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6 Things to Look for in Usage-Based Billing Software



6 Things to Look for in Usage-Based Billing Software

With the rise of e-commerce in recent years, many companies have embraced complex billing models to meet customer demands and gain a competitive edge in the market. It has become essential for companies to shift to automated billing and invoice solutions to cater to the growth of digital sales. According to studies, automated billing can reduce 81% of the costs incurred in managing the payment cycle.

With the increasing need for automation, more and more companies have started shifting to automated billing models, especially usage-based ones. Usage-based billing, also called consumption-based billing or metered billing, is a pricing model where customers only pay for the services they use and not a fixed subscription fee. It is becoming increasingly popular among customers because of its cost-benefit.

Businesses are incorporating usage-based billing rapidly, thanks to its high demand among consumers. Additionally, a fixed subscription does not account for clients or groups of customers using massive amounts of services. It means the amount of product or service used is not accommodated in the final payment, and your business loses potential revenue.

However, choosing the right billing software is difficult, especially since hundreds of third-party software are available in the market. Here’s a list of things that businesses need to look for when analyzing the usage-based billing software:

1.    Focus on Flexibility

Often, companies focus on their short-term needs when looking for solutions for their problems. It is not the ideal approach. Planning for future needs when looking to implement a usage-based billing software is essential. You need to consider the growth of your business and estimate a future customer base to find a usage-based billing software that can cater to both your short-term and long-term billing needs. It is essential to find billing software that is flexible and can easily adapt to your evolving customer base in the future.

When looking at the flexibility of the usage-based billing software, you need to consider the following characteristics:

  • Ability to adapt to increasing customer base – To cater to long-term needs, billing software needs to be scalable. It should have the capacity to accommodate an increased customer base.
  • Able to easily add new features– The software needs to be scalable and versatile to add new features easily.
  • Able to cater to new markets – You can use good billing software anywhere. When you look for usage-based billing software, make sure you can use it anywhere in the world. So if you choose to expand to new markets, it can cater to your needs. The software should be able to accommodate different currencies. Also, it should facilitate your taxation matters.
  • Able to add new selling channels – Most organizations’ growth plan involves increasing their sales channel by adding more distributors and retailers to their network. If your business also has such plans for the future, it is essential to look for usage-based billing software that can adapt to new selling channels. It makes no sense to subscribe to billing software that can’t cater to your growing needs.

2.    Integration with external systems

A billing ecosystem not only consists of billing software but also integrates with various external business systems. It must integrate with external systems such as enterprise resource planning (ERP), customer relationship management, and tax solutions.

Integration with these systems enables your business to push or pull customers’ data from the billing software to these external applications. Integration with third-party applications allows companies to streamline everything from sales to accounting and can help to reduce errors in billing.

3.    Consider Business Agility

In the past few years, the business landscape has changed rapidly. More and more businesses have moved towards e-commerce and digital solutions to keep themselves afloat. This rapid change has changed the way we used to do business.

As things have changed in recent years, your billing software should be able to adapt to these changes. The rapid shift to e-commerce has put a lot of pressure on automated billing software companies to build a network that can handle quick price changes and bundled pricing.

When analyzing different billing software, you need to consider whether this software can accommodate price changes, add new bundles, or update terms and conditions of consumption easily.

4.    Ensure Compliance

When looking for the right usage-based billing software, selecting software that complies with market standards and regulations is essential. It can help ensure the safety of your customer’s data and keep your business out of any legal troubles. A pro tip is to look for software compliant with international data protection standards.

5.    Look for the right solution

Usage-based pricing can be based on a per-unit, tiered, overage, volume, and tiered-with-overage basis. Good billing software should accommodate these pricing models or at least two or three. First, analyze your specific pricing model and find a software package that accommodates the required pricing model. Consider the strengths and weaknesses of the software to ensure that it caters to your needs.

Billing software also comes with features, such as advanced revenue recognition, end-to-end traceability, and hands-on support. Make a list of features you want in your business’s billing software. It can help you make the right choice.

6.    Consider invoices as an extension of your brand

Branding is an essential part of a business’s overall growth strategy. When looking for invoicing software, most companies ignore the branding part. Invoices offer a regular touch point to the customers.

Businesses need to look for software that offers user-friendly invoices as these improve customers’ confidence in the brand. If the invoices are hard to read, access, or distort the charges, it creates a negative brand image. Address the following questions when looking for user-friendly invoices.

  • Does the invoice offer clear information?
  • Is it easy to read?
  • Does the invoice say your brand name?
  • Does it show what services customers are paying for?


More and more companies are shifting toward usage-based pricing models to cater to the demand for faster and verifiable billing scaled to services as and when used by customers. Software as a Service (SaaS) companies especially get the flexibility to offer products and services to customers based on their needs instead of charging a fixed subscription fee.

To choose the right billing software for your requirements, you need to consider the scalability of the billing software program and its ability to accommodate an increasing customer base and new markets. It should be able to integrate with third-party systems to facilitate your business’s processes.

You should select software that includes features and services in compliance with industry standards and ensure a user-friendly experience for your customers.

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