SaaS, how to manage Subscriptions?

In the design and implementation of a SaaS, subscription management plays a very important role. A company that produces a SaaS, in fact, derives most of its revenue from subscriptions. The robustness of the subscription management system, therefore, becomes a vital issue for the success of the company, almost on the same level as the product itself.

A subscription management module for Software as a Service must have the following minimum functionalities:

• Management of the subscription plans catalog;

• Management of prices, with related promotions and options on plans;

• Management of the billing information of customers;

• Management of the payment methods associated with customers;

• Management of the subscription status transitions;

• Collection of recurring payments with recovery processes for failed payments (dunning)

• Invoicing and Refund

The development of this module requires advanced skills both from a technical and legal standpoint. In the first case, they are necessary to ensure reliability and security. In the second, however, they are needed to comply with the various legal requirements to which a system managing payment data must adhere. Not to mention the variability of tax regulations across all countries where the application is present. The infrastructure and architecture of the application must also be designed to comply with international regulations, such as PCI specifications.

With these premises, it is advisable to lean towards the adoption of a recognized subscription management software available on the market to delegate complexity, security, and compliance with standards and regulations.

The choice of subscription management software should involve: 

• The Sales department, because it must enable the implementation of pricing and promotional logic;

• The Operations department, because it must integrate into the various business processes of customer management and billing management;

• The IT department, because it must allow for smooth integration with the application.

Once the choice is made, from a technical perspective, it is necessary to design the integration.

The integration between SaaS and subscription management software

Typically, the flow of integration 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 sent to the subscription manager with the necessary information to create a subscription. 

The same communication must occur in the case of a change to the subscription or the customer’s data.

Similarly, when the subscription manager updates the status of the subscription, the information must reach the SaaS. An example is the update that follows a payment failure: in this case, the information must reach the SaaS so that access to the customer can be inhibited.

On this basic flow, subscription plans with related prices, calculation of estimates for changes to a subscription before the changes are applied, and potential integration with billing software, etc., are added.

The implementation of these flows can be done at various levels, from integration via a client-side SDK to a direct integration via API and webhooks. Typically, a mixed approach is useful: client-side SDK for payments to avoid having to process payment data on the application; integration via API for maximum flexibility for other features.

The Startup Bakery approach

The Startup Bakery Team has selected subscription management software that provides the best compromise between functional coverage, simplicity of integration, quality of documentation, and technical support. Around this software, a Javascript library has been developed that, based on a subset of APIs provided by the Subscription Manager, abstracts the flows of creation, modification, cancellation of subscriptions, retrieval of the list of plans and prices, and management of payment methods. 

From the perspective of Operations, the integration between the subscription manager and cloud software for invoice creation and transmission of electronic invoices via SDI for compliance with Italian law has been tested, validated, and documented.

Startups therefore have access to a robust, reliable, comprehensive tool ready for simple integration for subscription management. They can thus save the time necessary for scouting software, studying integrations and functionalities, and focus instead on the development of their product.

Startup Bakery is the Italian startup studio specialized 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 the innovation process.