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  • Writer's pictureNikhil Kotcharlakota

Difference between Billing and Pricing infrastructure

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:


  1. Subscription management 

  2. Payment processing

  3. Invoicing and billing

  4. Tax compliance

  5. Customer portal


Pricing Infrastructure includes:


  1. Pricing Engine - to determine pricing strategies and optimization of price levels

  2. Price levels - What should the price be for different pricing strategies

  3. Price Model - Create price models to maximize the value capture, example Flat rate, Per user, Usage-based etc.

  4. Discount and Promotions - Be able to create discounts and promotions quickly and in a timely manner

  5. Pricing Optimization 

  6. Customer communication

  7. Integration with billing systems 



Then there this there is Packaging infrastructure:


  1. Create and launch pricing pages

  2. 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!



 


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Difference between Billing and Pricing infrastructure




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