Accelerated business transformation and more predictable cash flow:
The role of SAP Subscription Billing
Why choosing a suitable subscription billing solution is so significant for a flexible consumption model?
Businesses are increasingly evolving in recent years to satisfy the growing customer requirements and create new revenue streams. Consumer-based business models are replacing traditional business models, allowing consumers to use and pay for their products or services depending on their usage.
A flexible consumption model may be a good option for certain organizations, but they simply couldn’t afford it. Customers are demanding flexible payment options, and many firms and whole industries are at risk of losing their sustainability.
SAP Subscription Billing solution is a unified cloud solution that offers a future-proof billing capability for any company with tremendous potential. Customer retention can be improved by automating regular billing procedures or by building strong relationships with customers over the long term. All inside one service, it lets organizations coordinate complicated sales processes with usage tracking and revenue monitoring.
Challenges in a growing market
Subscription-based revenues have increased by more than 300% across North America, Europe, and the Asia Pacific over the past seven years, according to a recent research.
When it comes to managing their subscriptions and payments, consumers demand fast, convenient, and customized service. To fulfill these evolving needs, organizations need to consider the specific challenges of delivering a subscription service, or a chance of negatively hurting their profitability.
It’s a fact that when an organization expands its subscription model, it becomes increasingly evident that managing subscriptions are very different from selling a one-time service. Hundreds of new customer datasets must be managed including:
- Payment period.
- Subscription duration.
- Billing deadline.
- Pricing tier.
- Automatic migration on contract renewal.
- Credit card numbers and expiration dates are required for payment.
Why Billing Has Become a Strategic Function
From constant ownership and fixed-term subscription models, the industry now represents a massive transformation of business models to products, subscriptions, and services business models. Relationships with customers are no longer seen as a transaction, but as something to be established and maintained.
To remain in the marketplace, companies are under massive pressure to establish, build, and expand recurring income streams. Businesses are trying to come up with new business models because of this. In an extremely significant number of events, their efforts fail.
There are three major reasons why billing is becoming a crucial company responsibility in today’s market environment:
1. Effect of Billing in Revenue:
Worldwide, there is an estimated $150 billion in lost revenue opportunities as a result of a lack of innovation capability and a slow time-to-market because of inefficient billing systems that are connected to old ERPs.
2. Effect of Billing in Cost:
Billing systems handle only one element of the billing: subscriptions, one-time transactions, or projects. For billing systems, significant integrations and expanded human resources are required, increasing the expenses faced by the organization. These factors have a direct influence on profitability.
3. Effect of billing in Customer Churn:
We know how consumers are using the service and how much they’re prepared to pay for it since we’ve been in touch with them continuously throughout our
as-a-service offering’s life cycle, depending on each customer’s subscription period.
To improve the entire customer experience, create cross-sell/up-sell opportunities, and modify prices based on need, these data may be communicated with the customer relations, sales, and pricing teams. An effective churn rate (% of consumers who discontinue using a service) may also be managed with this method.
A Seamless Business process with Subscription billing
Over time, SAP Subscription Billing will be integrated with SAP Commerce Cloud, SAP Marketing Cloud, and SAP Customer Data Cloud solutions, allowing it to function as an independent solution or as an essential component of the SAP Cloud for Utility solutions.
As a subscription company, SAP Subscription Billing helps you from the development of subscription services and pricing packages to subscription administration, through the prebilling of subscription products and services. Moreover, it allows you to monitor your consumption, as well as the rate at which you are billed, and to create a billing forecast.
Lifecycle Management of Your Subscriptions
SAP Subscription Billing helps companies to monitor the lifecycle of their customers’ subscriptions. Subscriber information can be managed for service and product subscriptions that are renewed, canceled, withdrew, or extended.
With the potential to update and cancel add-on offerings, you can fulfill your users’ requirements. Using the given specifications for periods and pricing, whether they are recurring, or usage-based, SAP Subscription Billing allows simulating different sorts of subscriptions.
You may provide a wide range of subscription packages to satisfy the demands of your user using this capability.
Models of plans and pricing
Different pricing options can be offered to customers by using SAP Subscription Billing. SAP Subscription Billing is used to meet the two major subscription needs of basic subscription and pay per usage.
Organizations can offer basic rate plans to their customers by offering basic subscription options. It is mostly used for monthly, quarterly, or annual expenses. In the planning of this subscription, there is no need to use a price implementation plan. Generally, pay-per-use business needs require more complicated and sophisticated rate structures than other types of business requirements.
In addition, SAP Subscription Billing offers a wide range of price models for customers to choose from. By configuring rate plans using pricing models, you can help guarantee customer happiness and accomplish compliance requirements and help ensure the customer experience.
Pricing and Planning Structure
Prices can be ongoing, or usage based. They can be combined as required. Payments will be invoiced either in advance or in installments based on the billing cycle you choose (monthly, quarterly, or yearly).
It is possible to create individual pricing plans by using frameworks. You’ll need to know how to calculate prices and credits based on recurring, one-time, and usage-based transactions. Collect and evaluate incoming usage statistics in real-time.
SAP Subscription Billing offers the flexibility to construct both common price patterns and customized cases to support customer-specific transaction engagements and contracts. The subscription can be set up for all customers or a select group of consumers, depending on the needs of the business.
It is possible to build special price and contract agreements for subscribers using customized subscriptions, including discount criteria per product in the subscription, based on modifications to existing subscriptions.
Customers can view billing and accounting information in real-time. This includes recurring revenue and subscription package as well as customer retention.
SAP Subscription Billing’s Major Benefits
- The timely development of new service and information billing models to satisfy your customers’ demands accomplishes a faster time to market.
- Faster responsiveness of customer inquiries.
- Customer relations are streamlined with a unified billing and subscription solution.
- As usage/consumption billing is automated, a sophisticated rating process is used.
- Automate renewals of recurring subscriptions to streamline billing.
- A configurable purchase requisition system allows you to manage the subscription lifetime.
Reasons Why you should choose SBS
To effectively implement a subscription billing solution, companies must be willing to make major improvements to existing operations, adopt alternative ideas to system design.
In addition, SAP Subscription Billing solutions help eliminate revenue leakage by automating subscription management with innovative features like
- Customized Pricing.
- Automated Billing.
- Usage-Based Billing.
- Consolidation of Invoice.
Businesses need a solution to create bills that correctly represent price and usage over a set period in the subscription market. In addition to streamlining billing processes, SAP Subscription Billing also provides real-time insight into billing and accounting transactions for organizations. SAP Subscription Billing provides transparency across all billing operations, from unified invoicing to automated evaluation procedures and compatibility for different pricing strategies.
Customers’ satisfaction will be crucial to long-term success as the subscription ecosystem continues to evolve as more possibilities become available.