Recurring billing is repeated or regular payments carried out within a particular schedule. This payment scenario doesn’t require the direct participation of the payer and re-entering payment data. Being set up once, recurring payments are made automatically, without obligatory confirmation from the payer.
The recurring billing software can be used by any business which offers its services on a recurring basis. Among them are streaming platforms, SaaS applications, utility services, magazine subscriptions, membership services, etc.
Both recurring billing service and subscription billing include auto-charging and storing customers’ payment information. That’s why these two terms are often used interchangeably. However, there’s a slight difference between them.
With recurring billing, customers typically pay for a predefined service that doesn’t involve trial periods or upgrades. This model includes periodic withdrawals from a securely stored payment method, such as a credit card. Recurring billing software is suitable for any type of business, not just subscription businesses.
In the subscription billing model, customers can achieve more flexibility with multiple pricing plans. This model also often includes a trial period and enables customers to upgrade their subscriptions and switch between them. Unlike recurring payments, subscription payments are not necessarily automatic. Businesses can send invoices to customers regularly so they can pay themselves at the beginning of every billing cycle.
Regardless of which recurring billing platform is used, the model works in much the same way. Let's walk through what setting up recurring billing looks like from a customer's point of view.
Depending on the specifics and needs of a particular business, recurring billing can be divided into two types: fixed recurring billing and variable recurring billing. What is the difference between them?
The term itself suggests that this model provides for a fixed amount to be debited in each billing cycle. Recurring billing software is a convenient option for businesses with a flat service fee, for example, magazine subscriptions, gym memberships, etc. Thus, fixed recurring billing is about debiting the same amount at the same period of time.
With variable recurring billing, the write-off amount changes each payment cycle based on the customer’s service usage. A popular example of using this model is utility services. Here, the final amount is formed individually for each separate period and service.
Obviously, recurring billing has plenty of benefits for both customers and businesses. Let's list them.
Thus, recurring billing is about simplification, predictability, and savings for business and payment convenience for customers. A recurring billing platform is definitely worth implementing for businesses who sell products or services that people buy regularly.
