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Glossary » Subscription Management

Subscription Management

What Is Subscription Management?

Subscription management is the process of handling customer subscriptions, typically for a recurring service or product. This can involve tasks such as managing customer profiles, updating billing information, and providing customer support.

Managing subscriptions effectively is essential for businesses that use a subscription business model and rely on recurring revenue, as it can help ensure that customers remain satisfied with the service and continue to subscribe. Poor subscription management, on the other hand, can lead to customer churn and lost revenue.

Subscription software is becoming increasingly popular as a way for companies to monetize their products and services. It allows them to offer their products and services on a recurring basis, which can be more profitable than selling one-time licenses. In addition, subscription software often includes additional features or services that can be accessed by subscribers, which helps to further increase revenue.

There are a number of software solutions available to help businesses with subscription management, including billing platforms, customer relationship management (CRM) systems, and subscription management platforms. These solutions can automate many of the tasks associated with subscription management, making it easier to keep track of customers and their subscriptions.

Subscription management tools can be used in any organization, large or small, that relies on subscriptions as a critical part of its revenue model. If you use a cloud application, whether G-Suite or AWS, then you’re probably already familiar with the kind of self-service functionalities that these tools present to users. They also contain a backend in which customer success and support teams and account managers can manually update and manage users’ subscriptions.

What Is Subscription Management Software?

Subscription management software is a sales enablement technology solution that allows you to automate subscriptions, renewals, recurring billing, collections, quoting, and revenue recognition.

It is used in B2B organizations to do a number of things:

  • Standardize packages and payment terms
  • Offer upsells and cross-sells
  • Consolidate renewals
  • Deliver custom pricing
  • Deliver personalized billing
  • Plan changes
  • Communicate new services

Below, we look at what subscription management software is used for, by whom, and why you need a next-generation solution like DealHub CPQ to streamline your subscription management

What Does Subscription Management Software Do?

DealHub CPQ is the best example of what subscription management software does to achieve more revenue. DealHub CPQ is next-generation sales technology that allows users to guide and control the subscription process at every stage, streamlining workflows and maximizing the opportunities at every stage.

Our guided subscription process allows you to create a single subscription playbook that guides the process with a rules-based logic engine. Sales leadership can input their strategy a single time, and then have quotes generated that ensure similar prospects and customers always receive the configuration, and terms and conditions, leadership has identified as optimal. 

That way, sales leadership can empower sales reps to maximize the revenue opportunity with:

  • Optimization with upsells and bundles
  • Approved discounts
  • Schedule subscription renewals
  • Implement contracted renewal pricing
  • Control expansions
  • Control discounts
  • Improve revenue forecasting
  • Keep customers engaged and create brand loyalty

In addition to the way DealHub CPQ lets you engage with buyers effectively, subscription management solutions help companies in several other ways:

  • Defining subscriber plans: Most SaaS companies contain various subscription tiers which are offered to users. Using subscription management tools, product managers can define, edit, and update precisely which set of functionalities are included at each level of service.
  • Billing automation: Subscription management tools generally contain an automatic billing functionality for automatically processing renewal payments according to system-defined expiry dates. 
  • Account management: While most SaaS subscription is resolved entirely through self-service means, managers need to retain the ability to manually update account records. This is where account management features come into play. Most tools allow users to override default actions, terminate plans, and upgrade them from the backend. Typically, customer-facing resources like customer support and success would apply these changes. 

Why Is Subscription Management Important?

A subscription management tool is an essential piece of software for organizations that operate a subscription-based business.

Without this software, it would be virtually impossible for organizations with larger subscriber bases to manage subscriptions. 

Subscription management software also makes it easier and more efficient for subscribers to do business with an organization. Users are able to access self service functionalities that in most cases entirely eliminate the need to contact a customer service representative. 

Users that wish to upgrade to a higher level of service, terminate their subscription, or purchase an additional membership to a subscriber service are able to take all these actions without needing to speak with a representative.  

Stages of Subscription Management

Subscription management software can allow account and sales reps managers to handle the subscription management manage subscriptions throughout the customer lifecycle.

Pre-Signup

Before customers sign up, subscription management tools can be used to present clear options about the various pricing models that an organization supports. 

Add-Ons, Discount

Sometimes, prospects need that little extra push to get over the line. With subscription management tools, users can configure discounts and add-ons which can be offered to sweeten the deal for recalcitrant prospects that are resisting clicking on the purchase button.

Upgrade Management

For customers that are already using the software, a seamless upgrade process must be provided. If users have already paid for a month and wish to upgrade, subscription management software should be able to automatically calculate and apply pro-rata payments based on your pricing strategy

Renewals

Generating revenue from existing customers maximizes your subscription revenue. Prevent revenue leakage by identifying churn candidates and ensuring you are maximizing the number of customers who renew their contracts. Automate your subscription renewals, and leverage upsells, cross-sells, bundles and incentives while renewing subscriptions. Incentives provide added value and can also add a sense of urgency to help reinforce and accelerate buying decisions. These renewal options help sales teams close deals faster and facilitate long-term customer loyalty.

Close Of Subscription

Just because a customer’s subscription has finished doesn’t mean that it’s time for customer management to take a curtain call. Subscription management tools can integrate with email marketing and CRM systems in order to send out collateral for post-subscription touchpoints. An example of this would be automatically sending out customer satisfaction surveys for closed accounts. Don’t let customers vanish into the night without one last message!

Subscription Management vs. Recurring Billing

What’s the difference between a subscription management solution and a recurring billing platform? Well, subscription management tools often contain features designed to support recurring billing and payment collection. 

However, subscription management tools are really designed to prioritize the management of all interactions between businesses and customers. Functionalities that support this might include subscription management, automatic downgrading of memberships, and reporting about revenue and subscriber numbers. 

Strictly speaking, recurrent billing tools just focus on everything required to make sure every stage of the billing process runs automatically and without a hitch. Functionalities required there might be invoice generation, payment tracking, and storing payment information securely (often in a cloud). 

Benefits of Subscription Management

Ask not what you can do for your subscription management software — ask what your subscription management software can do for you.

So what’s on offer? Most subscription management tools support various subscription business models and:

  • Allow users to track subscription revenue by drilling down into total revenue information, keeping track of trends, and allowing users to quickly export reports.
  • Contain or integrate with payment processing tools which are designed to be able to quickly and automatically process subscription payments.
  • Provide a full subscriber account management lookup functionality. Few things are likely to make support reps sound more clueless than not being able to know when a subscriber signed up and the status of their subscription. 

Together, these benefits allow SaaS companies to provide a much more robust user experience to their subscribers while reducing churn rate. 

What is Subscription Pricing?

The subscription pricing model is a type of pricing where customers pay a recurring fee for access to a product or service. This can be done on a weekly, monthly, or yearly basis. Typically, the longer the commitment, the lower the price per period.

This type of pricing is common among software-as-a-service (SaaS) products, where customers need ongoing access to the product in order to get value from it. It is also common for physical goods that are consumed on a regular basis, such as food or coffee subscriptions.

The subscription pricing model has a number of benefits for both businesses and customers.

For businesses, it provides a predictable and recurring revenue stream, which can be helpful for cash flow planning. It also generally leads to higher customer lifetime value (CLV) because customers are more likely to stick with a product or service that they’re already paying for.

For customers, subscription pricing can be more convenient than buying a product outright. They don’t have to worry about re-upping every time they want to use the product, and they often get a discount for commitment.

There are some downsides to subscription pricing, however. For businesses, it can be difficult to scale if customers are only using the product intermittently. And for customers, it can be frustrating to keep paying for a product or service that they’re not using.

Overall, subscription pricing is a popular way to price products and services, especially those that are used on a regular basis. It’s important to consider the pros and cons before implementing this type of pricing for your business.

Examples of Subscription Pricing Models

The most common subscription pricing models are as follows:

Pay-as-you-go: This is the simplest type of subscription pricing, where customers pay for what they use each month. There’s no commitment, so customers can cancel at any time. This type of pricing is common among cloud computing services, where usage can fluctuate from month to month.

Flat-rate: With a flat-rate subscription, customers pay a set price each month for access to the product or service. This is common among SaaS products, where the customer base is relatively stable and usage is consistent.

Tier: A tier pricing model offers different levels of service at different price points. Customers can choose the level of service that best meets their needs, and businesses can upsell customers to higher tiers over time. This type of pricing is common among managed services providers, where there are a variety of service levels on offer.

Usage-based: With a usage-based subscription, customers are charged based on their usage of the product or service. This type of pricing is common among utility companies, such as electricity providers.

Which subscription pricing model is right for your business will depend on a number of factors, including your customer base, what you’re selling, and your overall business goals.

Subscription Management vs. Subscription Pricing

When it comes to subscription services, there are two key components: the subscription management process and subscription pricing. Subscription management refers to handling customer subscriptions, from sign-ups to cancellations. On the other hand, subscription pricing is all about setting the right price for your service.

There’s no one-size-fits-all answer when it comes to subscription management vs. pricing. The best approach depends on the specific needs of your business. However, some general guidelines can help you make the right decision for your company.

When managing subscriptions, the most important thing is to ensure a smooth customer experience. This means making it easy for customers to sign up for your service and providing them with the tools they need to manage their subscription. For example, you might offer a self-service portal where customers can update their payment information or cancel their subscription.

Subscription pricing is all about finding the right balance between revenue and customer acquisition. If you price your service too low, you might be unable to cover your costs. On the other hand, if you price it too high, you might have trouble attracting new customers. The best approach is to start with a competitive pricing model and then adjust based on customer feedback.

How to Manage Recurring Revenue from Subscriptions

Setting up recurring revenue streams from subscriptions is an essential way for SaaS companies to grow revenue. However, managing recurring revenue can be tricky. Here’s how you can effectively manage your recurring revenue to maximize profits.

  1. Keep track of your subscribers.
    To effectively manage your recurring revenue, you’ll need to keep track of who is subscribed to what and for how long.
  2. Offer incentives for early renewals.
    If you want to encourage your subscribers to renew their subscription early, offer incentives. This could be a discount on their next subscription period or access to exclusive content or services.
  3. Provide value in every billing cycle.
    It’s important to remember that your subscribers are paying you on a regular basis, so you need to make sure that they’re getting their money’s worth. Provide them with valuable content or service in every billing cycle.
  4. Communicate regularly with your subscribers.
    Use email, social media, or a monthly newsletter to keep subscribers updated on what’s new with your service and remind them of the value that they’re getting by being a subscriber.
  5. Offer multiple payment options.
    To make it easy for your subscribers to pay, offer multiple payment options. This could include credit card, PayPal, or direct debit. The more options you offer, the more likely it is that your subscribers will be able to pay you on time.
  6. Use automatic billing.
    To make things even easier for both you and your subscribers, use automatic recurring billing so your subscribers will be automatically charged for their subscription.
  7. Offer discounts for referrals.
    To encourage your subscribers to spread the word about your service, offer them discounts for referrals. This is a great way to get more people to enroll in your service, which will boost your revenue.
  8. Evaluate your pricing.
    As your business grows, you may need to adjust your pricing to stay in line with market trends and competition.
  9. Review your subscription service regularly.
    It’s important to review your subscription service on a regular basis to make sure that it’s still meeting the needs of your subscribers.

    This could involve surveying your subscribers to see what they think or simply keeping an eye on your cancellation rate. If you see that people are canceling their subscriptions at a higher rate than usual, it’s time to make some changes.

Synonyms

  • subscription billing and management
  • subscription-based billing

People Also Ask

What is SaaS subscription revenue?

SaaS subscription revenue is the revenue that a company generates from its customers’ recurring payments for access to its software-as-a-service (SaaS) products.

The subscription model is a key feature of the SaaS business model, in which customers pay a recurring fee to use the software, typically on a monthly or annual basis.
The subscription fee gives customers access to the software and all its associated features and updates.

SaaS subscription revenue is a key metric for investors and analysts to assess the health of a SaaS company.
A company’s ability to generate recurring revenue from its customer base is a key indicator of its long-term viability.

SaaS subscription revenue is also a key driver of growth for SaaS companies.
A company’s ability to generate recurring revenue enables it to reinvest in its business and continue to grow.

How does subscription software work?

Subscription software allows users to access and use the software they have purchased for a set period of time, typically on a monthly or annual basis. The subscription can be for a single user or for multiple users and can be set up to automatically renew itself after the initial term expires. Typically, subscription software includes some sort of access control to prevent unauthorized users from using the software.

There are a few different ways that subscription software can be delivered.
The most common is through a web-based interface, where users log in to the software using their username and password.
The software can also be delivered as a downloadable application, which is then installed on the user’s computer. Alternatively, subscription software can be delivered as a cloud-based service, which is accessed via the internet.

Regardless of how it is delivered, subscription software typically requires some kind of payment method, such as a credit card or PayPal account, in order to set up the recurring payments. Once the subscription is set up, the user will have access to the software for as long as the subscription is active.

Is subscription software the same as SaaS?

Subscription software generally refers to any software that is offered on a subscription basis, whether it be monthly, yearly, or otherwise. On the other hand, SaaS (Software as a Service) is a type of subscription software that is delivered over the internet.

So, while all SaaS is subscription software, not all subscription software is SaaS. For example, Adobe Creative Cloud is a subscription service that provides access to a suite of Adobe software products, but it is not delivered over the internet (at least not exclusively).

The main difference between subscription software and SaaS is in the delivery method. SaaS is delivered over the internet, while subscription software can be delivered in a variety of ways, including via the internet, on a CD or USB drive, or even through the mail.

Another difference is that SaaS is usually offered on a pay-as-you-go basis, while subscription software is often offered on a monthly or yearly basis. This means that with SaaS, you only pay for what you use, while with subscription software, you pay a flat fee regardless of how much you use the software.

Manage Your Subscribers Today

With DealHub CPQ’s next-generation subscription management technology, companies can take control of every stage of their subscription cycle. From creating optimized bundles, to ensuring consistency, to creating a single billing cycle — DealHub CPQ has everything you need to maximize your subscription revenue.