Subscription billing software

Getting paid on subscription, by customers who rent, upgrade, pause and cancel

Take the water-purifier maker in Pune from Market Segment 11.1, Procurement and source-to-pay software. It does not only sell purifiers. It also rents them out, for a monthly fee that includes service and new filters. It now has 100,000 households on rental plans:

Each household is on a different plan.
Some upgrade, some pause for a month, and some cancel.
Some pay by how many litres they use.
Some card payments fail, and have to be tried again.

No company can bill all of that from a spreadsheet. The software that does it is called a subscription billing engine.

For each of the purifier maker's rental plans, a billing engine works out the charge, sends it to be paid, chases a failed card payment by trying again, and tells the accounts how much revenue to record.

The problem first appeared in software. Software stopped being sold in a box, and started being rented by the month. A software company with 100,000 subscribers, paying in a dozen currencies, needed a new kind of billing. Its accounts changed too. The rules for when subscription money counts as revenue, called revenue recognition, are ones the old accounting ledger never had to handle. The billing engine solved both. It has since grown into what the industry calls a monetisation platform, which more and more decides what to charge, as well as how to bill it.

This is the only Market Segment in Industry Vertical 11 about money coming in. The other kinds of money coming in are covered elsewhere:

The invoice for a one-off sale is kept in the ERP. (More in Market Segment 10.1, ERP and business accounting software, in Industry Vertical 10, ERP and business automation.)
The payment itself, where the card is charged and the money moves, is covered in Industry Vertical 17, Payments.
Collecting what customers owe, called receivables, is covered there too. HighRadius, the best-known Indian-founded company in receivables, is not covered in this Market Segment.

What is left is the money that arrives by subscription, which turned out to need an industry of its own. Its buyers are the finance teams of companies that earn money by subscription.

This Market Segment has few companies, but it matters for where its largest one comes from. Chargebee was founded in Chennai, and is one of the few Indian software companies that leads its category worldwide.

Every company named here has posted software engineering jobs in India. Famous companies that don't actively hire software engineers in India are left out.

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What this section holds

Back to the purifier maker's 100,000 rental plans from the start of this Market Segment. The companies here sell the engine that bills them.

Chargebee

was founded in Chennai in 2011. It has engineers there and in Bengaluru, and the most job postings in this Market Segment. It sells the billing engine on which software and subscription businesses run their plans, free trials and invoices. The engine also runs dunning: politely chasing a card payment that failed. Chargebee has grown outward in three directions. At the front of the sale, it handles the quote. At the back, it handles revenue recognition. And it works on retention: keeping the customer who tries to cancel.

Zuora

with engineers in Bengaluru and Chennai, coined the term "subscription economy", and built the first billing engine for it. It sells to larger companies than Chargebee does, and now to any company with recurring revenue, money that comes in again every month or year. Alongside billing, it sells payment orchestration, which routes each payment to the right payment provider, and revenue automation.

Zuora Community

is a second name of the same company, Zuora. It has engineers in the same two cities.

AppDirect

with engineers in Pune, sells a different form of this business: a subscription-commerce platform. Through it, telecom operators and distributors resell other companies' software. It puts three things in one product: the billing, the marketplace, and the setting up of each customer's account, called provisioning.

One company covered mainly in another Market Segment belongs here too:

InvoiceCloud

presents the bill and collects the payment for utilities, local governments and insurers. It solves the subscription problem for organisations that do not think of themselves as subscription businesses. Its centre in India is in Hyderabad. (More on it in Market Segment 17.2, Payment gateways, in Industry Vertical 17, Payments.)

Pricing by use, and the model that sets it.

The subscription is giving way to the meter. Software, and above all AI software, is more and more often charged by what was used, not by the number of users. The industry calls this usage-based pricing. It turns billing from a monthly calculation into one that runs all the time, and every company here has rebuilt its product for it. The next step is already in Chargebee's and Zuora's products: an AI model that recommends the price. It also predicts which customers will cancel, called churn, before they do.

A subscription charges the same amount every month, while usage-based pricing charges by what was used, so billing becomes a calculation that runs all the time.

So the purifier maker from the start of this Market Segment does not send 100,000 bills by hand. A billing engine works out each household's plan, charges it, chases the payments that fail, and tells the accounts how much revenue to record.

Who they hire

Who these companies hire, and for what, is on What finance and accounting software companies hire for.

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