Category Archives: Recurring Billing

How To Tell Your Customers That You’re Increasing Subscriber Fees

"Image courtesy of zirconicusso / FreeDigitalPhotos.net".

“Image courtesy of zirconicusso / FreeDigitalPhotos.net”.

Customers like signing up with subscription based businesses because they enjoy the consistent price. However, chances are at some point you will need to increase the price. The reasons for a price increase might include:

  • You want to earn more revenue.
  • Your costs have increased.
  • You want to reposition yourself and appeal to a different target audience.
  • Demand for your service is too high and you want to encourage fewer subscriptions.
  • You have increased your expertness or have a higher brand value.
  • You offer more services or products and wish to incorporate their costs into your pricing.

Whatever the reason, you have to inform your subscribers the reason why prices are increasing. Without the right strategy to inform your customers you could lose a significant percentage of your customers. Here are some tips to maximise your customer retention during a price increase.

Tip One: Terms And Conditions

Include in your terms and conditions a clause clearly stating you hold the right to increase the price. This way your clients cannot claim a price increase doesn’t apply to them.

It also allows you not to state a clear reason why you are increasing prices. However, not stating the reason is likely to cause several customers to leave.

Tip Two: Give Plenty Of Notice

Always give your customers plenty of notice of a price increase. This notice should be at least 2 months. This gives plenty of time for your clients to find the funds necessary for the price increase. It also supports the trust between you and your customer.

During this notice inform you customers exactly when the price will increase and how the increase will be collected.

One subscription based business which rarely gives notice of price increases are energy firms. Though they tend to announce some changes in the news, they rarely write to customers informing them of when the price increase will come into effect.

Tip Three: Don’t Give Too Much Notice

A big mistake on the other hand is to give too much notice. Some companies can give up to six months notice of a price increase. This is too much time and it is likely your customers would have forgotten about the increase by the time it comes in effect.

Tip Four: Give A Reason Why You Are Increasing The Price

Customers like to know exactly why you are increasing the price and how it will benefit them. This will increase the acceptance of your price increase amongst your customers. Ensure that this reason is passed onto your customer service team so customers can be told the same thing when they call to discuss the change.

Tip Five: Present The Price Increase Right

Present the price increase as a percentage. This has less impact in the minds of the customer, especially if the percentage is less than 5% or the price increase has a significant monetary value.

Tip Six: Repackage Product Bundles

If your service includes groups of products or services, re-organise them. Each new package should offer slightly more than it did before but be priced higher than its predecessor. This way you can increase the price while providing a better service to your customers. Something they will appreciate.

To support this, if you are offering a physical product and you have old stock left over, offer this at a discounted price until the stock has run out.

Conclusion

There are always going to be times when you need to increase the price of your subscription. By ensuring you have the right method to announce your price increase you can minimise the loss of customers and maintain strong customer relations.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

How To Turn Your One-Time Fee Business Into A Subscribe-Based Model

"Image courtesy of Stuart Miles / FreeDigitalPhotos.net"

“Image courtesy of Stuart Miles / FreeDigitalPhotos.net”

A subscription based business model has many advantages over a one-time fee model. It offers a stable income allowing you to pre-plan what resources you need on a monthly basis. A subscription based business can also offer your business a larger customer lifetime value while at the same time giving a perception of a lower cost for the product by your customers.

Subscription based businesses can afford to bring in fewer new customers per month and afford to dedicate more time to customer retention activities.

Changing your business from a one-time fee model to that of a subscription based model can seem difficult. However, Adobe has recently done this with their creative suite and while it has had some criticism, many pundits are seeing it as necessary for the company and consumer.

The main issue with this is how your business designs and implements the change. Here is our quick guide how you can switch.

1. Design Your Subscription Product

The first step you need to take is to design your product. If you run a software business this would be an easy decision. Other industries may have to be inventive but usually the subscriptions could allow customers access to resources, tools, guides, advice from your team, etc.

With your decision you should consider how much access to the product the consumer has. You might want to offer different access for different subscription levels. For example, if you have a digital art creator your lowest subscription model could offer 300 stock images to use, while a higher priced option offers 1,000.

If you want to start with one level of subscriber, remember to include some room for improvement later on. You may find customers want more features/access and would be willing to pay extra for it.

2. Choose Your Pricing Level and Billing Method

The price of your subscriptions is very important. You want to create a price point which gives you good revenue while being perceived by the consumer as a bargain. The monthly price should never be the same as a one-off fee, but instead that fee should be collected over the expected life-time of the customer.

For instance, if you sell a product now for $120 and you believe that the lifespan of the customer is 6 months you will want to charge at least $20 per month. You will also want to add a small margin, so the customers who are with your business less than you expected are still paying a significant amount towards that one-time fee valuation.

The next step is to decide how you will collect payments. The best option is to use a product, service or company which allows you to automatically collect membership fees. Many products available will automatically adjust your subscribers’ access should they upgrade, cancel or default on a payment. Ensure you check with your provider whether they offer this.

You’ll need to decide what to do with previous customers. Are you going to leave them with full access, offer them a discount or a subscription for free for a period of time? If they don’t take up your offer on the subscription will you remove access?

You could increase the uptake of the subscription with these clients by offering extra benefits in the subscription model than they currently have with the one-time fee product.

3. Communications And Testing

Create the website and all the online and offline systems to help run your subscription business. This can take minutes or days to implement depending on the software you are using. Bring in all the technical people you can to help ensure the system works flawlessly.

Then you need to create the marketing materials to announce the changes. Remember to sell the benefits of the change rather than the features. There are some generic benefits all subscription based customers can experience:

  • Lower initial and short term costs to gain access to product.
  • Better customer service and support.
  • Instant access to updates and fixes.

At the same time you want to identify a launch date and create a very specific marketing plan to create anticipation to your target audience through email, social media and other advertising channels.

4. Launch

On the launch day remove your one-time product and switch to the subscription based business. Don’t offer your clients any access to your old product to limit confusion.

Conclusion

Although it seems like a difficult proposition, changing from a one-time fee into a subscription based business is a simple and straight forward exercise. The benefits you gain from moving from one model to another can support the sustained growth of your business and offer your customers a great customer experience for a fraction of the cost per month.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

3 Security Questions Customers Will Ask About Your Monthly Service

"Image courtesy of cooldesign / FreeDigitalPhotos.net".

“Image courtesy of cooldesign / FreeDigitalPhotos.net”.

When customers are looking at your business they will be asking themselves several questions. Some of those questions will be about how your product can support them and whether the value you have placed on your product matches their perception.

One of the more complicated areas that will be scrutinized is the security of your business. Customers always want to know that you can provide a safe environment for their payments and details. Therefore there are a number of questions which they are likely to ask you and which you will need to answer.

Here are three of those security questions and how you can provide a solid answer to convince your customers they can trust your monthly services.

1. How Are Customer Details Stored and Used?

Privacy concerns are a major issue online. Many individuals have concerns that their details will be sold to third parties for extra marketing and sales. This can sometimes lead to customers receiving dozens of spam emails, unwanted mail and phone calls which are obviously unwelcome, so consumers avoid companies who do sell on their information. Customer data can be very valuable, which is why some businesses do this.

There are certainly instances where customers will be happy for you to provide their details to other parities. However, for the majority of the time small businesses should exercise caution and not sell on customer information.

There are two ways a business can effectively deal with this. The first is to include a checkbox asking permission to share consumer’s details. This creates a psychological contract between you and the consumer.

Another method is to clearly state that you do not share any customer data with third parties.

2. How Secure Is The Website From Hackers Wanting To Steal Information?

Hacking is a real security threat online. Major corporations and small businesses are constantly being attacked by rogue internet users in an attempt to disrupt a website’s operations and steal consumer information to sell on to other companies.

A big security leak is often bad news for a company and some businesses have been severely affected by hackers attacking their networks.

There are two ways in which your business can reassure customers on this issue. The first is to employ the best technology to protect your system. Tell your potential customers exactly what system you are using and how it is the best on the market to protect your network and their information.

The second is to regularly take down your site at a preplanned time to perform regular updates. Having constant reminders on this procedure and how it will affect your customers will reassure them you are taking the right precautions to protect their data.

3. Use A Good Third Party Billing Service

Nothing is more important to your customers than the security of their financial details. Consumers sometimes want to double check when they are being asked to pay a small business with no history directly.

Using a third party billing system is one of the best ways in which you can overcome this. A third party billing company is likely to be large, well known or at least have an established reputation which can be looked up easily.

Therefore advertising that all payments are taken through a third party might be a good way for your business to reassure your customers that their financial details are safe.

Conclusion

Demonstrating to your customers that you take their security seriously is a step towards developing a relationship built on trust. This type of relationship is strong and encourages your customers to be with you over the long term. This relationship sometimes requires you to reassure your customers with words – at other times it requires investment in technology.

Whatever the method, it is important you invest to attract customers to your brand.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

How To Use Comparative Selling To Sell Your Subscription Software

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Before making a purchase, many decision makers like to have a firm grasp of what they are buying. Normally this can involve some kind of interaction with the product. With subscription software this can be difficult. A free trial may be a good way to attract customers, but it might not be the best way to convert those who take up your offer.

Therefore, other methods have to be utilised to encourage your target market to purchase a subscription. Another method is to compare your software. Comparative selling can happen on a subconscious and conscious level for the customer and there are several methods to exploit this effective selling tool.

1. Comparing Price To Everyday Purchases

Your pricing may be very reasonable, but without a tangible product for the customer to see, they may find it hard to value the offer. Comparing the product’s price to common purchases creates an impression of product value in the mind of the customer. A common comparison for a subscription is coffee.

Be careful in your choice and the frequency. Four cups of coffee a month is ideal because many people consume more than that.

2. Original Price Compared To Sale Price

To achieve great sales, stating an original price for a product and then offering a reduced price will entice visitors to convert. Often these new customers are ‘bargain hunters’ who want to find a good deal online. This works so effectively it even outperforms the rule of 9 – that is any price which ends with 9 has a higher conversion rate than that of a price point which is rounded up or down.

Therefore it is important to consider demonstrating a higher starting price and then showing a discounted price, preferably ending with a 9 for double effect.

3. Comparing To Useless Price Point

How you price different subscription plans will greatly affect your customer’s perceived value of your product. This in turn will change how they convince themselves of which plan to purchase. Research by Dan Ariely on the pricing strategy of The Economist shows this to great effect.

In the Economist’s subscription options they had three price points.

Subscription Offer One: A web only subscription at $59

Subscription Offer Two: A print only subscription at $125

Subscription Offer Three: A web and print subscription at $125.

Subscription offers two and three don’t make sense being the same but option three offers more. In the consumer’s mind, the second option becomes a ‘useless’ price point and they would be better off selecting offer three. In the study, option three had a high uptake even though there was a cheaper option available. This is because when faced with this type of scenario, consumers become value seekers rather than bargain hunters and will always seek the most value for their money.

This was further demonstrated in further research. The Economist tested what would happen if they took away option two. In this scenario consumers were more likely to purchase option one as they convinced themselves they didn’t need the upgrade.

Therefore having three options with the second option at the same price point as the most expensive option may increase your revenue.

4. Comparing Compared To Competitors

If you are in a highly competitive market you may be tempted to highlight your services or prices against that of your major rivals. This could work in theory, yet research has shown that at times, lower cost products do not always perform well against higher priced branded products.

This is because there is a consumer perception of value on the branded product. Instead you should concentrate on comparing your product’s features and benefits to that of your competitors. Consumers are more likely to buy a product which has favourable benefits rather than a favourable price.

Conclusion

There are several options when you want to use comparative marketing to convert your customers. The above four options are used regularly by many organisations to sell products and subscriptions. Consider what methods you can exploit in your sales process to increase conversions, income and profits of your subscription based business.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

4 Invoicing Tricks For Getting Paid On Time By Your Clients

Image courtesy of hin255 / FreeDigitalPhotos.net

Image courtesy of hin255 / FreeDigitalPhotos.net

Getting paid on time is essential if you want to run a successful business. Having to chase payments which are not coming in on time from your clients is an ineffective waste of time and costs your business. According to research conducted in 2012, small business owners are being crippled by $1.2 billion worth of late payments.

Therefore you want to ensure that you employ effective methods to guarantee that the majority of your clients are paying on time.

Here are the top four tricks you can use in order to get paid on time:

1. Establish Clear Payment Terms at the Start of the Contract

Ensure that you have the payment details organised with the client when you create the initial agreement. In this document clearly state both the time the invoice will be sent and the date on which it is expected to be paid by.

It is also a good idea to include in this document penalties for late payment.

If a client does not pay on time then you can show them the clear terms of the contract.

2. Enforce Late Penalty Charges / Early Payment Discount

Sometimes you have to resort to late penalty charges in order to ensure you are getting paid on time. Laws vary between countries in regards to what you can charge. Some legislation allows you to charge interest on what you are owed.

This might not stop a late payment in the first case, but if you are strict and show that you are willing to charge a late penalty the first time round – a second late payment is unlikely to occur.

On the other side, you could always offer a small discount for those who pay by a certain date. Companies are always looking for ways to cut costs and therefore by offering a way to do so by paying on time will create an attractive proposal.

3. Make Sure Payment is Received Before You Deliver the Final Product

Once you have completed the project, hold back enough and ask for the final payment before you deliver the remainder. Some small business owners think this is rather unprofessional, but there are a number of cases where the owner of a small business has given over the final product only for the payment not to be forthcoming.

Some technical businesses can get round this by including a shut off switch where they can stop the use of their product if payment is not made – but for others sometimes having a reassurance of the final payment can be a useful tool.

4. Recurring Billing

Sometimes the best way to ensure you are paid on time is to switch to recurring payments in which your clients will set up and make regular payments for your product / service. This can be easily arranged and you can stop work at any time should a payment be missed.

This is an excellent method if you provide a regular service for your clients and it makes it easier for your clients to know exactly what they have to pay and when. The recurring billing can even be setup so that it is done automatically.

There are a number of different options for you to ensure you are getting paid for the work which you have completed. With careful planning you can reduce the number of clients who fail to pay for your products, but also make sure you have clear guidelines in place on how you will respond to those who do not pay on time, to avoid its re-occurrence.

Do you need recurring billing and subscription management software? Call or email one of our experts at info@fusebill.com, call 888.519.1425 or check out the Fusebill free trial.

Transparent Redirect: The Superman of Online Payment

SupermanIs PCI compliance the Kryptonite of your business?  Is payment information collection the Lex Luther to your company?  Then Great Scott! This looks like a job for SUPERMAN!

Errr… I mean TRANSPARENT REDIRECT!

Yes, we’re being a little silly, but transparent redirect or direct post really do seem like a superhero to companies that sell online, especially those who sell by subscription.

What is it?

Transparent redirect lets your business process credit cards from your website without having to pass them through your server. Which means none of your customers sensitive, cardholder data is stored on your system and you can conduct business on your website (instead of making people pick up the phone and call you, or by sending them to another website like PayPal), without having to deal with the expense, work, or burden of keeping their information secure.

How does it Work?

Basically, when a customer purchases something on your website using a credit card form, the form data, such as credit card number, expiry date, etc. is submitted to Fusebill for processing. Your customer is the redirected to your success or failure page and you receive the results using an API call.

Do customers know?

No. Your customers will have no idea they ever left your website because Fusebill transparent redirect is faster than a speeding bullet, customers never see anything but your web pages – never Fusebill.

Sounds hard, right?

Something that removes the burden of PCI compliance, keeps customers on your website, and provides an online payment method has to be difficult to implement, right?  Wrong. It’s really just a few simple like building a form for your website that includes a hidden field with a redirect URL, and a unique identifier, some API calls, and that’s it. Your developer can probably do it with one hand tied behind his or her back.

Up, up, and away!

It’s amazing that something that happens so fast and totally behind the scenes can be so beneficial to your business, but transparent redirect really is like a superhero in that way. Not only does it allow you to keep customers on your website, it drastically reduces the burden of PCI compliance because it allows you to never process or transmit sensitive data.

Want to know more about transparent redirect or the Fusebill API? Call or email one of our experts at info@fusebill.com or 888.519.1425. Or, check out Fusebill for yourself by taking our fully featured, free trial

Agile Billing – The New Essential for Business Innovation

ForbesYesterday, Forbes’ Andrew Dailey wrote a great post on agile billing. In the article Dailey not only gives a great definition, but explains what’s driving the shift to agile billing – realities such as shrinking business cycles and the inflexibility of legacy billing systems.

Modern billing solutions such as Fusebill have an attractive, consumer-style interface which means customers and business partners can access the billing system directly – and reduce the burden on customer support centers.

A quiet revolution is taking place in the most unlikely of places.  Boardroom pressure to deliver revenue growth and gain competitive differentiation is pushing companies to create new products and services.  Customers are demanding more granularity, flexibility, and transparency with prices.  The combination of these forces is driving companies to re-think their billing systems.  Formerly the domain of back-office clerks, billing and monetization processes and solutions are becoming critical ingredients enabling corporate innovation.

Read the full article on Forbes online

A Closer Look at the Fusebill Price Catalog

Fusebill Products and PlansOne of our favourite features in Fusebill 2014 is the Product Catalog, which is where you describe your product and services.

Designed with a hierarchical structure – plans are built from combinations of products.

 Basic Terminology

  • Products define “what” is sold.
  • Plans bundle together products and define “How” and “How Much”.
  • Customers subscribe to Plans.

Products and Plans act as a template for setting pricing, so you define how you want to charge, (one-time, usage, or recurring) as well as your default pricing. However, as products and plans are assigned to a particular customer you also have the opportunity to override the default pricing to create customer specific pricing.

Important Points about Plans

  • Plans have prices of their own, as well as any pricing specified with the included products.
  • Plans specify an initial (setup) fee and a recurring charge;
  • A single plan can include pricing for different payment schedules (monthly, quarterly, annual) so you don’t need to create a new plan for each variation.

Products? Do I have to?

No, you don’t. Products are optional so you don’t have to create any if you don’t want to. In fact, if you have a straightforward pricing model that only contains a setup fee and a recurring fee, then a plan is sufficient.

When Should I Create a Product?

While you don’t need to create products, they do of course have their place, below are various scenarios for when products should be used.

  • You want to report on them;
  • They are an optional offering;
  • There are charges associated with them;
  • The invoice needs to display a line item;
  • Customers can buy multiple instances;
  • You want to control revenue recognition;
  • To link a purchase to an option in the provisioning system;
  • Inventory tracking.

Best Practice Guidelines

There is a natural tendency for products and plans to proliferate to accommodate special offers, promotions or client needs. While there’s nothing inherently wrong with a large product catalog, a smaller catalog is easier to manage, understand, and report on. You’ll find that with a little planning, the versatility of Products and Plans allow you to keep your product catalog simple and uncluttered and resist the tendency to grow.

Keep the following in mind as you plan your catalog – and feel free to consult with your Fusebill team for advice.

  • Products can be used in multiple plans.
  • Products can be optional components in a plan. Use optional products to create upgrade paths or special offers.
  • Plans can have their own charges, which are added to the product charges. These Plan Charges can be zero.
  • Plans contain pricing for multiple time intervals. Don’t create one plan for a monthly charge and another for an annual. Just add an interval to the plan.
  • Similarly, plans contain pricing information for each currency. Don’t create a different price plan for each currency.
  • To give different pricing to a specific client, use price overrides.
  • Create a ‘Super Plan’ that contains all of your products (as optional).  This makes it easy to satisfy a la carte purchases.

usebill Webinar RegistrationIf you’d like to see more of Fusebill, join Fusebill CEO Steve Adams for a live Product Demo via webcast, today at 2:00 PM Eastern. You can register here.

Or, if you prefer to explore Fusebill on your own, take a fully featured free trial and see for yourself how easy it is to build your price catalog!