The Challenges of Subscription Billing

Challenges of subscription billing

subscription billing

It could be easy to underestimate the efforts required to create a billing system. The steps are pretty straightforward : 

  1. Signup for a recurring billing service
  2. Create a signup form that accepts the billing information
  3. Create a page for the user to update their billing information
  4. Allow the user to cancel their subscription
  5. Sell your product or service and money

The above will get you up and running with subscription management software. However, there’s a lot missing from the list above that you wouldn’t realize until you roll out your new billing system. If your startup is new to subscription billing, there are a few key problems you’ll encounter soon. Being aware of these possible issues will help you be cautious and budget your development resources appropriately. This will help you evaluate your recurring billing options.

  • Declined Recurring Payments

For starters, what happens when one of the recurring payments fails due to perhaps a declined or expired credit card? Would your system know to alert the user and/or cancel their subscription? Would you get a list of past due accounts and will the system continue billing the user or will it stop until their payment information is updated? 

When a payment is declined, you need to alert the customer and provide them with a way to update their billing information. If they’ve done this time, then proceed with the billing. If not, proceed to cancel their subscription or transition their account to a free one.  

Unfortunately, many recurring billing APIs make it seem non-trivial to determine if a recurring payment failed. And, if the user updates their billing information, verify that the service will collect the missing payment. This should immediately happen as part of the billing information update process.

  • Upgrades and Downgrades

If your site offers various subscription types for your audience, billing intervals, or quantities, then your customers will definitely ask for upgrades and downgrades of their subscriptions. How do you manage this? If you start offering subscriptions without the means for the subscriber to modify their subscription plan, then you’ll receive many support requests. Considering your support staff has the means to modify the subscriptions, you don’t miss out on the opportunity to make better money by allowing a smooth upgrade. 

Not all recurring billing APIs allow an upgrade or downgrade as one would expect. An upgrade would usually happen quickly. For the same, the remainder of the current term needs to be prorated and billed immediately. Some billing services will require you to wait until the renewal to charge a new amount. 

Downgrades or billing cycle changes can be just as tricky. These events typically occur at the end of the current billing cycle, since the customer has already committed to paying for their current term. These changes can be made with almost all recurring APIs, but most services will require you the correct calculations to get the appropriate changes. 

  • Customer Service Tools

Does the billing system provide support to your team? The ability to search for and modify accounts? Your subscribers would expect you to make changes on their behalf in case of an inconvenience.

If it takes an external consultant or engineer to make subscription changes because you haven’t got the right tools for your support team to handle such a situation, then you’re at high risk of losing out on your resources. 

Other users would also expect your support team to be able to offer them credits or refunds if something were to go amiss. Your support team should be able to handle these requests immediately to minimize any chances of chargebacks or upset customers quickly. Provide the support team the right tools necessary to support billing requests without involving a developer with database access- be quick to satisfy your users.   

  • Reporting and Metrics

Most publishers have started to actively track their subscriber metrics. Your payment gateway will give you deets about the dollars and cents moving through your account but it wouldn’t know anything about your subscribers. As a modern-day publisher, you’d want to know as much as you can about new users, subscribers, upgrades and downgrades, cancellations, missed payments, failed to subscribe attempts, etc. This gives you a clear idea about what’s driving the attention of your users while also pointing out your mistakes.