In the design and implementation of a SaaS, subscription management plays a very important role. A company producing a SaaS, in fact, obtains most of its revenue from subscriptions. The robustness of the subscription management system thus becomes a vital matter for the company’s success, almost on the same level as the product itself.
A subscription management module for a Software as a Service must have the following minimum functionality:
management of the catalogue of subscription plans;
management of prices, with the related promotions and plan options;
management of the customers’ billing data records;
management of the payment methods associated with customers;
management of the subscription status transitions;
collection of recurring payments with failed-payment recovery logic (dunning);
invoicing and refunds.
Developing this module requires advanced skills, both technical and legal. In the first case, they are needed to guarantee reliability and security. In the second, to comply with the various legal requirements a system handling payment data is subject to. Not to mention the variability of the tax rules across all the countries the application is present in. The application’s infrastructure and architecture too must be designed to comply with international regulations, such as the PCI specifications.
With these premises, it is convenient to move towards adopting a subscription management software recognised on the market, delegating to it the complexity, the security and the compliance with standards and regulations.
The choice of the subscription management software must involve:
the Sales department, because it must allow the implementation of the pricing and promotional logic;
the Operations department, because it must integrate into the various company processes for customer management and invoicing;
the IT department, because it must allow smooth integration with the application.
Once the choice is made, from the technical point of view, the integration must be designed.
The integration between the SaaS and the subscription management software
Typically, the integration flow between a SaaS and its subscription manager is bidirectional.
When a customer is created on the SaaS and chooses the service to subscribe to, their data must be passed to the subscription manager with the information needed to create a subscription.
The same communication must happen in case of a change to the subscription or to the customer’s data.
Likewise, when the subscription manager updates the subscription status, the information must reach the SaaS. One example is the update following a failed payment: in this case the information must reach the SaaS so that the customer’s access can be blocked.
To this basic flow are added the retrieval of the subscribable plans with their prices, the calculation of the quote for changes to a subscription before those changes are applied, the possible integration with invoicing software, and so on.
The implementation of these flows can happen at various levels, from an integration via a client-side SDK to a direct integration via API and webhooks. A mixed approach is usually useful: a client-side SDK for payments, to avoid processing payment data on the application; API integration for maximum flexibility on the other features.
Startup Bakery’s approach
The Startup Bakery team has selected a subscription management software offering the best compromise between functional coverage, ease of integration, quality of documentation and technical support. Around this software, a Javascript library was developed which, starting from a subset of the APIs provided by the Subscription Manager, abstracts the flows for creating, modifying and cancelling subscriptions, retrieving the list of plans and prices and managing payment methods.
From the Operations point of view, the integration between the subscription manager and a cloud software for creating invoices and transmitting electronic invoices via SDI, for compliance with Italian law, has been tested, validated in the field and documented.
The startups the studio spins up thus have at their disposal a robust, reliable, complete tool ready for simple integration for subscription management. They can save the time needed for the software scouting phase, for studying integrations and features, and concentrate instead on developing their own product.
Startup Bakery is the Italian startup studio specialised in creating B2B SaaS companies with Artificial Intelligence. We offer aspiring Co-Founders the opportunity to develop a business idea. We create investment opportunities for Professional Investors. We help companies in their innovation process.