SaaS payment methods: beyond subscriptions
Posted: Thu Dec 12, 2024 10:11 am
What payment methods are acceptable for a SaaS company? You probably plan to have your customers pay through a subscription model, meaning they pay you a monthly fee in exchange for a service and commit to a full year . You may even already have your SaaS company up and running and this is your payment method.
This form of charging is not exclusive to SaaS: gyms, newspapers and magazines are examples of monthly subscription services.
Advantages of subscription as a form of payment in SaaS companies
A subscription service has many advantages:
For the customer, the costs are predictable and the flat rate allows belgium phone number library to choose what they want to buy without having to pay more.
For the seller, it also means that income is predictable, that he does not have to be looking for new buyers for each sale, and that he will have loyal customers.
It is not surprising, therefore, that this model is beginning to be adopted by all types of companies: it is convenient for buyers and sellers and the novelty of subscribing, for example, to a store and receiving a product monthly is certainly attractive.
But not everything is rosy.
Disadvantages of subscription as a form of payment in SaaS companies
Probably the most common disadvantage is that sometimes customers realize they are not using the service they paid for and are left feeling like they have been scammed, thus leaving the customer with a bad image of your company.
It can be even worse if they are paying for a service without knowing or remembering it, because when they see the first bill it will be even more unpleasant.
Another disadvantage is that any attempt to encourage spending in a subscription service can accelerate the customers' cancellation of the service: if they pay a certain amount of money and we want them to pay more, they may reconsider whether they want to continue spending .
There are also problems on the company side:
On the one hand, there is a problem of temptation: if you already have clients who pay every month, why improve? The answer is obvious: to continue growing, but sometimes it is easy to rest on your laurels. On the other hand, there is a problem of ethics: is it right to charge clients who do not use the service but who signed up at some point?
Alternatives to annual subscriptions are beginning to emerge as a form of payment that imply a greater commitment from the company to the customer and, therefore, greater awareness of the expense for the customer.
This form of charging is not exclusive to SaaS: gyms, newspapers and magazines are examples of monthly subscription services.
Advantages of subscription as a form of payment in SaaS companies
A subscription service has many advantages:
For the customer, the costs are predictable and the flat rate allows belgium phone number library to choose what they want to buy without having to pay more.
For the seller, it also means that income is predictable, that he does not have to be looking for new buyers for each sale, and that he will have loyal customers.
It is not surprising, therefore, that this model is beginning to be adopted by all types of companies: it is convenient for buyers and sellers and the novelty of subscribing, for example, to a store and receiving a product monthly is certainly attractive.
But not everything is rosy.
Disadvantages of subscription as a form of payment in SaaS companies
Probably the most common disadvantage is that sometimes customers realize they are not using the service they paid for and are left feeling like they have been scammed, thus leaving the customer with a bad image of your company.
It can be even worse if they are paying for a service without knowing or remembering it, because when they see the first bill it will be even more unpleasant.
Another disadvantage is that any attempt to encourage spending in a subscription service can accelerate the customers' cancellation of the service: if they pay a certain amount of money and we want them to pay more, they may reconsider whether they want to continue spending .
There are also problems on the company side:
On the one hand, there is a problem of temptation: if you already have clients who pay every month, why improve? The answer is obvious: to continue growing, but sometimes it is easy to rest on your laurels. On the other hand, there is a problem of ethics: is it right to charge clients who do not use the service but who signed up at some point?
Alternatives to annual subscriptions are beginning to emerge as a form of payment that imply a greater commitment from the company to the customer and, therefore, greater awareness of the expense for the customer.