Billing & Invoicing Articles

How to Choose the Right Subscription Billing App for Your Small Business

Published on 31 August 2015

What do Netflix, Spotify, Adobe, and Apple all have in common? Amongst other things, they've all recognized the value of the subscription business model. With growth in the subscription economy and the importance of offering different payment plans to your customers, a strong subscription billing app is the lifeblood of any business. But picking the right one is an area mired with pitfalls.

Here we look at what you need to manage subscription payments, key factors to consider when picking your software billing provider, and find out what cloud apps leading businesses are already using.

Tablet with bills on it

How to manage your subscription payments

Before you even get to choosing your subscription billing app, there are a few things you need to think about when it comes to managing recurring payments.

The first of those is pricing plans, as Garrett Brown, chief revenue officer of Bitium, a cloud-based identity and access management solution provider, explains: "Will you offer plans with different length terms? Will your sales team offer discounts? Are you charging a flat fee, or per user? If per user, how will you handle seats added or removed in the middle of a billing cycle? Understanding these things, and how you want to see them reported, will help with your analysis of a subscription billing tool."

Customer experience is also key. "You'll also want to think through the experience from your customers' perspective to make things as easy and secure for them as possible," says Brown. "The easier you make it for customers to enter their payment information, the less likely it is that you'll lose them before they complete the process."

What you need before you start

To make sure customers can pay for their subscriptions easily and securely, you'll need both a merchant account and a payment gateway. A merchant account is a bank account that allows you to process recurring payments by debit and credit cards, as well as via direct debits. A payment gateway is an e-commerce application that ensures the secure transfer of payments between your website and your merchant account. You are charged a fee per transaction for using payment gateways. Examples include PayPal, Stripe, and BrainTree, although some e-commerce software such as Shopify allows you to accept payments without having to use a gateway."When evaluating cloud-based subscription apps you need to consider which payment processor the service integrates with and the fee per transaction charged for using their software," explains Kyle Ems, founder of Senior Care Box, a subscription care package provider. "The fees seem small, but can impact your margin significantly when both the payment processor and subscription software companies are taking a portion of each transaction."

What should I look for in a subscription billing app?

What you should look for when choosing a solution will vary depending on the type of app or service you provide, but there are some standout features you should look for regardless.

"For subscription billing, I would recommend using an invoicing app that specializes in recurring payments," says Marc Prosser, co-founder and managing partner of Marc Waring Ventures, an online publishing company. "These enable you to create custom billing pages with different products, services, and add on items. Once a customer has signed up, the app will continue to charge them on a recurring basis. Through a page such as this, customers can set up and manage their own subscriptions. A good subscription billing app will also come with features such as the ability to create coupon codes and set up a free trial."

Flexibility and the ability to create recurring profiles are two other important pieces of the puzzle, according to Sajeel Qureshi, VP of Operations at Computan, a digital asset management company. "This allows you to customize what you bill for each month, as well as any enhancements you may want to add per month," he explains. "Also, you should look for a company that has an API that will allow you to build your own extensions into it to handle accounting. Usually one-size apps don't fit all subscription based needs."

Other useful features to look for include promotions management, multi-currency and multiple languages support, shopping cart integration, strong analytics and reporting, failed transactions management, automatic invoicing, and payment tracking.

To buy or to build?

You've decided that you need a subscription billing app, then the next decision you need to make is whether to build it yourself (if you have the resources) or to enlist the help of a software vendor. At GetApp, we recommend checking out the range of billing apps on our Marketplace, as there are many advantages to cloud-based apps as opposed to building your own.

"The features in today's billing apps have been proven by a large user base," explains John Peroyea, president of FindaPilot.com. "It would be impossible or, at the very least, cost prohibitive to match these features."

"As with any SaaS product, purchasing a subscription billing tool rather than buying one lets you focus on your core business instead of wasting valuable time and resources on something that another company spends all day thinking about," adds Brown. "Additionally, you get access to the fruits of all of that company's collective experience and resources. For example, if you forgot to consider implications of sales tax across all 50 states, a good subscription billing provider will already have an integration to help you address the issue."

Which software provider should I should chose?

So you've decided that you want a cloud-based billing app to manage your subscription payments, but how do you navigate the minefield of different providers. A good first step is often to take a free trial, and you can easily filter apps that offer this feature on GetApp. Other factors to take into account include whether it is flexible enough to meet your current and future products or pricing models needs, and if it is scalable enough to cope with anticipated business growth. The right software provider can work wonders for your business.

"Cloud-based billing providers work with customers across many industries, so you'll have access to lots of customizations and reports right out of the box," explains Brown. "A good salesperson or onboarding team at a subscription billing provider should be able to help you identify potential issues in advance and get you set up correctly from day one."

What apps do you use?

If you're looking for some ideas about which apps to use, we've asked some businesses that are already happily using a subscription billing solution to help you out with their recommendations.

Sajeel Qureshi, VP of Operations, Computan

"We use Freshbooks, which is a cheap, cloud-based accounting software that is ideal for small businesses. You can easily generate invoices, track time (if you're in the service business) and it has integration with Paypal, Stripe and its own native gateway (which is great!). You can also set up autobilling features and link your online bank accounts to classify expenses to customers and/or income statements. It comes with a mobile app to so you can track everything on the go. On the downside, the reporting around tax-time is kind of useless and our accounting needs to build their own."

Garrett Brown, chief revenue officer, Bitium

"At Bitium we happen to use Recurly, but there are lots of great apps out there. As an identity and access management tool, we have unique insights into what SaaS tools companies are using. The top payment tools that we see among our customers are Stripe, Paypal, Recurly, Zuora, and Chargify."

Marc Prosser, co-founder and managing partner, Marc Waring Ventures

"Personally, I would recommend Chargify as a great subscription billing app. Zoho Subscriptions and Zuora both offer similar services, but Zoho is an especially good choice if you would like to bill individual projects in addition to subscription billing."

John Peroyea, president, FindaPilot.com

"Recurly is our choice for subscription billing."

Kyle Ems, founder, Senior Care Box

"I use Chargify for my subscription billing and have been very happy with it."

If you're not convinced by any of the apps we've mentioned so far, check out the GetApp marketplace for a comprehensive list of subscription billing solution providers.

This post was originally published in April 2011

Apps mentioned in this article

PayPal
  • · Accept Payments Online
  • · Online Invoicing
  • · Mobile Card Reader
  • · Express Checkout
Learn More
PayPalWebsite & eCommerce
Stripe
  • · Full-stack payments
  • · Invoice paying
  • · Invoice closing and opening
  • · Instant Payment Acceptance
Learn More
StripeWebsite & eCommerce
Braintree
  • · Available in 40 countries
  • · 130 currencies
  • · No user redirects
  • · Pay out to a phone or email
Learn More
BraintreeWebsite & eCommerce
Shopify
  • · 15 Day Free Trial
  • · Secure shopping cart -256-bit SSL
  • · 100+ professional themes
  • · Use your own domain name
Learn More
ShopifyWebsite & eCommerce
FreshBooks
  • · Online Invoicing
  • · Time Tracking
  • · Recurring Invoices & Auto Payment
  • · Team Timesheets
Visit Website
FreshBooksFinance & Accounting
Recurly ®
  • · Quick and Easy Implementation
  • · Import Current Subscribers
  • · Salesforce Integration
  • · Multi-Currency Support
Visit Website
Recurly ® Finance & Accounting
Zuora
  • · Plan Based Pricing Catalog
  • · One time, recurring and usage pricing
  • · Billing in advance and arrears
  • · Time based discounts
Learn More
ZuoraFinance & Accounting
Chargify
  • · Recurring Billing System
  • · Subscription Management
  • · Business Intelligence Tools
  • · PCI Compliant Security
Learn More
ChargifyFinance & Accounting
Zoho Subscriptions
  • · Recurring Billing
  • · One-time Charges
  • · Automated Professional Invoicing
  • · Offline Payments
Learn More
Zoho SubscriptionsFinance & Accounting

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