Dan Heffernan

Is Subscription Management the Same Thing as Recurring Billing?

It seems that people confuse subscription management solutions (or platforms) with recurring billing solutions with some regularity. Let’s draw some distinctions between the two, because these things are distinctly different. We’ll start with…

Subscription Management Platforms

Subscription platforms manage the lifetime of the subscription, from the first term (often a special offer or free trial) until the subscription expires or is canceled by the subscriber. Here are some of the functions of a subscription platform:

  • Initiates any auto charge of a direct debit or credit card. These can be annual, monthly, or any frequency at all.

  • Keeps track of how the revenue for that subscription is earned over time, which can be completely independent of when payments are collected. For example, in the case of a year-long subscription which is paid up-front, that payment is not all reported as earned income, since there is still subscription liability to serve out the remaining term of the subscription. We’ll look at more on this later in this blog post.

  • Can manage renewals – the timing of messages to subscribers to get those who are not on auto-payment to opt-in to renewing the subscription.

  • Gracing, which extends the service until the subscriber renews. A subscription platform should also then be able to recover the graced period, by earning the income for that which was already served.

  • Backstarting the subscription to a previous physical issue or point in time. A good example of this would be a print journal that only has 4 issues per year: you don’t want a subscriber to wait for up to 3 months for the first issue, so just backstart it to the previous issue.

  • Calendar-year subscriptions (not accepting “anytime starts”), especially for academic institutions who often demand calendar-based subscriptions due to their budget cycles.

  • Suspensions for vacations, non-payment, or undeliverable physical goods.

  • Group subscriptions, for families, classrooms, or consortia of institutional libraries.

  • Gift subscriptions, including renewing to the purchaser or to the recipient, if the original purchaser is not interested in continuing.

  • Packages of subscriptions and products, digital and print, or any combination of things. This requires both flexibility and control to keep the various components synchronized.

  • Migrations to other products or changes of the content of the subscription. This is critical in the box subscription world, for example.

  • Changes of frequency, where the subscriber wants to get things more or less often, or where the provider wants to send more or fewer in a year.

  • Changes of quantity, where the subscriber wants to increase or decrease the number of items being sent.

  • For news media subscriptions, a subscriber might want print newspapers on weekend, and digital access always.

And many more features and nuances which we don’t have time to go into here.

Recurring Billing Platforms

Recurring billing platforms are good at what they do. They just don’t do all of the subscription management functions described above. Rather, they are focused on collecting payments at the proper intervals of time. These platforms are used for subscriptions which do not require opting in for renewals, but are set up to continue to collect payments until the subscriber cancels the subscription. In the publishing world, these subscriptions were called “renew ‘til forbid.” 

Here are some of the functions of a recurring billing platform:

  • Collect payment via credit card, direct debit, EFT, or other means

  • If payment can’t be collected, employ one or more schemes to successfully collect payment:

- try again after x days

- change the expire date on the credit card if it is expired

- contact the subscriber to get a different card

  • Revenue recognition, which subscription platforms have always done

  • Collections, which most subscription platforms also do

  • Retention, which most subscription platforms also do

In short, recurring billing platforms have a subset of the capabilities that a subscription platform has.

Buyer beware as well! Many of the recurring billing platforms on the market today are attempting to pivot to subscription platforms for greater reach. Their success is varied, but they are effectively playing catch-up against true subscription platforms (like Advantage!).

Some years ago, I was invited to a luncheon in Chicago by a new subscription platform to hear about their successful launch. After a couple of testimonials, the CEO sat down at our table in the empty chair next to me. He asked me where I was from and when I told him AdvantageCS: the software developer of the top subscription platform in the publishing industry, he immediately turned to the person on the other side of him and ignored me for the rest of the luncheon!

Before leaving, I asked one of the representatives from his company if he would show me their software, which he gladly did. When I asked about how they manage renewals, he looked at me with a blank stare and said they hadn’t built that part of their software yet.

Nor had they considered revenue recognition. They only added that capability about 10 years later.

I realize that this company was not necessarily interested in the publishing industry, so having some holes in their capabilities wasn’t seen as a problem by them. But they did go after some large publishers and a number of those projects failed because they simply didn’t meet the publishers’ requirements for true subscription management. 

So be aware of the difference between subscription platforms and recurring billing solutions. They are not the same!

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