing can result in unhappy customers, increased customer service demands, and higher attrition rates. The goal is to create a pricing model logically related to your product value metric, making it simple for customers to grasp what they'll pay and receive. Aim to make choosing the most suitable plan a breeze for your clients.
Also read: Metered Services: What Are They and How Do They Work?
Incorporate Volume Discounts and Usage Alerts
Rewarding loyal customers with volume discounts and other incentives can motivate increased usage and foster a base of power users. Delivering this value leads to satisfied customers who are likelier to stick around.
Set up a system that automatically informs customers when they are nearing their usage limits, whether imposed by their chosen tier or self-imposed, to monitor spending.
Integrate Your Product with Your Billing System
SaaS billing can be quite complex, even without considering the metered pricing model—particularly if you rely on manual billing processes. Thankfully, modern billing software can seamlessly communicate with your software product, simplifying the entire process.
Integrating a flexible billing solution into your tech stack can save your finance team significant time and prevent manual errors. The billing software can accurately compute metered charges based on customers' exact usage levels—eliminating the need for manual calculations.
Challenges often faced while consolidating usage data into an accessible format for Stripe can be addressed with tools that automate these calculations. This ensures fewer billing errors or disputes resulting from complex Excel calculations, streamlining the process and facilitating payment collection.
Maintaining Customer Engagement
By offering an intuitive self-service portal, you can easily and quickly share information with customers and build loyalty. Customers need a user-friendly portal or dashboard displaying real-time usage data, billing history, and details about upcoming bills.
Once your portal is set up, including self-service options for customers, such as the ability to upgrade or downgrade plans or add or remove usage limits. This empowers customers to access information and make changes swiftly and easily, reducing operating costs and enabling your business to function optimally.
Proactively Prevent Revenue Leakage with Customer Data
Market trends cause demand to fluctuate throughout the year. Utilizing your customers' usage patterns and data to fine-tune your product offerings and pricing model often helps mitigate the effects of these fluctuations on your company's finances. Further, this information can help you reduce churn, increase customer loyalty, and even promote upselling.
Ensure proper payments and streamline billing-related communications to avoid providing services without compensation. This process can be best managed using an advanced subscription management system.
Localize to go global
To successfully expand your business and achieve your internationalization goals, such as revenue growth or target customers, your SaaS billing software must have localization capabilities.
Your billing system should support multiple currencies, languages, payment providers, tax rules, and local regulations, to name a few. Additionally, the user interface should be easily configurable for pricing & packaging, invoicing, and other documents to meet local requirements.
Also Read: Mastering SaaS Billing: Top 10 Practices
Maximizing Growth with SaaS Metered Billing Models
The most effective way to fully capitalize on a metered billing model or any other SaaS billing model is to implement the right metering & pricing software. Automating key processes allows your team to focus less on time-consuming billing tasks and more on growing your business. Talk to the experts at Togai to learn more about how we can help you navigate SaaS Billing.
