7Newswire
12 Sep 2023, 10:53 GMT+10
If you are involved in the SaaS industry, you must surely be aware of the significant transformation taking place in billing methods. This is what has occurred: Traditional pricing models, which were based on annual licenses, have now been replaced by subscription-based pricing, allowing customers to make monthly payments.
Nowadays, even if SaaS products do not require human users, their value is determined by usage metrics like:
Pricing is now shifting towards variable and consumption-based models to better align with the value that customers perceive, thus giving rise to consumption-based pricing, also known as Usage-Based Pricing (UBP).
The benefits of shifting from traditional flat-fee pricing to usage-based pricing are multifold. SaaS businesses are now able to:
The high-stakes situation has resulted in the emergence of extensive internal teams focused on back-office operations and engineering. These teams are responsible for the constant and meticulous monitoring, measuring, reporting, reconciling, certifying, and invoicing based on usage.
Handling something as complex as usage-based billing can be quite challenging for teams already overloaded with tasks and responsibilities. To successfully implement usage-based pricing, it is imperative to have a well-integrated billing infrastructure that can effectively handle the intricacies associated with managing usage data.
Here's where specialized subscription management tools make it easy to handle usage-based billing processes. But are these traditional tools really designed to handle the complexities that come with usage-based billing?
To answer this question, we must first understand the basic requirements of usage-based billing.
Togai, the metering and billing platform, suggests that to effectively implement usage-based billing, you require a robust billing platform that is capable of:
Despite the complex demands of usage-based billing, platforms offering traditional subscription tools were quick to capitalize on the model's growing popularity. However, their attempts to integrate it into their existing infrastructure haven't been unsuccessful. Rather, it has exposed the traditional platforms' lack of compatibility, limitations, and gaps in handling usage-based billing.
In simple terms, these platforms lacked the specialized infrastructure required for UBP. How? Here are the details.
Managing and accurately billing end users for their usage can be overwhelming, especially for customers using consumption-based pricing. Traditional subscription tools are often too inflexible to accommodate this model, leaving customers in a bind.
To tackle this challenge, numerous organizations depend on tailored scripts and extensive engineering resources to construct their billing infrastructure, which often takes months, if not years, to finalize.
Also, traditional billing systems can significantly increase the workload for finance teams because they need to ensure the system is adequately equipped with:
So, how can organizations effectively and compliantly bill customers while flexibly implementing the business models that suit them best?
To successfully integrate usage-based pricing with your existing billing system, you must fulfill certain specifications to collect and implement usage data during invoicing. This includes:
However, the close association between metering and subscriptions may result in several billing challenges. The solution is to dissociate metering from contracts by implementing fundamental architectural changes to the existing traditional billing tools.
This dissociation between metering from contracts allows you to:
Investing in Togai, the usage-based pricing software, is the easiest way to gain these advantages. Togai fits perfectly with any billing model, whether license, hybrid, or usage.
How does Togai work? Togai considers all monetizable actions that are sent to the platform for metering are regarded as an event. Suppose your pricing is based on the number of API calls; the total number of events will be the number of times you call Togai's API to transmit that information.
Togai's metering, pricing and billing infrastructure is designed to seamlessly integrate with other pricing platforms like Stripe, Zohobooks, and Zuora. You can also use the platform to customize your integrations into your existing stock and internal workflows.
When adopting usage-based pricing, SaaS businesses should be ready to step aside from traditional tools and opt for robust platforms like Togai. Billing platforms like Togai are built to cater to SaaS businesses, reduce your billing time and costs, manage migration risks, customize your integrations, and address specific workflow needs.
With intelligently designed billing platforms like Togai, you can say goodbye to the stress of dealing with complex specifications and effortlessly handle your subscriptions.
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