A subscription billing plan could provide your business with a predictable stream of income. Customers who were satisfied with your company’s products or services could become repeat customers via a subscription service instead of having to make multiple individual purchases. That could help you easily cultivate a loyal customer base.

If you are thinking about setting up a subscription billing system, you will need to decide whether to charge customers on a yearly or monthly basis. Each model has pros and cons.

Yearly Billing Model

By charging an annual fee, you could keep customers for at least a year, which could help you build loyalty. You would be guaranteed a year’s worth of subscription fees for each customer who signed up for your service. Annual billing could also help keep your overhead down since you would not have to process monthly payments.

Charging an annual fee could lead to disputes if customers forgot about the subscription and didn’t recognize a new charge when a subscription automatically renewed. You might have to issue refunds to a large number of customers unless you sent reminders to inform them that their subscriptions were going to renew soon.

Customers who couldn’t afford to pay upfront might decide not to sign up at all if an annual subscription fee was the only payment option. People who were trying out your company’s products or services for the first time might also be reluctant to commit to an annual subscription.

Monthly Billing Plan

With a monthly subscription model, you would have money coming in on a regular basis. That consistency and predictability could make budgeting easier than it would be if you only got paid by each customer once a year.

With a monthly subscription billing plan, the cost would be spread out in even installments throughout the year. That means that the upfront cost for customers would be lower than it would be with an annual subscription.

Monthly billing might help you attract more customers than you could with an annual billing model. The downside is that customers might cancel their subscriptions after a month or two, which means it could be difficult to build customer loyalty.

What Should You Offer?

You could offer both annual and monthly billing options to your customers. For those who paid annually, you could charge an amount that was less than the sum of 12 monthly payments to encourage those who were able and willing to pay upfront to do so.

Subscription DNA can help your business process subscription memberships with annual or monthly payments. Our software can make it easy for you to manage your customers’ accounts, and our Secure Subscriber Portal can allow them to handle many issues themselves instead of calling customer service. Contact Subscription DNA to learn more about how we can help your business.

Having a successful business requires more than a great idea and a brilliant marketing strategy. To keep your customers satisfied and prevent problems that could cost you money, you must manage payments and revenue effectively. Using software to process recurring monthly fees can help you do that.

Reasons to Use a Recurring Payment Model

Setting up recurring monthly payments makes it easy for customers to manage their purchases. Instead of having to place individual orders, they can simply create an account, choose a membership option, and forget about it. That provides customers with convenience and gives businesses a steady stream of income.

Abandoned online shopping carts can cause businesses to lose out on large amounts of potential revenue. Customers often leave before completing a purchase because the payment process is too complicated or because there are not enough payment options. Recurring payments can prevent losses due to abandoned shopping carts.

If a credit card payment fails for some reason, a subscription billing system can automatically try to process the payment again at a later date. If the payment still cannot be processed, the software can send an email asking the customer to update the billing information.

Recurring payment software can notify customers if their credit card will expire soon so they can update their billing information and prevent problems. Billing software can allow users to make those and other changes themselves, rather than calling to speak to a customer service representative. That can save your business money.

Why You Should Work with a Professional Subscription Management Service

Businesses often offer subscription services with a variety of pricing structures. Prices may change periodically, and discounts and promotions may be applied from time to time. Without the right software, it can be difficult to keep up with all those changes and to make sure that customers are charged the right price. A subscription billing service is set up to handle numerous pricing structures and can make changes as needed.

Companies that receive regular recurring payments must separate earned income and deferred revenue to reflect the difference between money collected for products or services already provided and payments for products or services still owed to customers. A company that processes recurring payments has software that can meet those requirements.

Hacking is a serious problem that has affected businesses in every industry, as well as governments and educational institutions. It may be difficult or impossible for you to protect your customers’ data if you try to handle billing with a simple in-house system, but a company that handles recurring payments on a large scale is up to the task.

Get Help Managing Recurring Payments

Subscription DNA can help your business efficiently process recurring monthly fees. Our software makes it easy to manage customers’ subscriptions and financial data and to make changes when necessary. Our Secure Subscriber Portal allows customers to make any changes themselves, which can reduce the burden on your staff. Contact us today to learn more.

According to a recent report compiled by Zuoara, a subscription software company, the subscription industry is currently stable. Even though this may sound comforting, it’s important to remember that this is still very much a time of uncertainty. This is a time when anything can happen: like the swings of the stock market, the subscription industry can either sore or plummet tomorrow. 

We already offered some strategies subscription companies can use to gain and retain customers, but today we wanted to take a different approach. If you’re in an industry that is struggling, then have you considered starting completely fresh? We are not suggesting that you abandon your brand; rather, ask yourself if it could be reinvented? 

Put a Unique Spin On What You Already Know

If you already have experience starting a subscription based company, then why not consider jumping into a market that is stable? For example, streaming resources can be quite valuable. If you’re in the travel industry, consider creating a streaming platform that travelers can appreciate. This could be shows where hosts travel the globe (a la Diners, Drive Ins, and Dives, except in the travel niche). 

Are you in the event industry? What if you tried selling reoccurring merchandise online? Whether it’s speakers, artists, or influences, the fact remains that you already know who’s trending, right? So, capitalize on it! If you don’t think there’s a market for it, then think again. Companies like Loot Crate have shown us that people enjoy all sorts of unique collectibles.

Don’t give up. This pandemic will pass in time. Stay safe, healthy and creative!