Company |Blog |Why Adopting Subscription Billing for Digital Products is the Best Move for Your Digital Brand

Why Adopting Subscription Billing for Digital Products is the Best Move for Your Digital Brand


Nenad Barugdzic

Director, Product Development Technology & Engineering


18 Apr 2022


Subscription billing is one of the most prominent ways of consuming digital content, as per the Juniper Research forecast*. Its prospects are that the number of services offering this model will only rise, with the estimated rise to $275 billion in 2022. The three highest-growth categories include video and music on demand and digital goods. Before we dive into the benefits of subscription billing, let’s cover the basics first.

What is Subscription Billing

Subscription billing, or recurring billing, is a revenue model in which a company that provides digital products charges customers recurringly on a membership basis instead of charging per purchased item. The model includes a schedule and a list of goods available for consumption based on customers’ preferences. Video and Music on Demand and gaming brands already have the subscription billing in their charging models, and more offline businesses follow suit.

This charging model requires customers’ consent once - during signing up for the subscription. Companies can then start deducting the recurring charges automatically per agreed period from the customer’s preferred payment method. The payment methods are usually credit or debit card or direct carrier billing. Learn more about direct carrier billing.

Unlike one-time purchases, subscription billing is a more convenient way for customers to pay for digital services they will use continually. The main appeal is the automation of the purchases – making multiple single transactions unnecessary. Some of the great examples of recurring billing include Netflix, Spotify, and software suites like Microsoft 365.

With the technology advance, subscriptions have become increasingly customisable, allowing customers options to:

  • Upgrade or downgrade services

  • Choose or change billing dates or frequency

  • Change or update payment methods

  • Purchase one-time add-ons

  • Cancel or pause subscriptions

As subscriptions make a steady revenue flow for the companies, investing in promoting them has become more prevalent. Companies often offer discounts on services bought as a subscription and allow free cancellation. 

Why Use Subscription Billing Platform

Undoubtedly, a steady recurring revenue stream is one of the most important subscription billing benefits. But there are a few more beneficial effects: customer loyalty and retention and driving new customer leads.

The payment process has long been recognised as part of the user experience. Besides enjoying your digital service, customers want as little hassle as possible. The subscription option makes your service easy to use and enjoy, adding to the satisfaction brought by your brand. Ultimately, the frictionless user experience is crucial for customer retention and loyalty.

The longer you retain your customers, the higher the chances that they will refer your service to a peer. Consequently, those peers as your new customer leads will be more likely to start using your digital service because you have the payment user experience solved: the subscription option.


How to Choose the Best Subscription Billing Platform

Subscription Billing - How to Choose the Best Platform Subscription Billing - How to Choose the Best Platform

Depending on the type and market you’re pushing your digital service in, you can choose from various recurring billing platforms. Not all of them offer the same features, but some are essential. Your subscription billing platform should have:

  • Recurring Billing. The billing platform should make invoicing and payment collecting easy and follow the subscription schedule. Besides the apparent billing management that will require different billing cycles or periods between two charges (individual for each customer), you should choose the platform that can adapt to any changes in pricing, as your brand will evolve and grow over time. Also, customers are likely to subscribe and unsubscribe on the go without following the monthly cycle. Your recurring billing platform should be able to provide more flexible, prorated billing and charge the customers based on what they actually used. It goes without mentioning that the prorated billing should also include the optional upgrades or new services the customers choose, packing everything in a single invoice. 

  • Multiple Payment Gateways (PSPs). Having multiple PSPs is considered a standard UX feature with today’s vast array of payment options. Your subscription billing platform should be capable of offering what your customers want – whether it be credit or debit cards, digital wallets, cryptocurrency, or direct carrier billing. PSPs like Centili that provide access to monetisation via telco channels bring direct connections to their own network of mobile network operators (MNOs), paving the path to large audiences in previously untapped markets.

  • Subscription management. As subscription management defines the customer journey, including the onboarding and offboarding experience, it is the most important feature of a recurring billing platform. The key is to make it easy and convenient for customers to control their subscriptions fully. Your platform of choice should have functionalities such as allowing customers to update their payment methods or give customers options to pause, cancel, or conveniently resume their subscriptions. Besides the customer-facing subscription management functionalities, your subscription billing platform should make it easy for you as a merchant to allow a free trial period or offer coupons to incentivise the spend. It will help boost customer retention and customer lifetime value.

  • Compliance and security. Tax and regulatory compliance is a priority for all businesses, let alone online businesses, and it requires a reliable system that will cover all the details - no gaps. A subscription billing platform should be capable of seamless sync up with your accounting system and automatic calculations of relevant local and cross-border taxes. The billing platform must provide the highest levels of security, respecting customer privacy and data used for all transactions. Most businesses must comply with GDPR, SOC1, PCI-DSS, PSD2, and other current standards.

  • Dunning management. Revenue churn related to payment failure occurs at as much as 20% for subscription-based businesses. This type of involuntary churn is known as dunning, and it encompasses trying to receive funds after failed payment attempts. All the while, the billing platform should continue communicating with customers about the billing issue. Automated tools capable of communicating with customers, and attempting payments repeatedly, should also maintain the record of these processes. 

  • Top-notch analytics and reporting. Monitoring payment activity and customer actions such as signups, pauses, cancellations, or renewals, are the key to subscription management success. The platform should provide performance metrics, such as ARPU - average revenue per unit, LTV - lifetime value, MRR - monthly recurring revenue, and ARR - annual recurring revenue. Subscription billing platforms that offer performance dashboards and other convenient reporting systems will help you trim your tactics and drive more revenue for your business.  

  • Customer support. Is there a business today that can get away with providing no customer support? We believe not, especially in the complex, customer-facing part of the business, such as monetisation. The subscription billing platform should run with no downtime and always have available support to smooth out any issues.

Explore the New Automated Revenue Opportunities with Centili

If you’re looking to adopt a subscription billing platform and a reliable payment service provider that can offer subscription billing management and multiple payment methods, including carrier billing, credit cards, wallets, and more, get in touch today and discover how we can help you further grow your business.