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How to Develop a SaaS Billing Software: Best Practices and Strategies

Picture this: you’ve built an amazing SaaS product, and it’s taking off. Subscriptions are pouring in, customers are happy, and business is growing. But then comes the not-so-glamorous side – handling payments, managing subscriptions, and making sure everyone’s invoices are accurate and on time. Suddenly, you’re not just running a product; you’re trying to keep up with a mountain of billing tasks that seem to multiply every month.

A solid billing SaaS software can be a live-saver: it can automate payments, reduce errors, manage renewals, and – what’s most important – ensure a smooth billing process for both you and your customers. But building it from scratch? It’s a project that requires planning, precision, and a clear understanding of what your business needs.

Let’s say you run a project management tool that charges customers based on the number of users in their account. As the customer’s team grows, their subscription cost needs to adjust automatically. Without SaaS billing software, you’d be manually tracking and updating each account’s usage every month. It will eat tons of your time and may lead to costly mistakes such as overcharging users or undercharging for months without realizing it, or missing a renewal entirely.

With SaaS billing software, this process is automated. The software automatically tracks user counts, adjusts the billing amount, sends an updated invoice, and charges the customer – all without any manual work from you. This way, as the customer’s needs grow, their billing adjusts smoothly in real time. The result? Less hassle on your end, and a consistent, reliable billing experience for the customer, helping build trust and improve retention.

Opting for billing software as SaaS, you can reap numerous benefits. They are as follows:

1. Unlike one-size-fits-all solutions, it adapts to your workflows and customer preferences, so you can provide a more personalized experience and scale efficiently as you grow.
2. A custom solution streamlines the billing process, automating everything from invoicing to payment collection and subscription renewals. This means fewer manual tasks and fewer chances for errors.
3. Custom billing software can actually save you money in the long run, even though it requires significant investments in the beginning.
4. Such software can integrate with the systems you already use, such as CRM, accounting, and analytics tools. This creates a unified ecosystem with seamless data flows, better efficiency, reduced duplication, and more insights across all operations.
5. Custom billing software can be built in modules, so you only pay for and use the features you need. As your business grows or your billing requirements change, you can add new functionalities without overhauling the entire system, keeping it flexible and scalable.
6. Billing involves sensitive customer data, so security is paramount. With custom billing software, you can implement tailored security measures (MFA, data encryption, etc.). Off-the-shelf solutions typically have generic security settings.

SaaS companies usually use one of the three key models.

Subscription-based

It is designed to manage recurring payments for subscription-based services. This type of software automates the billing process for businesses with regular payment cycles. Key features include automated invoicing, flexible billing cycles, dunning management for overdue payments, and customizable pricing models. Companies like Chargebee and Recurly specialize in subscription billing, providing tools that help businesses manage subscriptions effortlessly.

Usage-based

This type of software is ideal for businesses that charge customers based on their usage of a service, allowing for dynamic pricing models. It typically includes real-time usage tracking, tiered pricing plans, and automated billing based on usage data. Scoro and Zoho Books are great examples of platforms using usage-based billing to charge customers according to their actual usage of resources or services.

Hybrid

Hybrid billing solutions combine different billing models, such as subscription and usage-based, to provide flexibility for businesses with varied pricing strategies. These systems often include customizable billing options, comprehensive reporting, and integration capabilities to manage multiple revenue streams efficiently. Zuora offers a hybrid billing solution that supports diverse pricing structures, making it suitable for companies with complex billing needs.

Now, let’s review the key steps of billing SaaS software development. The process will depend on your request – whether you need to build a custom billing software solution or scale an existing one. 

Custom Billing Software Development

Step 1. Requirement gathering

The first step is gathering detailed requirements. This involves understanding the business model, target audience, and billing needs. Engaging with stakeholders, such as finance teams and product managers, helps identify must-have features.

Step 2. Planning & design

Once the requirements are clear, the next phase is planning and designing the software architecture. This includes deciding on the tech stack, defining user workflows, and creating wireframes or prototypes. This stage ensures the solution will be user-friendly and meet the functional requirements outlined earlier.

Step 3. Development

With a solid plan in place, the actual development begins. Developers start building the software, focusing on key features such as user accounts, billing cycles, and payment gateways. This phase often involves using agile methodologies, allowing for iterative development and regular feedback from stakeholders.

Step 4. Integration

After the development team completes the core functionalities, they need to integrate the software with existing systems, such as CRM and accounting tools. This ensures that data flows seamlessly between platforms, reducing manual entry and errors. APIs play a crucial role in this integration process.

Step 5. Testing

Before launching the software, the team conducts extensive testing to identify and fix bugs. This includes functional testing, usability testing, and performance testing. Ensuring that the software is reliable and performs well under various conditions is crucial for user satisfaction.

Step 6. Deployment

Once testing is complete and any issues have been resolved, the software is ready for deployment. This involves setting it up on servers, configuring the environment, and preparing it for users. A smooth launch is essential, so the team often provides training and support materials to help users adapt.

Step 7. Monitoring & maintenance

After deployment, ongoing monitoring and maintenance are necessary to ensure the software continues to perform well. This includes addressing any user feedback, applying security updates, and adding new features as business needs evolve. Regular updates help keep the software relevant and effective.

Step 8. Scaling

As the business grows, the billing software should also scale accordingly. This might involve optimizing performance, adding more advanced features, or increasing capacity to handle more users. A scalable solution ensures that the software remains effective as customer needs change.

Scaling Existing SaaS Billing Solution

Scaling an existing SaaS billing solution involves a series of strategic steps to ensure that your billing system can handle increased demand while continuing to meet the needs of your business and customers.

Step 1. Assess current performance

Start by taking a good look at how your current billing system is performing. What’s working well? Where are the pain points? Getting feedback from customers and your team can give you a clearer picture of what needs to change and what’s already solid.

Step 2. Define scaling objectives

Next, set clear goals for what you want to achieve by scaling your billing software. Are you looking to handle more transactions, introduce new billing options, or improve how it connects with other tools you use? Knowing your objectives will help keep the scaling process focused and aligned with your business needs.

Step 3. Optimize infrastructure

Think about whether your current infrastructure can support your growth. This might mean upgrading your servers, improving your database performance, or even moving to a cloud-based solution that can easily grow with you. A strong infrastructure is key to keeping things running smoothly, especially during busy times.

Step 4. Enhance features

think about the features that could make life easier for your users. Consider adding flexible billing options that cater to different customer needs, automated invoicing to save time on manual tasks, or improved reporting tools that give you a clearer picture of your business's performance.

Step 5. Integrate with new technologies

Consider connecting your billing software with new tools that can boost efficiency and accuracy. For example, you can integrate it with analytics platforms or a customer relationship management (CRM) system to refine your billing strategies.

Step 6. Conduct thorough testing

Before you roll out any changes, it’s important to thoroughly test your updated system. This means checking how it performs under increased loads and ensuring that new features work smoothly without disrupting existing ones.

Step 7. Launch & analyze

Once you’re confident everything is in order, it’s time to launch your scaled solution. Keep a close eye on its performance. Monitoring how things go after the launch will help you spot any issues and make necessary adjustments.

Pro tip: Remember, scaling is an ongoing journey, not a one-time event. So regularly revisit your goals, performance metrics, and user feedback to identify areas where you can improve further.

Integrating your SaaS billing software with other business systems isn’t just a “nice-to-have” option – it’s often essential for smooth operations. Here’s how you can make a difference with integrations:

CRM (Customer Relationship Management)

Connecting your billing software with a CRM helps keep your customer data synchronized and accessible in one place. With this integration, your sales and support teams can access real-time payment statuses, billing cycles, and account details. 

Benefits: Fewer errors, faster responses, better customer experience

Examples: HubSpot, Salesforce

Accounting

This integration is important because it helps you avoid manual data entry and therefore reduces the risk of errors. It also streamlines financial reporting, automates revenue tracking, and ensures all transactions are recorded accurately.

Benefits: Minimized errors, streamlined reporting, accurate financial records

Examples: QuickBooks, Xero

Customer support

When you integrate your billing software with customer support tools, agents can access billing information immediately. This means faster resolutions to customer queries.

Benefits: Faster issue resolution, better support experience, higher customer satisfaction

Examples: Zendesk, Intercom

Marketing automation

Connecting billing data with marketing platforms helps you keep customers informed and encourages engagement by delivering tailored content at the right time.

Benefits: Personalized customer engagement, improved retention, automated communications

Examples: Mailchimp, Klaviyo

Determining the cost of developing a SaaS billing software requires a look at various factors influencing both the complexity and scope of the project. 

First, you should think about the kind of solution you’re going to build. It can be either a tool (to perform specific functions within a larger system; e.g. a standalone invoicing app) or a dedicated, full-featured platform (a robust, scalable solution built specifically for delivering and managing services across a broad user base). Since each type has a different scope of work, the costs will vary as well.

Next, you should mind the level of features and customizations. The more features and customization you want, the higher the cost. Basic billing functionalities like invoicing and payment processing are usually straightforward, but adding custom pricing models, multi-currency support, or integration with other systems will increase complexity and, consequently, costs.

Pro tip: We recommend that you make a list of must-have features and those that are nice-to-have but not that essential. This approach will help you avoid overpaying at least in the beginning. Later on, when your business grows, and the solution starts generating revenue and demands more advanced capabilities, you can add those desirable features.

Here’s the list of common features that form the backbone of efficient SaaS billing:

• Subscription management:
  • Handles various subscription plans, upgrades, downgrades, and cancellations;
• Recurring billing:
  • Automates billing cycles (monthly, yearly, etc.) and payment processing;
• Invoicing:
  • Generates and sends invoices automatically to users, with options for custom templates;
• Payment processing:
  • Integrates with payment gateways (e.g., Stripe, PayPal) for secure payment collection;
• Dunning management:
  • Sends automated reminders for failed payments and retries payment collection;
• Compliance and security:
  • Includes features like PCI-DSS compliance, data encryption, and GDPR compliance for user data protection.

And these are the ones that can enhance the functionality:

• Tax management:
  • Calculates and applies local, national, and international taxes automatically;
• Proration and adjustments:
  • Adjusts charges based on mid-cycle changes to subscriptions;
• Analytics and reporting:
  • Provides insights into revenue, customer churn, ARPU (Average Revenue Per User), and more;
• Multi-currency support:
  • Allows transactions in various currencies for global businesses;
• Customer portal:
  • Provides users with a portal to view billing history, update payment methods, and manage subscriptions;
• Discounts and promotions:
  • Supports coupon codes, discounts, and other promotional pricing strategies;
• Integration with CRMs and accounting tools:
  • Syncs data with external systems like Salesforce, QuickBooks, and Xero for seamless workflows;
• Usage-based billing:
  • Calculates charges based on user consumption, ideal for SaaS with usage metrics (e.g., API calls);
• Customizable pricing models:
  • Supports flexible pricing structures, including tiered pricing, volume-based pricing, and per-user pricing.

What else affects the cost of the SaaS billing software is the development team composition – you can choose to hire an in-house team, outsource the development, or a mix of both. A standard team includes developers, designers, project managers, and QA specialists. For specialized features, you might need additional expertise in areas like security or data analytics, which will also increase the cost of the solution.

When you develop SaaS billing applications, you need to carefully and thoughtfully choose the right tech stack. The tech stack comprises the programming languages, frameworks, libraries, and tools for building the software. Your tech stack includes the programming languages, frameworks, libraries, and tools you use to build the software, and each choice comes with its own pros and cons. 

For example, if you go with popular languages and frameworks, you might save time and money because there are plenty of developers who know how to work with them. On the flip side, if you pick the latest and greatest technologies, you could get better performance and scalability, but you might end up paying more for specialized expertise. 

Plus, the tech stack you choose will affect your long-term maintenance costs. Some technologies might have ongoing licensing fees or require more powerful servers, which can add up. In the end, it's all about finding the right balance – one that meets your current needs but also prepares you for future growth.  

Design complexity also affects the cost of the software. A simple, user-friendly interface is usually cheaper and faster to develop. For a more intricate design with custom graphics, animations, or unique user flows, the price tag can go up significantly. 

Want to optimize your design choices? Check out our article on the best SaaS practices for more insights.

Depending on the industry, your software may need to comply with various regulations (like PCI-DSS or GDPR), which can require extra development work and increase costs. Implementing robust security measures will also contribute to the overall cost.

After launch, you'll need to budget for regular updates, bug fixes, and enhancements, which can accumulate over time.

And what’s also worth mentioning is investing time and resources in the product discovery phase. This upfront investment will also impact initial costs. But in the long run, it leads to a better-defined product and reduces costly revisions.

On average, you can expect the following costs:

• Basic SaaS billing software (core features, single platform, limited integrations): $50,000–$100,000;
• Mid-range SaaS billing software (advanced features, multi-platform, several integrations): $100,000–$200,000;
• High-end SaaS billing software (custom architecture, extensive integrations, robust security): $200,000+.

Now, you know what it looks like to create a SaaS billing app. Whether you’re starting fresh or upgrading an existing solution, taking a thoughtful approach to your planning and execution can create a billing system that’s not only reliable and efficient but also helps your business grow and keeps your users happy. If you need guidance along the way, SapientPro is here to help you navigate the journey and achieve your goals.