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!

Swimming in SKUs? Keep Agile with Subscription Pricing

Swimming in SKUsDealing with changes in pricing is a significant challenge in any business. The rise of subscription based retailing magnifies the complexity – pricing plans and paradigms proliferate, while individual customers require specific charges and adjustments to their accounts. The result? Vast lists of SKUs, ordering complexity, and confusion.

To understand the value of agility in a subscription billing environment, let’s examine a billing lifecycle from two perspectives. First, we’ll look at the lifecycle of a pricing plan – initiated by a marketing program, introduced for sale, and eventually retired. Then we’ll look at the typical customer lifecycle events that create their own pricing challenges.

As a specific example that is easy to relate to, we’ll use a fictional men’s hygiene subscription box with some a la carte options:

  • Razor Blade service $10/month
  • Shaving Cream service $10 / month
  • Premium Skin Creams $20/month
  • Razor handle: $20 one time
  • Premium Razor Set: $50 one time

Now, the marketing team goes to work:

  • Let’s bundle Blades and Shaving Cream together and give a discount to $15
  • Can we sell Skin Creams at a lower price to encourage people to try? Just for those with the bundles?
  • There should be more incentive to sign up for an annual contract. Let’s make Razor 1 free with an annual subscription.
  • What about the Premium Razor – ok, it should be $30 for an annual plan.
  • We should test the bundle at $18 as well.

There are now 96 separate variations of what is, all-in-all, a reasonably simple packaging idea. A customer can order the blade service, or not; the shaving cream service, or not; the extra premium creams, or not; choose one, both or neither razor; commit to an annual plan. Some customers will see one price test, some will be at a higher price point. Over time, more variations are created for further promotions; some are retired; some are grandfathered.

A traditional approach is to translate each one of these variations into a separately identifiable ‘part number’ or SKU. This makes it: difficult to order, track results, and analyze what is working. While it’s easy to tell which individual variant is performing well, even simple questions like “how many customers chose Razor 2” requires aggregating data from multiple SKUs.

Now consider a typical customer experience as seen through the eyes of a CSR (Customer Service Rep)

Typical Customer/CSR experience

In coming weeks, a typical customer might upgrade their package; change razors; upgrade to an annual plan, and receive a free month of service to compensate for a service problem. Each transaction involves removing and replacing SKUs, generating a string of confusing entries on the bill that may generate more questions. Manual attempts to pro rate charges to align with the billing cycle are error prone.

This simple example illustrates how complex it can be to implement even straightforward bundles of products and service. This complexity complicates ordering, customer service and reporting. Further on, accounting groups must also decipher events to apply appropriate revenue recognition policies.

A subscription billing system provides agility by structuring pricing catalogs to minimize the proliferation of products, plans and variations, and automated tools for dealing with common customer service issues.

This article is a taste of what Fusebill CEO Steve Adams will be covering in a new, live webcast on March 20th. If you’d like to know more about this topic, register today:

usebill Webinar RegistrationSwimming in SKUs? Keeping Agile with Subscription Pricing
When: 2:00 PM, March 20th, 2014
Cost: Free
Presenter: Steve Adams, CEO Fusebill

Please Note: This webcast is being presented in partnership with CPA academy and is worth 1.0 CPA credits.
Bonus: As a thanks for attending you’ll get a copy of our popular whitepaper The Impact of Billing on a Subscription World absolutely free!
REGISTER NOW!

How painful is your billing system?

The importance of the billing system means that a lot of businesses live with a lot of pain and anguish caused by their traditional system failing. Only when the pain becomes unbearable do they seriously think about doing something about it.

Here are three typical scenarios where traditional billing systems hit the pain threshold.

1. There’s too much improvisation

Billing System PainOne way to know if your traditional billing system is failing is by looking at the amount of improvisation you have to perform to get it to even come close to doing what you need it to do.

Do you use a) Excel and a billing clerk who on a monthly basis enters new orders into the traditional system in order to trigger the right things to happen?  Or b) some sort of ticketing/workflow system that sends out reminders to people who then perform task(s)?

In both a and b, reminders tell people to do things such as manually charge a credit card, and if the card goes through, then manually process the order, then perform any order fulfillment requirements.

We’ve seen some very creative ways in which people try to essentially create their own recurring billing subscription management system. This usually happens when, (as many things do) the subscription project starts as a test, pilot project or a “let’s try this and see what happens” experiment.

No one wants to invest too much in systems when they don’t know if the test is going to result in something ongoing, so you make do with what’s around, and what’s around tends to be Excel, or Excel plus Quickbook,s or Excel plus a tracking management system.  But at some point there is so much improvisation and so many pieces to remember that it’s no longer sustainable.

2. There’s not enough security 

Security pain in billingA second way traditional billing systems fail is when it comes to security. Most often, this occurs when people try to build projects themselves.

There are two different types of build your own projects. The first is the quick and dirty development project where a database is hacked together to store credit cards and purchase orders.

The second is the long drawn out development project that while sometimes come to completion, never really ends, because as soon as you start developing, people discover just how entwined the billing system gets to be.

Both types of “build your own” often have security issues – risks that can be devastating to a business. Security and PCI compliance is a big issue, both in terms of the risk of loss of data on your customers’ behalf, risk of losing your customers trust (which usually results in the loss of their business. But once you’ve proven to have security issues you could lose the ability to process credit cards all together.

3. Revenue Leakage

Revenue leakage painRevenue leakage occurs when money is lost due to manual errors. For example, you’re shipping to customers who have stopped paying you or not shipping the right things to people who are still paying you.

Customers aren’t billed on time, credit card processed for the wrong amount, etc. all of these types of errors cost you money, and don’t provide you the visibility you need to run your business.

Whether that’s forecasting your requirements and inventory levels, or understanding which marketing programs are working and delivering good customers.

All three of these of these scenarios become barriers to scale. And what we most often hear from our customers when they talk to us about why they need a new billing system is that their billing system is getting in the way – that it’s become a barrier to growing the business. They’ve proven success, their idea or concept or subscription model, and now they need to get bigger and they need billing to be a key part of that.

Learn more about how an automated billing system like Fusebill can take away this pain. Join Fusebill CEO Steve Adams on March 13th for a live Product Demo!

usebill Webinar RegistrationProduct Demo: Fusebill Automated Billing and Payments Platform
When: March 13, 2:00 PM
Presenter: by Steve Adams
Cost: Free

Subscription billing stresses business processes and systems. The challenge of creating and delivering accurate bills, and securely collecting payments, can overwhelm billing teams as a business scales. Accounting teams are challenged with applying proper revenue recognition rules to subscriptions, and analyzing performance.

Keeping the wrong billing system means tightening the bottleneck around the whole business while moving to the right system means invoices are accurate and on-time, collections come in faster — and the bottom-line gets a huge cash-flow boost.

Hosted by CEO Steve Adams this fast-paced and interactive hour will give you an insider’s view of Fusebill’s market leading Billing and Payments platform, an overview of subscription commerce including best practices, and a live in-product demonstration.
REGISTER NOW!

Pricing: It’s not so Easy

Pricing is hard, and not just in the subscription world, but generally. There’s no question, in every new business, with every new product, it all seems easy when you start. You’ve got one product, you’ve got one price point, and you say, “I’m just going to charge $10/month for it.” The reality is that when it comes to pricing plans – nothing lasts forever, and as soon as you introduce one price point you need to change and start testing others.

Let’s look at a fictional cell phone company B2C (business to consumer) example.  This company offers a basic voice service, a basic data service, extra bandwidth at an additional charge price, and two handsets, a basic phone for $200 or a smart phone for $500.

Pricing starts easy…

Pricing seems easy when you start

Each of these things is an a-la-carte choice, with its own price point, so you write them all down with the prices and you start selling it, and everything’s fine – and easy.

But then the marketing team gets to work, creating and testing new pricing plans to maximize conversion rates and this type of activity almost always entails trying to work around quirks in the billing system, and things suddenly aren’t so easy. In fact, this situation is some of the history behind why we started Fusebill.

For example, you have the five a-la-carte options, and the marketing team says, “Let’s create a bundle, a voice and data bundle, and give people a discount, so instead of $30/month it’s $25/month.”

Then maybe somebody says maybe we should give a deal on the extra data, but only to the people in the bundle. So you’ve got a voice, data, and a special pricing on data, all for that $25.

Then someone says, “Well I want a charge per month, but I’d also like to offer an annual plan, and to encourage people to purchase the annual plan we’ll offer a discount.  Then maybe you want to test an incentive, either with or instead of a discount, so you offer the basic phone for free. Oh, and don’t forget upgrade options – for example the $500 smartphone is only $200 if it’s purchased within a particular plan.

Now you have an extensive mix of promotions, bundling, discounts that really start to create a proliferation of different things for sale. All from the same building blocks: voice, data, etc., but wrapped up in different ways, at different price points, at different billing schedules, and it rapidly becomes a very confusing issue.

Next comes price testing, where the $25 bundle becomes $18 and you test that for a while, and so on, and so on.

And quickly becomes not so easy

Pricing is complex

There’s just no end to the number of permutations you can come up with from the five basic plans, and the very simple model, becomes a very complex model.

Want to learn more about subscription pricing? Download the popular whitepaper 7 Popular Pricing Paradigms and join Fusebill CEO Steve Adams for a live Fusebill Product Demo via webcast on March 13.

Integrating Fusebill with Accounting Systems Part 2

The first part in this series looked at using Fusebill as the master customer sub ledger for subscription management and billing in order to take advantage of Fusebill’s advanced feature set. If you missed Part 1 of this series, please read it here.

Reconciliation Steps

Fusebill Reconcilliation ReportFusebill provides standard reports that specify the required journal entries. The following steps should be followed:

1)      Reconcile cash collected to bank records. Using the RECONCILIATION report, drill into the details and ensure that all transactions are accounted for. The CASH report details all payment activity for a given date range, indicating the payment method. (see Figure 1)

2)      Generate appropriate journal entries by using the RECONCILIATION report. The RECONCILIATION report  (Figure 2) shows the opening balance, credits, debits, net change, and closing balance for a specified time period. It shows the changes in each of the following ledgers:

  1. Cash
  2. Accounts Receivable
  3. Deferred Revenue
  4. Taxes Payable
  5. Earned Revenues
  6. Discounts
  7. Write Offs
Fusebill Cash Report

Figure 2: Fusebill Cash Report

Fusebill Reconcilliation Report

Figure 3: Fusebill Reconciliation Report

To provide auditability, details of each transaction can be accessed by drilling into the report details.

Alternative – Accounting System as System of Record with invoicing triggers only

Fusebill can also be used only to generate invoicing triggers which are used by a primary customer management system.  This scenario arises in environments where there is a centralized CRM system for multiple product lines, and invoices need to reflect information from Fusebill and other billing systems. Fusebill generated data is used to prepare consolidated invoices using both Fusebill and non-Fusebill invoicing data.  Information from Fusebill is used to populate the consolidated invoices at one of two levels:

-          Summary invoice information is entered as a single line item on the consolidated invoice, without a detailed breakdown; or

-          Transaction level details are provided showing individual subscription product charges and adjustments.

This can be readily supported through reports or through API integration; the volume of information required for makes this more suitable for API integration.

 Process Considerations:

  • Ensure Fusebill’s automated invoicing, collections and dunning features are turned off:
  • Set customer billing email address to an internal address;
  • Turn off dunning emails;
  • Ensure no credit card information is stored with accounts;
  • Record invoices as paid in Fusebill; otherwise the reports will be misleading;
  • Do not use Fusebill AR Aging reports;
  • Subscription changes, including pro-rating, should be applied in Fusebill directly.

Take a Fusebill Free Trial to see all of our accounting features for yourself. No credit card is required to signup and your trial includes access to a demo account where you can start investigating Fusebill’s feature set right away,  a no obligation personalized walkthrough with a Fusebill product expert, and API Access. Try it Now!

What is agility in pricing? And why does it matter? Part 2

If you missed Part 1 of this two part series, we suggest you read it here before reading Part 2.

Now consider a typical customer experience as seen through the eyes of a CSR (Customer Service Rep)

Customer Service Rep: A Typical ExperienceIn coming weeks, a typical customer might upgrade their handset; add a family member to the plan; upgrade to an annual plan, and receive a free month of service to compensate for a service problem. Each transaction involves removing and replacing SKUs, generating a string of confusing entries on the bill that may generate more questions. Manual attempts to pro rate charges to align with the billing cycle are error prone.

This simple example illustrates how complex it can be to implement even straightforward bundles of products and service. This complexity complicates ordering, customer service and reporting. Further on, accounting groups must also decipher events to apply appropriate revenue recognition policies.

A subscription billing system provides agility by structuring pricing catalogs to minimize the proliferation of products, plans and variations, and automated tools for dealing with common customer service issues.

There are three key needs:

1)      Flexible product catalogs. Hierarchical grouping of products is needed to allow the easy bundling of products together. Avoiding a flat catalog then groups together all the options into a single orderable entity.

2)      Multi-level pricing. Specify pricing at both the top of the hierarchy, and within the product components to allow extra charges for optional products, and special discounts.

3)      Customer specific overrides. Allow pricing elements to be specified for a particular customer: draw the standard, default values from the pricing catalog, but provide flexibility for a sales or service agent to negotiate a specific arrangement per client.

How Fusebill 2014 provides agility.

Hierarchy of customers, plans and products

Figure 2: Hierarchy of customers, plans and products

Fusebill 2014 introduces a hierarchy of customers, plans and products (Figure 2).

  • Products are the building blocks of “what” is being sold – the fundamental offerings of the business.
  • Products can be grouped into plans, describe “How” the products are sold, including the pricing for each time period;
  • Customers subscribe to plans – and the subscription which links customers to a plan allows individualized pricing and terms to be set.
Fusebill Configure Subscription Feature

Figure 3: Both monthly and annual plans are included in the bundle.

The core plans (voice, data, extra usage and handsets) are defined as products, the basic building blocks.

These are grouped into a single plan (Voice and Data Bundle) with both monthly and annual pricing specified. Customers are subscribed to this plan, choosing either monthly or annual pricing. (Figure 3)

The specific offers are easily captured:

  • Extra data is specified at $10 per month within the bundle; this pricing is only accessible within the bundle.
  • The handset offer is included in the annual plan, with the free handset included by default.
Products are bundled into plans, specifying default configurations.

Figure 4: Products are bundled into plans, specifying default configurations.

Register for the webinar:

usebill Webinar RegistrationTo delve deeper into this topic, register for our free, live webcast What is Agility in Pricing & What are the Implications for Your Billing System?

Presented in partnership with CPA Academy. CPAs who attend will receive 1.0 CPA credits, however this webinar is free and registration is open to everyone, not just CPAs.

Date: February 27th 2014
Time: 2:00 PM Eastern
Cost: Free
Presenter: Steve Adams, Fusebill CEO
Special Notice: Fusebill is presenting this webinar in partnership with CPA Academy. CPAs who attend will receive 1.0 CPA credits, however this webinar is free and registration is open to everyone, not just CPAs.
CLICK HERE TO REGISTER

BONUS! All attendees will receive a copy of our new whitepaper “The Impact of Billing on the Subscription World.

Integrating Fusebill with Accounting Systems Part 1

Fusebill Reconcilliation ReportMost companies use an accounting system to manage their P&L. Some companies also use their accounting system for other purposes like invoicing, dunning, order tracking and collections.

Fusebill manages the invoicing for both one time and subscription sales: calculating what is owed, taxes, sending invoices, charging credit cards, sending dunning emails and more.  Revenue recognition is also managed within Fusebill.

When transaction level details are maintained in two systems, unless the two systems are continuously kept aligned there is the risk of having duplicated or missing data.

Best Practice: Fusebill Manages all Subscription Customers

To take advantage of Fusebill’s automated feature set, Fusebill should be used as the master customer sub ledger for subscription management and billing:

Fusebill calculates the amount owing, and applies taxes (as needed). On an account’s billing day, Fusebill creates an invoice, delivers to the customer, and collects automatically (optional).  For invoices not paid within their terms, dunning messages are sent; AR Aging reports show outstanding amounts (Table 1) on a monthly basis, reconcile cash collections and then use summary journal entries to update ledgers in the accounting system.

With this approach, Fusebill manages the details of individual customers, subscriptions and invoices; there is no need for the accounting system to track these details.

Fusebill Accounting GOOD                          Table 1 – Fusebill and Accounting Responsibilities

The process implications are:

  • Offline payments (i.e., via check or wire transfer) must be recorded in Fusebill and associated with the corresponding invoice. Online payments via credit card or ACH are automatically recorded by Fusebill.
  • All adjustments (including discounts or refunds, write-offs or balance adjustments) should be made in Fusebill. Credit card chargebacks, and NSF checks should also be recorded in Fusebill.
  • Any dunning or collections capabilities in the accounting system should be disabled.
  • Disputed invoices should be set to status “Disputed” to avoid dunning emails.
  • Cash should be reconciled regularly (at least monthly) to ensure all chargebacks and payments have been correctly recorded.
  • Journal entries should be made in the accounting system prior to any closing.

In Part 2 we’ll look at Reconciliation Steps, the alternative of using the Accounting System as the System of Record with invoicing triggers only and the process considerations. To see Fusebill’s feature set including the accounting report, take a fully featured free trial. No credit card is required to sign up.