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What is Agility in Pricing & What are the Implications for Your Billing System?

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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

Published in: Business
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What is Agility in Pricing & What are the Implications for Your Billing System?

  1. 1. What is Agility in Pricing? And why does it matter? February 23, 2013 Steve Adams
  2. 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. 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. 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. 5. The expanding Subscription World
  6. 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. 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. 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. 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. 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. 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. 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. 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. 14. Easy Solution? • Custom tracking for every contract • Proliferation of spreadsheets that are manually updated
  15. 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. 16. Agility helps with • • • • Accounting Automation Accuracy Analytics
  17. 17. Advertise Web Visits $$$$$ Conversions Build Repeat Business One Decision – multiple orders
  18. 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. 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. 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. 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. 22. Catalog – What, How, How Much • Concepts – What? – How? – How Much? • Catalog – Products – Plans (aka packages of products) – Pricing
  23. 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. 24. Plans • Plans – What is it? • Basic Plan – Setup Fee – Charge • Products in Plans (optional) – Package up multiple products
  25. 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. 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. 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. 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. 29. Accounting • Accurate Taxes • Discounts, Write-offs • Earned vs Deferred Revenues • Cash vs Revenue
  30. 30. Agility – cope with pricing changes • Pro rating • Upgrade Options • Variations • Promotions / Coupons • Customer lifecycle: – Cancel – Renew – Options
  31. 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. 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. 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. 34. Brief Walkthrough Basic offering – Premium Plan – Options to purchase extra or upgrade
  35. 35. Contact Fusebill sales@Fusebill.com stevea@Fusebill.com 1-888-519-1425

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