Introducing subscription management

In an increasingly consumer-centric world, subscription services and billing have become popular across all industries. The use of pricing strategies, traditionally associated with the software industry, has spread to every sector, from healthcare to transport and beyond.

This guide will shed light on subscription pricing strategies, what to look for in subscription management software, and share resources that will help you better manage or implement recurring billing.

Nature

Who should read this guide?

Anyone interested in improving subscription management, implementing best practices for recurring billing, remaining compliant with ASC 606, or reaping the benefits of flexible pricing strategies.

What exactly is subscription management?

Subscription management is often used interchangeably with subscription billing or recurring billing. However, it's important to make a distinction as billing simply refers to the managing of payments. In contrast, subscription management is much broader concerning payments and renewals, best practices, revenue and expense recognition, and accounting compliance.


Nature

Subscription billing models VS traditional billing models

Some companies still rely on a more traditional approach to billing models, which is perhaps more suited to bricks and mortar transactions. Today, it makes sense to take a more flexible approach to billing. In the table below, we explore the most common pros and cons of subscription management compared to more traditional models.

Subscription billing models

Pros

  • Attract a wider range of customers
  • Predictable recurring revenue
  • Increases return on Customer acquisition costs
  • Easier to make data-based decisions

Cons

  • Tricky to choose the right model
  • Complying with ASC 606/IFRS 15
  • May initially require a lot of trial and error
  • Need to invest in tools or software to run smoothly

Traditional billing models

Pros

  • Customers pay upfront
  • Transactions are straightforward
  • Homogenous customer base
  • Few opportunities to inspire customer loyalty

Cons

  • Data can be hard to interpret
  • Inaccurate forecasting of future revenue
  • Customer acquisition can be expensive
  • Hard to accurately report on customers