The fintech landscape has been revolutionized by many key players, but few have made as significant an impact as Stripe. Catering to millions of businesses across the globe, Stripe offers a suite of tools designed to smoothen online transactions. One of these offerings is Stripe Billing, a specialized tool to manage subscriptions and calculate pricing for merchants. But while Stripe’s reach in the B2C sector is undeniable, is it the ideal solution for B2B companies? Let’s unpack this.
What is Stripe Billing?
Before diving deep, it’s essential to understand what Stripe Billing brings to the table. At its core, Stripe Billing aids in calculating the owed amount by each user and subsequently managing subscriptions. Once the owed amount is determined, a payment trigger is initiated, processed via Stripe Payments.
Sounds pretty straightforward, right? Well, for many B2C models, it is. But the complexity emerges when B2B operations come into play, especially for fintechs and companies employing usage-based pricing.
Pros and Cons of Stripe Subscriptions - A summary
| Pros of Stripe Billing | Cons of Stripe Billing |
| User-friendly interface | The percentage fee for using each Stripe’s products keep increasing |
| Offers a plethora of payment methods | Event based architecture that doesn’t align with B2B billing use-cases |
| Developed Stripe eco-system to cater to various financial needs | Seamless integration with other payment providers like Paypal or Adyen isn’t possible |
| Created for straight-forward billing use-cases | Difficulties in mixed billing periods within subscriptions |
Pros of using Stripe: Why choose Stripe Billing?
1. User-Centric Design
One of Stripe's most commendable attributes is its user-friendly interface. Startups or small enterprises without a full-fledged finance team will find its design intuitive, ensuring that they don’t get bogged down by technical jargon or complicated processes.
2. Adaptable Usage-Based Pricing
Businesses with models that charge based on consumption or usage will appreciate Stripe Billing's features tailored for usage-based pricing. This can be a valuable tool for businesses that wish to offer flexible payment plans to their users.
Cons of Stripe billing: Reviews and Examples
While Stripe Billing possesses some solid attributes, it does have limitations that can become pronounced in a B2B setting.
1. The Percentage Fee keeps spiraling:
Our experiments revealed that applying a straightforward percentage fee, a standard requirement in many B2B models, isn’t easy. While workarounds exist, they might not be sustainable or efficient for every business, particularly those processing large volumes.
The cost paid to stripe billing is 0.8% of your revenue plus an additional flat fee if you’re using Stripe’s gateway!
Here’s how things workout:
The flat-rate pricing of Stripe payments, i.e, 2.9% + $0.30 per transaction and a +0.8% of revenue for Stripe billing might seem competitive initially. But as your business scales and the volume of transactions increases, these fees can take a substantial bite out of the revenue.
Larger enterprises or those processing high volumes might find better deals elsewhere. As you include more stripe’s products, the fee you pay to stripe significantly increases.
Example: Consider a SaaS firm offering an email marketing tool priced at $20/month. At 1,000 subscribers, Stripe fees would amount to roughly $630. However, as they scale to 50,000 subscribers, this fee spirals to $31,500 monthly + 0.8% on their revenue. This amounts to a significant sum that could have been reinvested into product development or marketing.
| Subscribers | Stripe Fees | Total Monthly Fee + 0.8% Revenue |
| 1,000 | $630 | $630 + $160 |
| 50,000 | $31,500 | $31,500 + $12,000 |
Not just that you have additional charges incurred for international credit cards and currency conversions. The payout to Stripe at each step keeps increasing.
Stripe Reviews
This Hackernoon reddit thread that gives Stripe billing reviews is eye-opening and adds testament to what we're saying!
And no, we’re just not saying this out of thin air, folks leaving stripe billing reviews on G2 and Trust Radius are in agreement as well!
Are you crippled with Stripe’s billing system? Well look no further and explore the world’s easiest and flexible billing platform for all your billing and integration needs!
2. Vendor Lock-in with Stripe's Ecosystem:
One of the noticeable limitations of Stripe is its interdependency on its own suite of products. For instance, if you've integrated Stripe Billing to handle your subscriptions and Stripe Payments to oversee your customer transactions, branching out might pose a challenge. Let’s say you're eyeing to:
- Offer PayPal as an alternative payment option to diversify customer choices;
- Use Skrill to enable cross border payments across 120 countries in 40 different currencies to expand business;
- Collaborate with region-specific providers like Razorpay, Paytm Business, PayU to tap into the Indian market; or
- Use GoCardless to handle direct debits.
You'd soon realize that such integrations aren't feasible with Stripe! With Stripe not only are you paying a hefty sum, but some inherent business expansion use-cases too aren’t supported!
Your choices then narrow down to:
- Remain exclusive to Stripe, potentially constricting your business's expansion and adaptability; or
- Transition to a different billing solution, one that's amenable to both Stripe Payments and other payment platforms.
3. Event-Based Architecture Dilemma
Many fintech operations function on an event-based framework, where each transaction is its own event. Stripe Billing’s structure doesn’t align seamlessly with this. The repercussions? Potentially creating double the usage records for large transaction volumes, a notable inefficiency.
4. Managing a Plethora of IDs
For a seamless workflow, simplicity is key. However, Stripe Billing requires businesses to juggle multiple IDs, spanning products, customers, and subscription details. This process, while manageable, can quickly become cumbersome, especially for larger enterprises.
5. Rate Limits - A Bottleneck for Growth
One of the significant drawbacks is the restrictive rate limit—only up to 100 read and write operations per second in live mode. This threshold can quickly be met by B2B companies, especially in fintech or cloud infrastructure sectors. The limitation poses potential growth restrictions, a significant concern for expanding enterprises.
6. Inflexibility in Billing Periods
One of the holy grails for many B2B companies is the combination of annual contracts with monthly overage charges. The challenge? Stripe Billing's architecture doesn't easily allow for mixed billing periods within a single subscription. This constraint can complicate billing structures for many B2B operations.
Platforms like Microsoft's Volume Licensing Service or Adobe's enterprise solutions often combine annual licensing agreements with monthly usage-based fees. For instance, a company might purchase an annual license for software but pay monthly for additional features or overage usage. Using Stripe Billing could complicate the combination of these billing periods.
Stripe is great for B2C but they need to work for B2B
Stripe Billing was crafted with e-commerce and B2C businesses in mind. While this isn't inherently a negative, it does mean that certain B2B operations and structures become more challenging to implement within its framework.
As your business scales, billing isn’t just about getting money, it’s about providing tailored solutions to your customers in this competitive market! You need to make lucrative deals and get that account!
Stripe vs Togai: How can Togai help?
1. Effortless Usage-based pricing management
If you have a usage based component in your pricing, Stripe expects you to do the heavy lifting of metering all by yourself because in Stripe usage data is merely an invoicing input that you’ll need to provide. So you’re forced to record time series data reliably and without latency, aggregate it in real-time, maintain historic usage records, while also making it available for analysis and billing calculations.
In Togai, recording and making use of time series usage data is the core part of how we do everything from calculating invoices to usage and revenue analytics. Where Stripe takes a hands-off approach, Togai smoothly takes the wheel and takes care of metering for you.
2. Unparalleled Flexibility
Recognizing the unique pricing and billing needs of each company, Togai has been crafted for adaptability. It simplifies modeling intricate pricing scenarios and even allows for customization at an individual user account level.
With Togai’s billing architecture, you aren’t bound to one payment provider; you have the freedom to select whichever aligns with your business model. Integrated workflow automations further streamline operations, ensuring seamless interactions between your preferred tools.
3. Beyond Just a Platform - A Partner
While Togai provides you with flexible billing, the commitment doesn't end there. There are additional services like migration support, accommodating custom feature requests, and ensuring 24/7 priority support. The emphasis on real-time solutions ensures that any billing hiccups are promptly addressed.
How does Togai enable SaaS?
1. Self-serve Product Led Growth
Togai not only facilitates comprehensive self-service models but empowers businesses to swiftly modify pricing models. It automates billing processes while also equipping teams with valuable analytics insights. Contrary to Stripe, Togai offers automated upgrades/downgrades, extensive feature limits, superior usage analytics, and a more comprehensive customer portal.
2. Sales-led Growth
Togai understands the dynamism needed in sales. It simplifies the creation of elaborate custom pricing plans, minimizing engineering intervention. With features like account/user level overrides and custom charges, your sales team is equipped with the flexibility crucial for sealing deals.
3. Usage-based Pricing
Unlike Stripe, Togai is inherently designed for usage and hybrid pricing models. Setting up intricate usage-based pricing plans is a breeze. With advanced metering, usage analytics, and robust handling of overages, Togai ensures your usage-based pricing model is both efficient and scalable.
4. Hybrid Pricing
Catering to businesses with diverse pricing components, Togai stands out as the go-to platform for complex hybrid models. Whether dealing with flat fees, overages, or seat-based pricing, Togai offers unmatched support, including advanced subscription management and rich credit/discount offerings, features where Stripe tends to lag.
Conclusion
As SaaS businesses grow and diversify, their billing needs become more intricate. While Stripe Billing has been a significant player, it's evident that Togai is designed keeping the evolving and multifaceted needs of SaaS businesses in mind. If you’re a SaaS enterprise looking for a robust, flexible, and comprehensive billing solution, Togai might just be the platform you've been searching for.
FAQ's
Why Stripe?
Stripe offers a seamless payment processing experience, catering to online businesses with easy integration and a robust set of features.
Stripe Reviews:
Stripe is renowned for its user-friendly interface, extensive API documentation, and global payment solutions, though some find its fee structure challenging.
Is Stripe Billing Good?
Stripe Billing effectively manages recurring payments and subscriptions, making it ideal for many online businesses, but may fall short for complex B2B needs.
Can We Connect PayPal and Stripe Billing?
No, Stripe primarily operates with its own ecosystem and doesn't natively support integration with PayPal for billing.
