B2B Subscription-Based Billing: Could It Be Right for Your Business?

January 16, 2020
Take a moment to think carefully about the subscriptions that you pay for every month or year. If you’re like many Americans, the list includes things like Amazon Prime, Netflix, Hulu, Disney+, Bark Box and more. While you might not think of a subscription-based model when it comes to your business, many companies are thriving through B2B subscription-based billing. The subscription model has plenty to offer businesses like yours.

What Businesses Use B2B Subscription-Based Billing?

While you might not immediately be able to think of a B2B business that utilizes subscription billing, there’s a high probability your business already utilizes several. First, consider Adobe. The company first launched its Creative Cloud package in 2012. It allows customers and businesses to pay on a monthly basis to access all of the software contained in the Creative Suite instead of purchasing the boxed software and only getting occasional upgrades. This lowered the cost of entry while increasing the long-term income, as customers were now paying them for access to software over a period of years instead of once every couple of years. Other companies that offer subscriptions for businesses include anything from CRM platforms to video conference calling, data back up and password protectors to social media accounts.

What Are the Benefits of a Subscription-Based Model?

As we demonstrated in the example above, many B2B subscription-based services rely on a short-term loss for a long-term gain. Instead of chasing one-time sales or invoicing companies by the hour, you will have a predictable and stable amount of revenue coming in every month (or every billing period). It also often creates a more streamlined customer experience, because there is no need to constantly send out invoices or follow up on unpaid invoices. When subscriptions bill automatically, you only need to follow up when the payment card was declined! This lowers the likelihood that you will need to perform collections and ensures that you get payment as the work is done instead of after the fact. Subscription-based models are also great at helping you continue to sell your service. Entering into a longer-term contract for a year, for example, ensures that you will have 12 months to continue to deliver a high-quality service, provide exceptional customer care and build brand loyalty. When it’s time to charge your customer again in a year, they will have a year of evidence of what your service did for their business and 12 months of building a relationship with you. That makes them much more likely to say “yes” to another 12 months of work.

What Types of Businesses Lend Themselves to B2B Subscription-Based Billing?

There are many businesses already using the subscription-based billing model with ease, including those in the following industries:
  • Marketing services (paying for a website for a year up-front, purchasing six months of blogs, etc.)
  • Managed IT services (12 months of tech support, one month of stand-by software training and support, etc.)
  • Legal services (a year of legal services, a flat rate every time a certain piece of paperwork needs to be filed annually, etc.)
  • And more!

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If you do have issues getting paid for products or services sold, call on us right away. Alacrity Collections is proud to be a leader in debt collections. We achieve great results that are over twice the national average and treat all of our customers with dignity and respect, on social media and offline. We work tirelessly to protect your brand and improve your net returns. To learn more about our services and get in touch, please call us at 1-800-752-9663 or set up a phone appointment directly on our representative’s calendar via this link: www.calendly.com/hheemann.  

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