In SaaS, there is a lot of focus these days on getting the right billing infrastructure setup, especially for usage-based pricing.
The traditional billing and payment systems support the generic price models such as Flat rate per month and Per user pricing model, but usage-based pricing needs a special setup to make sure the usage is metered correctly and more importantly the customer is billed correctly for the usage in the right intervals.
This has caused a misconception that billing infrastructure is the same as pricing infrastructure, as these new billing infrastructures help execute the different price models.
Billing infrastructure includes:
Subscription management
Payment processing
Invoicing and billing
Tax compliance
Customer portal
Pricing Infrastructure includes:
Pricing Engine - to determine pricing strategies and optimization of price levels
Price levels - What should the price be for different pricing strategies
Price Model - Create price models to maximize the value capture, example Flat rate, Per user, Usage-based etc.
Discount and Promotions - Be able to create discounts and promotions quickly and in a timely manner
Pricing Optimization
Customer communication
Integration with billing systems
Then there this there is Packaging infrastructure:
Create and launch pricing pages
Create plans and integrate with payment gateways
There is also Pricing research and Value modelling which I will expand on in a later article.
There is a clear distinction between all these and should not be conflated.
Each of these also solves a different problem in the entire Order-to-cash process and have different user personas, who need to use them.
PriceOps is building the Pricing and Packaging infrastructure for SaaS companies and we are going to launch soon!
Book time to discuss your pricing needs: https://www.priceops.net/contact
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