Though Stripe Payments is what the fintech behemoth is most known for, for many startups, Stripe Billing has also become the go-to platform for managing subscriptions and payments. It's generally regarded as user-friendly, reliable, and easy to integrate with a wide range of tools and platforms.
However, as your SaaS business grows, you may find that yourself needing more advanced billing capabilities, and find that the Stripe elements don't always cut it, especially for more complex pricing configurations. In this article, we'll discuss how to use Stripe for this type of pricing model, explore the benefits of Wingback's approach when compared to Stripe's, and provide a step-by-step guide on how to implement usage-based billing with Wingback.
Before we dive in, a quick refresher on usage based billing (also called metered billing, metered usage, etc) and why many B2B SaaS companies choose it...
What are the benefits of usage based billing?
With this pricing model, you can charge your customers based on their actual usage of your product or service, rather than a fixed monthly fee. This pricing model can be more appealing to customers, as it ensures they only pay for what they use, and it can help you capture more revenue from heavy users. While it can make it harder to predict revenue, there are strategic ways to overcome this, such as using tiered pricing with a usage limit, or bulk pricing, to incentivize customers to use more of your product.
Using Stripe for Usage-Based Billing
Stripe Billing can handle a variety of pricing models, including simple usage-based billing. (Things can get more complex when you introduce hybrid pricing models, such as a usage component in a tiered pricing structure, but we'll get to that below.)
Here's a step-by-step guide on how to implement usage-based billing with Stripe:
1 Create a Stripe account
If you haven't already, sign up for a Stripe account. You'll need to provide some basic information about your business, and Stripe will guide you through the setup process.
2 Set up your billing plan
In your Stripe Dashboard, navigate to the "Products" section and create a new product. For each product, you can define one or more pricing plans, including usage-based plans. To create a usage-based plan, choose "Metered billing" as the billing type and set your desired pricing model (e.g., a flat fee per unit of usage, a percentage fee, or a tiered pricing structure).
3 Create a Stripe customer
In your Stripe Dashboard, navigate to the "Products" section and create a new product. For each product, you can define one or more pricing plans, including usage-based plans. To create a usage-based plan, choose "Metered billing" as the billing type and set your desired pricing model (e.g., a flat fee per unit of usage, a percentage fee, or a tiered pricing structure).
4 Create a Stripe subscription
Once you've set up your billing plan and created a Stripe customer, you can create a subscription for the customer. To do this, create a Stripe subscription object and associate it with the customer's Stripe customer ID and the usage-based billing plan you created earlier.
5 Record usage data
To implement usage-based billing, you'll need to record your customer's usage of your product or service. You can do this by creating usage records in Stripe. For each unit of usage, create a usage record object and associate it with the customer's subscription item ID. You'll also need to provide a timestamp for when the usage occurred and the quantity of usage.
6 Generate Stripe invoices
At the end of each billing period, Stripe will automatically generate an invoice for each customer based on their usage data. The invoice will include line items for each usage record, as well as any other charges or discounts associated with the customer's subscription.
7 Collect payments
Stripe will automatically attempt to charge the customer's default payment method for the invoice amount. If the payment is successful, Stripe will update the invoice's status to "Paid." If the payment fails, Stripe will initiate a dunning process to retry the payment and notify the customer of the failed payment.
Beware the pricing pitfalls!
While it can be a great solution for many startups, the Stripe price can be pretty steep when all is said and done. Do your research beforehand so you can be sure you're getting a reasonable price from whatever billing provider you choose.
A New Approach to Usage-Based Billing
While Stripe Billing covers the basics for managing usage-based billing, Wingback's unique approach provides several advantages that make it a more attractive choice for modern SaaS businesses, especially as they grow and scale.
Advantages to SaaS Businesses
First and foremost, Wingback was built specifically for SaaS companies, ensuring that its features and capabilities are tailored to the unique needs of this market. This means that Wingback's usage-based billing is more intuitive and easier to implement for SaaS businesses compared to Stripe's more generic approach, and will be more beneficial over time as you ship new features, adjust pricing models, introduce new usage-based components, etc.
Furthermore, Wingback offers advanced features, such as real-time analytics and reporting, which provide valuable insights into customer usage patterns and help you optimize your pricing plans for maximum revenue.
Finally, Wingback allows you to easily integrate other popular SaaS tools so you can implement usage-based billing without having to make other major changes.
Customer Benefits
One major benefit of Wingback is the customer portal. In this portal, you can choose whether to also give your customers insight into their usage in real-time during the current billing period, creating less friction, sticker shock, and even churn, as customers can better anticipate their bills, upgrade mid-cycle, and will have fewer questions about their bill, all of which can help reduce time to payment.
In addition, the ability for customers to see their usage real-time in the billing cycle helps build trust and loyalty.
Implementing Usage-Based Billing with Wingback
Wingback is a powerful billing platform designed specifically for SaaS businesses and the complexities they face. Wingback offers highly advanced levels of configuration with respect to usage-based pricing; for example, you can decide to implement the pricing model on an entire plan, or just on a single feature.
Here's how to implement usage-based billing with Wingback:
1 Connect your Stripe account in Wingback
If you haven't already, sign up for a Wingback account. Then, in your Wingback Dashboard, navigate to the Integrations section and connect your Stripe account, if you have one. This will enable Wingback to use Stripe for processing payments and managing customer payment methods.
2 Set up your billing plan
In your Wingback Dashboard, create a new plan and choose the usage-based pricing model. Configure the pricing model according to your desired billing structure, such as a flat fee per unit of usage, a percentage fee, or a tiered pricing structure.
3 Create a customer in Wingback
For each of your customers, you'll need to create a customer object in Wingback. This object stores information about the customer, such as their email address, payment methods, and billing address. When creating a Wingback customer, you can associate it with the customer's Stripe customer ID to ensure seamless payment processing.
4 Record usage data
To implement usage-based billing, you'll need to record your customer's usage of your product or service. You can do this by sending usage events to Wingback's bulk usage API endpoint. Each usage event represents the usage of a certain amount of "units" of a feature for a customer that occurred at a specific time. The units can be any amount of what you are measuring (e.g., a single action, CPU seconds, the number of reports), and you can set a (cosmetic) unit string in the plan editor if you want it to show up on invoices.
5 Generate invoices and collect payments
At the end of each billing period, Wingback will automatically generate an invoice for each customer based on their usage data. The invoice will include line items for each usage record, as well as any other charges or discounts associated with the customer's subscription. Wingback will then use Stripe to charge the customer's default payment method for the invoice amount.
Benefits of Wingback's Approach
User-friendly pricing plan management
Wingback's intuitive interface makes it easy for even non-technical users to create new pricing plans with usage-based features or modify existing plans. This simplicity allows businesses to quickly adapt their pricing strategies to meet changing market conditions and customer needs without requiring extensive technical knowledge.
Support for complex plans with varied pricing models
Wingback's advanced billing features allow businesses to create complex plans with different features priced using various pricing models, such as usage-based, tiered, or per-seat pricing. This flexibility enables businesses to offer a wide range of pricing options to their customers, ensuring that they can find the right plan to suit their needs and budget.
Seamless plan changes and grandfathering
When you change a plan in Wingback, the old plans remain intact, making it easy to grandfather existing customers or upgrade them to the new plan. Wingback's platform handles the proration calculations and other complexities involved in the process, ensuring a smooth and accurate transition for your customers.
Out-of-the-box signup flow, pricing pages, and billing portal
Wingback provides out-of-the-box solutions for signup flows, pricing pages, and billing portals that support all the pricing complexity your plans may have. These tools improve the user experience for your customers and make it more likely that they will upgrade to higher-tier plans or purchase additional features. By offering a seamless and user-friendly experience, Wingback helps businesses drive customer satisfaction and increase revenue.
Final Thoughts
Both Wingback and Stripe offer great solutions for modern SaaS companies looking to implement usage-based pricing. Whether you use Stripe Billing or a more tailored billing system like Wingback that can accommodate your future needs as your SaaS grows and scales, implementing usage-based pricing is a powerful growth strategy that can help your startup gain an edge over the competition. Especially when compared with Wingback, the Stripe price may be too high for many startups to justify the costs, but ultimately either billing solution will give you accurate billing.
No matter which billing provider you go with, the key to success is understanding your customers' usage patterns and designing pricing plans that cater to their needs. With the right usage-based billing strategy in place, you can increase customer satisfaction, reduce churn, and ultimately grow your revenue.
