7 Important Factors to Consider When Choosing a Usage Billing System

July 15, 2021

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It should come as no surprise today’s most successful billing solutions are expected to come in all shapes and sizes, figuratively speaking. The modern business models they’ll support run the gamut so why shouldn’t they?

The days of sticking to the one-time sale are long gone, but, frankly, so are the days of hybrid support capable of only covering that traditional model and subscription billing.

It’s true the variety of billing models to be considered in our digital transformation climate is vast.

Let’s look at one of them: Usage-based billing

Usage-based billing, or metered billing, is the form of billing in which customers are charged solely based on their use of the product or service.

The days of this type of billing being confined to utilities and taxicabs have gone the way of that simpler hybrid support model we just mentioned.

Over time, with the rise of the cloud and software as a service (SaaS) solutions, technology advances and market segments such as data storage and streaming services jumping in to adopt, the usage billing model continues to grow in popularity.

To illustrate this trend, see the jump from a 2014 survey of SaaS companies by investment bank Pacific Crest Securities, nothing less than a quarter of companies (23%) charged based on usage, to figures indicating 39% of companies now charge based on usage, according to findings from a similar survey at the beginning of this year by venture firm OpenView Partners. 

When considering a billing solution capable of handling this increasingly influential billing model, what factors are most important?

Glad we asked. Here are a few:

1. Ability to handle usage collection and billing at different frequencies

Ensure the system can be configured to adapt to all variety of collection needs that can exist, including the flexibility for multiple collections within the same financial period. Yep, your solution should be able to slice and dice like an old-school Cuisinart.

2. Ease of implementation

Any worthwhile investment (and a billing solution certainly fits that, um, bill) needs to be easy to implement, and not just for the first go-around, but in this age of multi-acquisitions, mergers and global conglomerates, just as easy for each subsequent add-on to your business.

3. Capability to collect usage data against individual contract lines

Your billing solution should be able to import usage information at a granular level in order to calculate usage pricing.

4. Ability to price usage according to customer needs

 Your chosen solution requires a high degree of flexibility in pricing usage. Has the engine been designed to consider pricing on an individual usage or delivery transaction? Can it cater to each of the following?

  • Simple price
  • Tiered pricing - incorporating multiple input values, or dimensions, such as location, type of equipment, plan rate, etc. to calculate the price of the tier
  • Advanced pricing - pricing based on customer-specific rules, including custom formulas

5. Flexibility to automate adjustments

Changes or corrections are to be expected, and your solution needs to be able to adapt, quickly and with ease. The ability to handle adjustments automatically is critical to properly import usage data.

6. Ease of access to information

There’s a reason usage-based billing is on the rise, and it has to do with increased customer expectations, due to advances in technology that accommodate the availability of an abundance of customer preferences. Your system of choice should accommodate a high degree of visibility into this goldmine of usage data and associated billing information. For example, how will your solution manage visibility and reprocessing of exceptions of usage data? With literally thousands of customer actions on a daily basis, tracking usage gets pretty complex. The visibility within your system needs to keep up with that pace.

7. Multi-pronged coverage

The right billing system should not operate in a silo. Often this solution is already being integrated with a legacy ERP system, deemed incapable of handling today’s billing complexity, much less yesterday’s, on its own. The idea of having to incorporate other disparate systems into this growing ecosystem can be daunting, when all you want is one single system of record. Best to consider a unified platform solution capable of not just handling your billing complexities, but your revenue and partner payment needs as well.

These capabilities and many more are the reason we built RecVue, an enterprise-class monetization platform designed to cater to the specific needs of usage-based billing and other revenue models central to today’s business requirements.

There are so many advantages for SaaS companies when it comes to consumption-based billing, including:

  • A better understanding of the business value of the product or service
  • Flexibility for customers to ease their way in or conduct a trial period
  • Building the right product expansion path based on customer interest

We get it. This is pretty powerful stuff.

Take, for example, what we’ve been able to do for the company behind one of the world’s largest electronic payments engines. ACI Worldwide processes $14 trillion in daily payments and securities, and 250 million monthly transactions. In doing so, the company requires complex billing scenarios, frequently modified contracts and the processing of high volumes of usage data. RecVue helped ACI Worldwide combine 5 separate billing systems across 4 acquired businesses. Consolidating 80+ distinct usage platforms, the company sends one feed into RecVue for a streamlined billing engine. ACI Worldwide saw a 73% reduction in manual processing by automating complex usage-based calculations and reduced reliance on spreadsheets for usage collection and billing verification.

Contact us today to learn more about how RecVue’s order-to-cash solutions can help solve the complexity of your specific billing needs.


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