The Quick Guide to SaaS Billing Best Practices

Following SaaS billing best practices can help your company reliably capture revenue and make payment easier for your clients. Learn more here.

Software as a service (SaaS) businesses are built in large part on consistent and reliable delivery. Clients aren't making a large one-off purchase to own software. Instead, they pay a recurring fee for software access along with hosting, maintenance, customer service, support, and other benefits.

That arrangement makes billing for SaaS distinct from the process used by many other businesses. The right SaaS pricing and delivery model can deliver very positive results in terms of revenue. In fact, the SaaS industry as a whole is expected to reach a total value of $908 billion by 2030, according to Fortune Business Insights.

However, businesses also have to more actively manage SaaS billing than they would one-off purchases of goods.

Following SaaS billing best practices can help your company streamline this crucial process. Better SaaS billing can lead to improved customer retention and reduced churn, among other advantages. Keep reading to learn more about SaaS billing best practices.

Swipesum helps SaaS businesses just like yours find the right payment solutions for their needs.

Our experienced independent consultant takes functionality, features, fees, and many other crucial considerations into account. They'll research the best SaaS billing solutions, negotiate fees, and present a tailor-made solution for your company. And they'll handle all of that at no additional cost to your business.

Ready to learn more about how Swipesum can support your SaaS business? Book your free consultation today!

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What Makes SaaS Billing Unique?

We've already reviewed the unique position that SaaS businesses find themselves in when it comes to payments. Because these companies provide a recurring, always-available service, they can't take a standard approach to payment processing.

More specific considerations include:

  • Security. Keeping customer payment information on file makes sense for SaaS businesses because of recurring charges. This also requires companies to take additional steps, like using tokenized card data, to protect that sensitive information.
  • Keeping payment information current. Credit and debit cards eventually expire. SaaS businesses need an efficient method to collect updated payment details from clients.
  • Services, tiers, usage, and pricing. Accuracy in billing is especially important when SaaS companies offer a variety of services and related tiers. It's also crucial to accurately tabulate customer costs if the service is based on usage as opposed to flat rates for time-based access.
  • Specific billing cycle. Monthly billing cycles are common for SaaS services but are not a requirement. Aligning costs with the agreed-upon billing process is crucial.

These are just a few examples of the many potential needs related to SaaS billing best practices. Before we review more specific best practices in the next section, here's some foundational guidance:

Your SaaS billing solution needs to align with your business model. A payment processing and billing system designed primarily to support one-off transactions may not enable that alignment.  

Don't waste time having staff make manual adjustments to make a standard payment processing and billing solution work well enough. Seek out payment and billing systems designed to support a SaaS business model. When you partner with Swipesum's independent consultants, they can identify the best SaaS billing solutions for your unique needs.

SaaS Billing Best Practices: Advice & Guidance

How can you optimize SaaS billing for the benefit of your business and your customers? Our suggestions include the following.

Use Tokenized Card Data and a Payment Gateway That Supports It

The right payment gateways make it easy to collect and securely store client payment information. Tokenization secures that payment data while keeping it available for use.

Effective payment gateways for SaaS businesses allow those businesses to switch between gateways and merchant accounts as their needs grow and change. The portability of tokens, or lack thereof, can have a major influence on ease of payment processing.

Some gateways, including major industry brands like Stripe and Square, have closed systems in which they ultimately own your company's payment tokens. That makes it more difficult to efficiently process payments as your business develops.

However, if your business started out with Stripe or a similar closed system, you still have options. Find your new gateway or SaaS solution and onboard customers to it. As that process occurs, keep your old gateway running to make SaaS billing easier.

Take a Clear and Simple Approach to Pricing

Complex pricing can frustrate customers and discourage subscriptions. It can also make the billing process more involved for your systems and staff.

Simpler, easy-to-understand billing starts with an effective pricing model. It's not a problem to price distinct service tiers separately or to offer add-ons and additional services. Instead, the focus should be on making those options distinct and understandable.

Ensure Your Billing System Can Automate Invoicing and Billing

Manual invoicing is difficult enough for businesses that offer products and one-off purchasing. When it comes to recurring payments and multiple service tiers, billing and revenue become even more complex.

Payment solutions designed with SaaS in mind tend to automate billing and invoicing. That means less work for your staff. Crucially, it also means customers reliably receive statements that detail their usage, costs, and other key pieces of information.

Find Support for Complex SaaS Billing Needs

Remember that your company doesn't need to take on all the burdens of SaaS billing itself. You can find support from many sources. That includes Swipesum's own independent payments consultants.

Our teams have worked with all major providers on token migrations on behalf of our clients. We can provide valuable support for your business in this area as well. Don't feel as if your team needs to do all the research, contact all of the providers, and try to land on the most effective solution.

Swipesum can help in other ways, too. We're experienced in pricing negotiations, helping our clients save money while accessing best-in-class SaaS billing and payment solutions. With our independent consultants working on your behalf, your company can make billing and payment solution costs more manageable without sacrificing functionality.

Learn more about optimizing your approach to SaaS billing and payments. Schedule your free consultation today.

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Swipesum Team

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