8 SaaS billing best practices with concrete examples | 2024

Calista Reyes

Billing for SaaS companies can get complicated fast. 

Does it have to? We don’t think so. 

Mastering just a few of the tips we’ll share today can help you move from fumbling around with customer invoices and leaving money on the table to charging your customers in a way that’s fair, accurate, and hassle-free.

Even if you’re a seasoned expert, we’re sure you’ll find these 8 SaaS billing best practices useful. Here’s a sneak peek: 

  • #1 Craft transparent pricing models
  • #2 Optimize with customer usage insights
  • #3 Adapt to market dynamics
  • #4 Secure revenue streams
  • #5 Enhance the customer experience
  • #6 Utilize flexible payment options
  • #7 Have a premium pricing plan in place
  • #8 Implement scalable billing solutions

Let’s dive in.

#1 Make sure your pricing is transparent

You have to really put yourself in your customer's shoes for this one. Imagine an enterprise-level customer relies on your SaaS product to run their company and when they receive an invoice, there are hidden charges they weren’t expecting. 

That’s a deal-breaker. 

Creating transparent pricing models is all about being upfront:

  • Share details on your website about what’s included at each pricing tier. This includes the specific features customers will get access to, the level of support they can expect from you, and exactly how much they’ll be charged — specifying if they’ll be billed monthly or annually. 

    Customers need this information to determine if your SaaS fits their needs. 

    Your solution may not be for everyone, and that’s okay! But don’t let hazy messaging around your pricing model prevent customers from choosing your SaaS offering. 
  • Offer a free trial or freemium model alongside paid plans. Customers are more likely to find value in your SaaS product if they can try it firsthand. 

    The best part?
    Freemium models and free trials benefit both parties. Customers explore the software and find potential use cases before investing, and you showcase your product’s value and let the solution win them over. 
  • Review pricing models regularly using customer usage data and feedback. As your company evolves, your pricing is likely to change, too. Communicate those changes openly and use data to support your rationale.

    Track customer usage metrics and gather as much feedback as you can.
    This way, if you make changes to your pricing, customers won’t leave you because they no longer see the value in your solution. 

    Prioritize fairness and transparency
    for customer satisfaction and — most importantly — trust.  

Example: Spotify

Spotify’s simple subscription model with clearly defined pricing tiers is a perfect example of transparent pricing:

With three subscription levels — Free, Premium, and Family — Spotify makes it obvious what features are included at each level so customers can choose the right plan for their needs. No fancy wording, no hidden price tags. 

#2 Keep adjusting your pricing and billing

Customers spend the most time using your SaaS, and their usage data is the key to refining your billing strategies, in addition to the developers and your solution’s product leaders. 

Here are a few SaaS billing best practices to help you leverage usage insights proactively: 

  • Adjust your billing based on trends in customer usage. Customer preferences and usage patterns evolve, so you’ll always want to review data to spot usage trends. By adapting your billing to reflect these changes, you’re making sure your SaaS remains relevant and competitive. 

    For instance, if collaboration features become more popular among your user base, consider upgrading them in your standard package and adjusting the pricing accordingly. Customer usage trends help you weed out features that don’t work and elevate those that do
  • Personalize the billing experience. Use billing management tools to create personalized billing experiences. By understanding how different segments of your customer base use your service, you can customize packages and offer discounts that pique their interest.

Personalization makes customers feel valued and unique, increasing their loyalty and willingness to pay premium prices for a service that clearly aligns with their needs.

Example: Hubspot

HubSpot analyzed how customers engaged with its marketing and sales tools. It found that small businesses wanted an affordable CRM, while enterprises needed advanced features — and were willing to pay much more to access these features. 

So, after examining what different segments of its audience were looking for in its solution, HubSpot launched starter, professional, and enterprise tiers to match.

#3 Keep the market in mind

To stay ahead of the competition, you need to monitor what’s shaking up the market and be willing to adapt your billing model accordingly. 

As customer needs and preferences also change, your billing strategies should evolve to match. Here are two tips you can follow to do that:

  • Analyze customer interactions and payment trends. By understanding how customers use and pay for your product, you can identify areas for improvement in your billing model. 

    Let's say you discovered that certain high-demand features benefit a specific customer segment needing a different pricing structure. You can change your billing strategy to charge those customer groups accordingly.
  • Stay ahead of trends to avoid disruption. Monitoring industry trends and technological advancements is crucial for maintaining relevance and ensuring sustained revenue. 

Take AI as a stellar example. If your SaaS requires API calls and you aren’t billing the AI credits your customers are using accordingly, you’ll be losing money fast. Keep a pulse of what’s changing in your SaaS niche and adjust your billing to match.  

Example: Amazon

Look at how Amazon frequently adjusts the pricing for its AWS cloud services based on market dynamics. As competitors enter the market or new technologies become available, Amazon alters its billing rates to remain the most affordable and attractive option.

They also introduce new billing models, such as reserved instances and spot instances, to give customers more flexibility. 

#4 Secure your revenue streams

Cashflow's extreme importance is what makes SaaS billing different from other types of services. If you lose revenue streams, you risk having your costs chip away at your profit margins — sometimes to the point of putting you in the red. 

To avoid that, here are key tips you should follow: 

  • Automate revenue collection. Implementing automated billing processes (with the help of a billing management tool) helps avoid revenue leakage by ensuring payments are processed efficiently and consistently. 

    Automated systems can send payment reminders, charge late fees if necessary, and restrict access to services until payment is received. This reduces human error and can decrease late payments significantly. 
  • Offer flexible payment plans. Providing customers with the option to pay over time makes your service more accessible, affordable, and appealing to a wider audience. 

    Consider this approach, as it can help you secure revenue that might otherwise be lost by allowing customers to (for instance) spread payments over several months with a minor financing fee.
  • Communicate billing changes clearly. This tip circles back to our first set of tips about transparency. The key point is to notify customers well before any price changes or new features are added to the plan they’re paying for. 

    If the possibility of opting out of changes is considered, you’ll save your users the discomfort of unwanted charges in their bills — which hurts your credibility and compromises customer trust. 

A good practice is to always issue notification at least 30 days in advance to meet compliance standards. 

Example: Shopify

Shopify’s billing practices are an excellent example of securing revenue streams effectively. They automate billing to prevent revenue loss, offering reminders and even restricting access for late payments. 

Shopify also provides flexible payment plans, allowing merchants to spread out costs over several months, making their platform more accessible. They are super transparent about any billing changes, ensuring merchants are always in the know and can opt-out if necessary. 

#5 Make it easy to get paid

An optimal customer experience is key to improving customer satisfaction and retention. It’s simple: when your billing process is seamless and hassle-free, customers will appreciate your service even more.

Here are three tips to make your billing experience a key differentiator for your customers:

  • Seamless billing interfaces improve user experience. Billing can often be perceived as an abstract concept. It’s no wonder people make so many jokes about not understanding their phone bills at the end of the month.

    Intuitive and user-friendly billing interfaces solve this issue, making it easier for customers to manage their accounts, view their usage, and make payments. 

    Plus, positive interaction with your billing system increases overall satisfaction, encouraging customers to engage with your platform more often.  
  • Proactive billing support prevents dissatisfaction. Being always on top of what your customers need in terms of billing inquiries and issues can have a huge impact on retention.

    Prompt, helpful service in resolving billing questions or problems reinforces a sense of value and care, which is crucial for keeping customers engaged and loyal. You might have to beef up your customer support for that to happen — keep it in mind. 
  • Customized billing alerts and reminders go a long way. The main value you’re providing here is convenience. By informing your customers about upcoming payments and renewal dates, you’re showing a commitment to quality service.  

Make sure these alerts and reminders are tailored to the specific plan your customers are subscribed to, and don’t hesitate to get creative with how you notify your users. It’s all about the little things. 

Example: Adobe

A great example is Adobe’s switch from selling standalone Creative Suite products to offering a subscription-based model: Creative Cloud. This shift improved the customer experience by making Adobe’s offerings more affordable and accessible to its entire user base. 

By improving its customer experience through a flexible billing model and paying attention to user pain points, Adobe continues to excel at creating excellent customer experiences through billing to this day. 

#6 Use flexible payment options

Global audiences prefer different payment methods based on geographic location and available banking options. You want to make sure this is baked into your billing process so anyone can access your SaaS and pay for it however they choose. 

Here’s how you can make that happen: 

  • Offer various payment options to accommodate diverse preferences. Providing a range of payment methods maximizes subscriber accessibility. The last thing you want is to lose customers, not because they don’t want to pay, but because they can’t!

    Catering to local preferences in different regions
    — like open invoice billing in Europe, and prepaid cash cards in Asia, Africa, and the Middle East — improves global customer acquisition.
  • Integrate with multiple payment gateways and processors. This tip goes hand in hand with the previous one. To offer flexibility, it's essential to support various currencies and billing types through integration with diverse payment gateways.

    Although this requires significant resources — you need to track payments, refunds, and chargebacks across different systems and currencies —  the improved customer experience and expanded global reach justify the effort.

Example: Netflix

For instance, Netflix provides multiple payment methods to suit viewer needs across 190 countries. In addition to major credit cards, viewers can pay via debit cards, PayPal, and even gift cards that can be paid in cash. 

By providing payment flexibility, Netflix overcomes financial barriers to boost its worldwide subscriber base.

#7 Always have a premium tier available

Adding a premium pricing tier — even if not actively promoted yet — provides the opportunity to passively close larger deals. As your business grows, enterprise customers may come knocking. Even if you’re not focused on that size of deal, it makes sense to be open to the possibility of inbound interest.  

Having an established high-end offer in place means you can swiftly meet their needs. Here’s why it works:

  • While most customers may opt for mid-range plans, some power users will want additional features and support. Rather than turning them away or hastily creating a custom enterprise package, have a premium solution waiting in the wings. 
  • It works as a safety net. No matter how your business evolves — or who comes knocking, you’ll have an array of options to suit any customer. You want to make sure your billing process is ready to process high-ticket customers preemptively. 

Example: Monday.com

For example, the project management tool Monday.com has Basic, Standard, and Pro plans for small teams. But they also provide an Enterprise tier for larger organizations, with dedicated support and admin tools. This wasn’t originally advertised, but when big clients started calling, they were more than ready.

#8 Make sure your billing can scale

A scalable billing solution is essential for any SaaS company looking to grow. As your customer base expands, your billing system must keep up with increasing demands and handle more complex pricing models. 

Beware — if your billing can’t scale with your business, you risk frustrating customers, missing out on revenue, and limiting your growth potential.

Here are some SaaS billing process best practices you’ll find useful to circumvent this issue: 

  • Select a billing solution capable of handling high volume and complexity. Your billing system should grow alongside your business. 

    Crafting an in-house billing platform that can support a large number of subscriptions, multiple pricing tiers, and various payment methods helps you facilitate smooth operations as your SaaS company grows.

    You can also save yourself the hassle of designing an in-house platform and partner with experts that offer a done-for-your solution. 
  • Ensure ease of integration and flexibility for future growth. Opt for a billing system that integrates easily with your existing tools, has a straightforward API to minimize technical challenges, and is highly adaptable.

All of the above grows in relevance if your SaaS is currently running under a usage-based billing model.

Example: Salesforce

Salesforce is a prime example of a SaaS company with a scalable billing system.

As Salesforce has grown into a leader in the CRM space and expanded into new products like Marketing Cloud and Einstein Analytics, its billing infrastructure has evolved to support the additional complexity. 

Salesforce has mastered the art of scaling and personalization by offering enterprise customers highly customized pricing and billing options to match their needs. 

Ready to solve billing? 

Throughout this list, we’ve shared some insightful SaaS billing best practices that can help you solve your billing with little to no hassle. 

But you don’t need to go at it alone!

Orb offers a done-for-you billing management solution for complex, usage-based, and hybrid billing models. Here are a few reasons why more companies are choosing Orb:

  • Advanced usage tracking: Orb meticulously captures every interaction, turning complex usage data into precise invoices, down to the last decimal. 

    Whether you're billing by the byte, API call, or custom usage metric, Orb's granular tracking ensures every charge is justified and transparent.
  • Dynamic pricing models: With Orb, you're equipped to easily implement and evolve sophisticated pricing strategies

    From plan versioning that sidesteps the need for manual pricing migrations to supporting hybrid models that combine usage and subscription fees, Orb adapts to your business needs.
  • Detailed and transparent SaaS invoicing: Say goodbye to generic invoices. Orb delivers detailed, customizable invoices that can handle complex billing scenarios, including decimal precision for fractional charges, enhancing clarity and trust with your customers.
  • Seamless integrations for easy reporting: Orb integrates with your data warehouse and accounting systems in seconds, empowering your finance team with detailed reporting and insights without the need for deep technical expertise. 

Try it out for yourself and learn how Orb can solve billing for you.

April 5, 2024
Best Practices

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