Diversity Analysis Subscription Billing paper

Ben Kepes and Krishnan Subramanian over at Diversity Analysis have published a new paper on the subscription billing space. In keeping with their "10 Questions.." theme (See 10 Questions You Should Ask You Cloud Vendor), the paper discusses 10 questions across both operational and revenue generating themes they suggest companies ask themselves prior to either selecting a vendor or rolling their own billing system in house.

All of these questions resonate with us as we hear them time and time again from current customers and from prospects evaluating Monexa Billing. We don't often see them all from any given customer or prospect so it's nice to see them consolidated.

Here are some of the points I found interesting:

"The subscription and billing system should never be an impediment to a new
product approach and if a prospective system of choice puts limits on the
ability to rapidly change direction, it should be avoided."

This is really the crux of the Monexa Billing value proposition: Flexibility and Agility. Yes, a billing system can increase efficiency and save you money but it is crucial today to be able to quickly adjust your marketing and selling approach. Quantifying this for some of our prospects can be very difficult though as they can be very focused on today's problem:

"Businesses often make the mistake of underestimating the ongoing
complexity of their charging strategy. They might start with a very simple
monthly billing package but given growth and changing promotional
strategies the business may wish to offer new packages and/or broaden their
customer base geographically."

Quite often we think of billing complexity along only one axis, the pricing plan. Is it a simple monthly subscription? does it have a usage component? Billing is more complex than this. A good rating engine needs to understand the pricing plan configuration but also things like pro-rating rules, contract terms such as up-front or periodic payments. How will you handle metered billing? Will you simply bill in arrears or take a draw down deposit. As a prospect, it's hard to know what questions to ask if you haven't seen hundreds of pricing and billing models before.

One of the most effective topics for describing on-going complexity is the tax issue:

"The need to be able to react to international
taxation rates and laws, international currency issues, diverse payment
methods and multiple languages are all factors that need to be taken
into account."

Our previous blog and resource center paper on the Taxation of online commerce was by far our most read topic. It is easy to grasp the scale of the taxation problem if as an online vendor you have to keep up with taxation changes in thousands of jurisdictions. You definitely want to leave that to your billing vendor.

Have a read of the entire paper, you can get it from our resource center.

The SaaS pricing debate revisited

Over the last year, the SaaS and PaaS players have all been working on finding pricing models that work for their clients and businesses. 

While nobody seems to have nailed it just yet, some recent decisions by some really large players in the enterprise software game have shone a spotlight on what doesn’t work.   

It may not be obvious at first blush, but most small and medium sized companies that use software to power their online businesses need the same software features that big companies do.  They just don’t need the same amount of them as big companies do.   

The trap that awaits software marketers that miss this point is that by narrowing the product functionality to hit an affordable price point they produce a product that nobody wants.   

Just think of what would happen if a leading car maker offered an “entry-level” vehicle based on their top-of-the-line chassis.  However, to offer an entry-level price, they leave out the window glass, the transmission and the passenger seats.  Even though it contains most of components that are in the higher priced “enterprise” version, this “entry-level” product is doomed.  Software works the same way.   

The lesson?  Product plans that eliminate software functionality to arrive at an entry-level price won’t deliver new customers.