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Ask HN: Why is subscription billing hard?

10 points by zdrummond ↗ HN
Our company has created a new pricing model which is built around subscriptions. We have been thinking about the best way to bill our customers and report what has happened to accounting.

While doing research I came across Zuora (http://www.zuora.com) which is a SaaS based subscription billing system. It turns out that their product "solves" the whole pipeline (sales -> use -> billing -> accounting) but it is very very expensive.

So my question is, why? I am not at all trying to pick on Zuora. My guess is they have a fantastic product, but I am having trouble justifying the price. Isn't this just a simple rules engine that produces reports?

My guess is that I am falling into the classic blunder that "It's Trivial" (http://www.codinghorror.com/blog/2009/07/code-its-trivial.html). I was hoping someone in the community could enlightenment me on the pitfalls, before I go off and build it myself!

10 comments

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orangethirty
How much is expensive?
jaylist
Ranging from little at the low end.

We have customers ranging from startups in a garage to enteprises and everything inbetween. Plenty of customers who started small and scale up. Talk to you friendly Zuora rep. He'll give you a good price. :)

orangethirty
Thanks for answering, but I'm asking the OP how much is expensive to him. I don't sell services like yours, but like to know the options out there in case a client needs it. Though with US clients I just set them up with Stripe and be done with it.
zdrummond
Well, as the Zuroa rep mentions, it's an enterprise level product so they have a very wide range of plans. To be fair to them, it's likely best to just give them a call.

To give you a sense of scale, however. For a small company, with decent revenue, it costs a substantial chunk of a dev's salary.

orangethirty
Thanks, that's all I wanted to know. Seems you are better off making something custom.

Note: I have no issues with Zuroa. Never heard of them and have no experiences with their products. I was just curious about what the OP meant by expensive.

mchmch
Talked to them a few years ago. At that time there were hefty setup fees and $XXXX/Month
skrish
Depends on how complex your product and pricing model is. Zuora is slightly enterprisey customers and priced accordingly and they charge setup fee, customization fee etc.,

If you are looking for simpler products focused on small & medium businesses there are plenty of options available as well.

Of course if you are in North America you have Stripe as your first bet and for bit more sophisticated billing plus more options to do promotions, automated notifications, HTML emails, customer support portal, more complex metered billing, grandfathering of price plans (happens!), multi-gateway support etc., you should consider using a billing solution.

Disclosure: I am one a co-founder of http://www.ChargeBee.com, another Subscription Billing solution focused on small businesses.

Shameless plug: If you are looking for options to use payment gateway for credit card + bank transfers for recurring to save $$s per transaction you should try our solution (launching the ACH part very soon).

subsection1h 

    While doing research I came across Zuora [...]
What other solutions did you evaluate? Which of your requirements did the other solutions not meet?

After I research solutions to a problem, I end up with a list of requirements and a list of solutions with notes regarding each solution (e.g., pros and cons). If you were to post a complete list of your requirements and notes regarding each solution you evaluated, it would be easier to provide relevant feedback.

(If you didn't take any notes, you might want to consider the benefits of note taking in the context of a personal or company wiki.)

dangrossman
Think about a company like Comcast -- millions of customers, thousands of phone agents, thousands of contractors in Comcast vans hooking up home service, multiple regional websites, legacy customers from previous product iterations and acquired local cable companies. Add on to that multiple public and private billing plans, service credits, local deals/specials, grandfathered customers on old plans, a combination of fixed and usage-based billing, optional add-ons, and parent/children accounts for business and landlords. Imagine just how complex that "rules engine" has to be to get billing right.

The company that can manage that for Comcast is going to be delivering hundreds of thousands to millions of dollars in value. If they didn't pay someone for it, they'd have to employ and manage a large development team just to do billing. Lots of salaries. That's what justifies the price.

If you're a startup with 3 payment plans and sometimes you have to give someone a credit because you had some downtime, your situation isn't even 1% as complex, and you can get by with a $50/month service or a couple hundred lines of your own code.