12 Jul
2012
Posted in: recurring billing
By    270 Comments

Peeling the onion called recurring billing (Part I)

Looking at the number of recurring billing providers on the market you would normally expect to easily choose one. Unfortunately, that is not the case.  Not only service levels vary strongly among the companies but also their pricelists are dependent on multiple factors which have to be taken into account. Therefore, choosing the right provider is just like peeling off the onion when you reveal the multi-layer reality. So, where to start?

There are many approaches, and here we propose one that is fairly easy, yet systematic.  Namely, we start by researching different features that recurring billing providers offer on their websites. In order not to forget anything we can research them in groups such as: subscription philosophy, additional services, integration procedures etc. At this point we do not look at pricing we merely list features. Underneath we provide a short example of such a list:

A list of features to consider when choosing recurring billing provider

This exercise seems easy, however, it requires some imagination. For example, “vault” which ensures data portability in case you want to change payments provider, might not currently be a priority feature but it can prove crucial in few years’ time when you want to switch to another provider. Once, you are done with the list, you can move on to MoSCoW exercise.

A diagram presenting MoSCoW method

MoSCoW is nothing else than a method of sorting your requirements into Must have, Should have, Could Have and Won’t have. For example, if you are a European start-up that would like to launch fast in the US, in that case your payment’s providers should or must have a PCI compliance and merchant account as well as payment gateway ready for you since you do not want to spend months on fixing the bureaucratic issues. By using MoSCoW method you simply prioritize the items, which is crucial for the next step- supplier evaluation.

Now, it is the time to judge payment providers based on your requirements (MoSCoW list). Always start with “must have”. Those providers that do not comply with “must-have” can be crossed out easily. You will be astonished how fast your list of potential providers will shrink. Once you arrive at a reasonable number of them (3-4) you can start comparing the pricing- otherwise it is really challenging. We have found an article which has nicely summarized the costs of most popular recurring billing providers (http://expletiveinserted.com/2011/03/18/comparing-recurring-payment-solutions/). However, if you would like to go more into detail of recurring billing pricing then wait for the next part of this article.

Do you have any questions or tips to add? You can post them in the comments below!

 

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