Step One: Define your own billing requirements – what are your needs?

Here is a punch-list of items for you to consider:

Be clear on the structure of your subscription offering:

• How many subscription plans will you be offering? One plan or multiple plans?
• What is the billing cycle interval? (Monthly, Quarterly, Bi-Annual, Annual?)
• Will you offer free trials?
• Will your subscriptions auto-renew, or terminate on some date?
• Will your business require one-time payments?
• Do you need optional items to be added? (Add-ons)

Define how you will you price your subscriptions:

• Are you charging a flat fee per month?
• Do you have a variable pricing component? (Requiring ‘metered billing’)
• Will your pricing change based on usage? (Tiered pricing?)

Communication Requirements:

• How and when would you like to communicate with your customers?
• What are your data integration needs? CRM? Finance/Accounting? Mailing lists?
• How important is it for your billing + subscriber status to be synced up with your application?

EXPERT TIP:

Step Two: Items to look for in a subscription billing provider

Think about your businesses end-goals and total cost of ownership (TCO).

Most subscription-based businesses ultimately care about the following:

• Minimizing Customer Churn
• Maximizing Lifetime Customer Value (LTV)
• Maximizing Return on Investment (ROI) – which means minimizing TCO

You cannot achieve these goals if your billing platform doesn’t support key daily functions efficiently. Your billing system should be a valuable tool, not an impediment.

PCI Compliance:

If your vendor is not PCI Level 1 compliant, ‘do not pass go’. You cannot afford to store your customer credit cards with a company that is not invested enough to achieve PCI Level 1 certification.

Functional capabilities:

Daily administration (This is frequently overlooked):

• Is there a Customer Support console? If so, is it functional? Intuitive to use?
• Search / Sort / Filter – How easy is it to find accounts?
• Account changes – How easy is it to make a manual override?
  • Upgrades/Downgrades
  • Pro-ration of accounting? Is this automated or manual?

Really push on this. Some very expensive vendors require 30+ clicks to make simple manual changes to subscriptions.

Customer Invoicing

Automated – Are customer invoices delivered automatically?

Manual – Can you create invoices manually?

Credits and Refunds (Both whole and partial credits)

This is key functionality to keep your customers happy. It needs to be incredibly easy to issue a credit or a refund.

Transaction History

It is always critical to be able to call up the transaction history for an account in order to provide customer support.

Marketing Support: Coupon and Discount code management

Your business might require coupons or discounts for promotional purposes, or channel discounts. Coupon and discount support needs to be seamless and easy to manage. Not all systems are created equal.

• How easy is it to set up a new coupon or discount code? (60 sec. max).
• Can you manually apply coupons or discounts to an account?
• How flexible is the coupon/discount functionality?
  • One-time, Limited Time, Evergreen applications
  • Percentage discounts vs. absolute dollar off?
  • Expiration date management?
  • Applies to specific billing plans?
  • Limited count offers? “First 500 subscribers receive…”

Error Handling: Credit Card Error and Decline Management

Like it or not, your recurring payments will encounter errors. This is a given when you are charging credit cards on a recurring basis. Cards will be declined for a variety of reasons, and from a variety of sources.

Q: At the highest level, you need to know whether your provider stores credit cards and tokenizes cards in their own environment.

A: If the answer is no, then that vendor cannot remediate credit card errors and declines on your behalf. It’s that simple.

Reporting: Data or Business Insights?

What kind or reporting capabilities do they provide?

Revenue by period, Revenue by plan, Monthly Recurring Revenue (MRR), Cohort analysis, Credit card decline rates, Lifetime value analysis?

What is the support model? Look at support forums and evaluate quality and timeliness of responses.

Step Three: Evaluate Total Cost of Ownership

Total cost of ownership is often underestimated.

It breaks down simply to the following four buckets:

1. Cost of Integration (often a hidden cost – Recurly takes days rather than months)
2. Cost of Administration
3. Cost of Customer Churn and Non-renewing subscribers (another hidden cost)
4. Marginal Cost of Billing Service

Is your billing system working for you? Or are you working for your billing system?

Expert Tip:

Most evaluations of subscription billing providers erroneously focus only on #4. Total Cost of Ownership surprises most companies. Ease of integration, ease of use and ease of administration can be very costly. (Employee resignations have occurred over frustration with complex billing systems)

Pricing Gotchas

Be clear on Setup Fees, Cancellation Fees, Extra charges.

(Recurly does not charge for any of these)

Network Availability

Don’t be shy. You’re the customer.

Ask for third party auditing of network uptime and availability reports. [Recurly has proudly maintained 99.994% uptime in 2011]

Final Thoughts:

Expensive ≠ Better

Your subscription billing system should work for you, not the other way around. Paying more for an expensive enterprise ‘solution’ does NOT mean that you get more value.

If you consider the elements from this guide, you will not only be much happier with your ultimate decision, but your business will have a greater chance of success.

If you would like to learn more about Recurly’s capabilities, please contact sales@recurly.com

Recurly’s James Michels provides a quick video walk-thru demonstrating how easy it is to set up subscription billing functionality for your website.

Whether you’re using Intuit, Braintree, Authorize.NET or another supported gateway of your choice, Recurly makes launching subscription billing for your business a snap.

-The Recurly Team

If you’re attending too- we’d love to meet you! Both Isaac (@isaachall) and I (@timishungry) will be out, about, around and through the sessions and events. We’d love to hear your questions, share stories and see how how we can help. A good way to track me down and see where I”ll be is by following my plancast at: http://plancast.com/timishungry

We’ll have some fun schwag, American Apparel T-shirts and some even more exciting announcements. If we don’t see you in Austin, stay up to date with Recurly news and more by following us on Twitter at @recurly.

Hope to see you there!

Our REST API is pretty easy to consume, yet without an open-source .NET client library to start with, we found that our clients’ integration times took an extra day of effort.  So we started our own.

This lightweight library uses fast-forward only XmlTextWriters and XmlTextReaders along with Stream readers and writers so you can be assured it’s fast.  It also works great in .NET 2.0 and above.  And finally, it is strongly typed and boasts a wide range of explicit exceptions to help you handle errors.  The library is about 85% completed today and will be finished very soon.

So if you’re looking for a simple to use, subscription billing service to power your ASP.Net websites, check out Recurly and our open-sourced C# library.

Recurly was invited to Supernova as one of the spotlight innovating startups, which enabled us to present our service to attendees. More importantly, it let us attend the various sessions. These ranged from panels focusing on the evolving “real-time web” to the changing landscape of venture funding to the future of global internet policy. The common thread through all of these areas was rapid, real-time change. Rapidly changing times, rapidly changing customer needs and rapidly evolving business models.

How Subscription Billing Fit in

We were really curious to see how the movement towards subscription billing and Freemium models would be discussed. Over the past few months, we’ve spoken to companies ranging from SaaS companies to small newspapers and nonprofits- all of whom are looking at new ways to gain revenue and donations. It was encouraging to hear that the trends we’ve seen over the past year- a movement from traditional ad based revenue models to subscription models- highlighted several times by the panel speakers. One particular presentation stood out in this area- the panel on building startups today in the aftermath of the recent recession. Rashimi Sinha (Slideshare) , Christine Heron (First Round Capital) and Dave McClure (Founders Fund) discussed their thoughts on building a company now, how to fund it and guide it to success.

What was mentioned time and again was that now is the time is right for creating a new company. More can be accomplished with less capital- thus the reasoning for the drop in the size of funding rounds and the increase in the quantity of smaller fuding rounds. For many startups, pure bootstrapping is a very viable and real option. With the drop in dollars put in by VCs to startups,  Dave felt VC’s now offer an even greater level of support for startups in non-tangible resources (assistance with marketing, partnerships, advice on social media). Most interestingly, Dave and Christine suggested if you’re building a startup today, you should be looking at a subscription-based revenue model for success.

What does this mean?
As time goes on, there is going to be a larger shift towards service paid for in smaller- but recurring- increments. Multiple attendees I spoke to from several larger enterprise software executive to the manager of a nonprofit agreed that this shift towards subscription billing/donations is a direct factor of the economy. By lowering the bar to trying a new service (or donating to a charity)- it makes it much easier for an end user to sign up for. Even if the cost of the service over the user’s lifetime is higher, the value of being able to amortize the cost over time is a great incentivizer to using a product. With the explosion in the area of subscription billing and the growing amount of businesses interested in subscription billing, we see this number only growing, And we look forward to assisting make it easy.

We’ll be attending the sessions and will be taking notes- we’ll try to share some of the ideas we think are the most helpful. If you can think of any questions you’d like us to ask the presenters or address in our notes, please let us know.

If you’re attending, drop on by the “Innovation Alley” to find us. Thanks, and we look forward to giving you updates on the conference!