Dealing with changes in pricing is a significant challenge in any business. Pricing plans and paradigms proliferate, while individual customers require specific charges and adjustments to their accounts. The result? Vast lists of SKUs, ordering complexity, and confusion. A subscription billing system provides agility by structuring pricing catalogs to minimize the proliferation of products, plans and variations, and automated tools for dealing with common customer service issues. There are three key needs: - Flexible product catalogs - Multi-level pricing. - Customer specific overrides

1. What is Agility in Pricing?
And why does it matter?
February 23, 2013
Steve Adams

2. •
Pricing in the real world – B2C and B2B examples
– Coping with rapid changes
– Complexities of Subscriptions
•
Agility
•
Reinventing Billing
•
How Fusebill can help – Quick Demonstration

3. It’s one of the simplest of truths
For a subscription business to make money,
it must bill and collect from customers.
make money
bill
collect

4. Too bad it’s simpler to say than do
Traditional systems are slow, inaccurate and
unable to scale
The devil’s in
the details of
requirements
and
architecture.

5. The expanding Subscription World

6. Everything is easy when you start – B2C example
Voice
$10/m
Data
$20/m
40GB
$40/m
Basic
Phone
$200
Smart
Phone
$500

7. And then it’s not so simple
96 combinations of products, term
Voice
$10/m
Data
$20/m
40GB
$40/m
Basic
Phone
$200
Smart
Phone
$500

8. Then there’s some bundling…
Voice
$10/m
Voice
$10/m
$25
Data
$20/m
Data
$20/m
40GB
$40/m
Basic
Phone
$200
Smart
Phone
$500
$25
Voice
$10/m
40GB
$40/m
Data
$20/m

9. Some incentives, some discounts….
Voice
$10/m
Basic
Phone
$0
$300/year
Voice
$10/m
$25/m
Data
$20/m
Data
$20/m
Data
$20/m
$300/year
40GB
$40/m
Voice
$10/m
Basic
Phone
$0
Voice
$10/m
Data
$20/m
Smart
Phone
$200
Basic
Phone
$200
Smart
Phone
$500
$25
Voice
$10/m
40GB
$20m
Data
$20/m

10. And then we want to do price testing
Voice
$10/m
Basic
Phone
$0
$300/year
Voice
$10/m
$25/m
Data
$20/m
Data
$20/m
$18/m
Data
$20/m
$300/year
40GB
$40/m
Voice
$10/m
Basic
Phone
$0
Voice
$10/m
Data
$20/m
Smart
Phone
$200
Basic
Phone
$200
Smart
Phone
$500
$25
Voice
$10/m
40GB
$20m
Data
$20/m

11. The ‘Easy’ Solution
•
Create a SKU
– Uniquely identify every combination IN ADVANCE
•
Maintain a secret decoder ring spreadsheet to interpret
•
Reports? Tracking? Visibility? Accounting? Inventory?

12. Security Services - Product Bundling Example
•
12 month subscription
– Paid quarterly, in advance
– Recognized over 12 months
•
Hardware
– Delivered when project starts
– Invoiced (30 day terms)
– Revenue recognized on shipment
•
Integration project (development services)
– Paid in installments
– Recognized over life of contract

13. Complexities of Bundling & Revenue Recognition
Ship & Earn
Revenue
Hardware
Earn
Revenue
Monthly
Collect
Subscription
Collect
Quarterly
Delay Start
Win
Integration
Services
Active
Cash
Effort
Earn
Revenue
Monthly
Integration
Services

14. Easy Solution?
•
Custom tracking for every contract
•
Proliferation of spreadsheets that are manually updated

15. Proliferation of SKUs – hard in real life
Pro Rate
Changes
Can an
Agent cope
with
complexity?
Discounts
Switch
Plans
Upgrades
Promotions
Can
customers?
Self-Serve?

16. Agility helps with
•
•
•
•
Accounting
Automation
Accuracy
Analytics

17. Advertise
Web Visits
$$$$$
Conversions
Build Repeat Business
One Decision –
multiple orders

18. Transactional back office
systems fail
Recurring Billing
Initial Sales
Process
Renew
Upsell
Crosssell
Traditional transactional systems don’t
support recurrence
Multiple
Concurrent
Subscriptions
Usage Based Charges
Credit Card
Expiry, Fraud, etc.
18

19. What’s Needed?
•
Hierarchical structure to the pricing catalog
– Not just long lists of SKUs
•
Flexibility to create bundles, with optional products
•
Ability to over-ride prices and names for each customer

20. So What Happens?
•
Improvisation
– Track in Excel
– Ticketing systems
•
Pilot Projects
Security Risks
Errors &
Revenue
Leakage
– Quick and Dirty development projects
•
Or long and twisted development projects
Lack of
Visibility
Barriers to
Scale
Offline
Accounting

21. Products, Plans and Dates in Fusebill 2014
Customers
Subscriptions link Customers to Plans
Allow customer specific pricing
Know about Dates
Plans group products together
Set price and schedules
“How? How Much?”
Products are ‘what’
21

22. Catalog – What, How, How Much
•
Concepts
– What?
– How?
– How Much?
•
Catalog
– Products
– Plans (aka packages of products)
– Pricing

23. Products - What
•
Each “thing” you are selling
– Add on services Recur
Recur
• Can control earnings
• Ex. Tech support, Extra Access
– Physical Goods
• Earn Instantly
• Ex. Equipment/Devices, Chocolate Bars
– Non-Recurring Services
• Can control earnings
• Ex. Home installation, Administrative fees
One Time

24. Plans
•
Plans
– What is it?
•
Basic Plan
– Setup Fee
– Charge
•
Products in Plans (optional)
– Package up multiple products

25. When Do I Need Products?
•
•
•
•
•
•
•
It costs extra
It’s optional
Need it displayed on an invoice
More than one can be purchased
Control over service
Multiple Quantity
Reporting
Inventory Tracking
Free Features
Optional Features

26. Frequencies
•
•
Same plan, multiple frequencies
Manage One Plan with multiple frequency prices
– Ex. Monthly vs. Annual Pricing
•
Don’t create new plans for each frequency

27. Multiple Currencies
•
Currencies need to be enabled – by default, single frequencies
•
Plans hold pricing for all enabled currencies – need to specify
pricing
•
All Pricing
– Plan setup/charge
– Products in plans

28. Schedules – Control when charges appear
•
Life of a Subscription
– Activate
– Charges on Activation
– Expire on schedule
•
Active
Expired
With Scheduled Activation
– Charges on Provision
– Charges on Activation
– Expire on schedule
•
Draft
Cancelled
Draft
Provisioning
Product Start Dates
– Delay the start of individual products
Active
Cancelled
Expired

29. Accounting
•
Accurate Taxes
•
Discounts, Write-offs
•
Earned vs Deferred
Revenues
•
Cash vs Revenue

30. Agility – cope with pricing changes
•
Pro rating
•
Upgrade Options
•
Variations
•
Promotions / Coupons
•
Customer lifecycle:
– Cancel
– Renew
– Options

31. The key benefit of automation is automation…
•
Process Payments
– Automate collections, retries, client notifications
•
Process renewals – and expiries
•
Reduce people power – increase ability to scale
•
Outsource security issues
– Note that most shopping cart platforms don’t store
credit cards

32. Accuracy
•
Get paid before shipping
– Properly calculate amounts (discounts, coupons, taxes)
– Collect automatically
• Notify downstream systems of problems!
– Invoicing and Account statusing
•
Ship the right things
– Manage change
– Customer self-service
– Central view of customer orders
•
Stop delivering …

33. Analytics
•
So, what are we selling anyway?
•
What geographies are performing
well?
•
What online programs bring us long
term customers?
•
How long do customers subscribe
for?

34. Brief Walkthrough
Basic offering –
Premium Plan –
Options to purchase extra or upgrade

35. Contact Fusebill
sales@Fusebill.com
stevea@Fusebill.com
1-888-519-1425