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Subscription Software
Subscription-based software, otherwise known as
SaaS (Software As A Service), is becoming an increasingly
popular model for software. Many developers have
taken to the recurring "subscription fee" revenue
model, but there are a number of subscription-related
issues that developers struggle with. RegNet specializes
in ecommerce for subscription services, and they
have worked together with software developers
to address and resolve many of these issues and
problems.
Access and Authentication
Controlling access to the software has always
been one of the difficult parts of selling subscription-based
applications, since you often need to know who
is active, and the subscription state is often
tied to their site credentials or conditions.
This is a common issue for companies selling website
access to premium content, support, upgrades,
Software as a Service, and Hosted Applications.
There are two common solutions to managing customer
access.
The first solution is for the publisher to host
their own database for customer credentials and
access, and then ping RegNet (using web services)
to determine whether someone has access to a particular
resource. The account in this case lives in two
locations (which are called shadow accounts).
If the subscription state changes, there are two
options:
1) RegNet modifies the user's access record,
and when they next try to login, the publisher
pings RegNet to determine if the customer has
access, or...
2) RegNet pings the publisher's server
due to a change in subscription status, and the
publisher updates the flags on their side.
A second solution for managing credentials is
the use of non-shadow accounts, whereby the customer
creates their account on RegNet's servers as part
of the subscription purchase process. When the
customer logs in, the publisher passes the information
to RegNet, and RegNet then determines whether
or not the customer should have access. If access
is legitimate, RegNet then redirects the customer
to the "actual location" based on the state of
the customer's subscription record. This prevents
publishers from having to maintain a customer
database at all, but allows them to sell access
to protected content in a turn-key manner. RegNet
manages the customer's account, including the
typical "forgotten password" functionality, all
under the publisher's brand.
User History/My Account Functionality
One important aspect of subscriptions is the
need to keep the customers account history. If
the customer orders something else, it is best
to have some consolidated history. For every subscription
client, RegNet assigns a unique ID for multiple
purposes. RegNet passes the unique ID back to
the vendor after the purchase, using e-mail or
XML posted to a server. This unique ID can then
be stored and passed into any future purchases,
which will tie the customer to their existing
account without the customer needing to login
to RegNet, and can also "form-fill" in order to
streamline the purchase process. It also allows
the customer to change any data in their record
(billing info, name, e-mail address, etc) while
their unique identifier remains constant. Once
a customer is logged in, publishers can present
a "My Account" link using the unique ID, where
the customer is transferred to the RegNet server
to view their account history, modify or update
their billing data, print receipts, and cancel
auto-renewing subscriptions.
Types of Subscriptions/E-mail Communication:
RegNet currently supports two types of subscriptions:
manual and automated. A manual subscription type
can be used in the case of a customer who purchases
something with a specified life-span, and at the
end of that life-span the customer must manually
take action to renew the subscription. The automated
subscription method (typically preferred) will
automatically renew the subscription unless the
customer manually takes action to cancel the auto-renewing
process. RegNet takes care of sending pre-billing
e-mail reminders, which not only increases customer
satisfaction, but also helps to avoid billing
disputes and confusion over automated billing
transactions. RegNet also manages declined transactions
by e-mailing the user and driving them back to
the branded Account Management location in order
to update their billing information, which then
starts an automatic retry of the transaction so
that their subscription is maintained.
RegNet supports two approaches to subscriptions:
Always On vs Dead Man's Switch. The "Always On"
approach keeps the subscription "on" unless cancelled
by the subscriber. The "Dead Man's Switch" approach
will automatically turn off the subscription at
the ending date unless notified of a new subscription
sale being processed. RegNet supports either model,
and using their flexible Event Notification system,
vendors can be informed in real-time of changes
in subscription status, as well as certain events
like a sale, a refund, a chargeback, or a failed
billing attempt.
Billing Cycles and Intervals:
Flexibility is important in subscriptions. RegNet
supports free trials in which the credit card
data is collected in advance, as well as free
trials where order data in collected initially,
but not the billing information. The initial signup
fee can be more or less than the subsequent recurring
fee. The recurring time period can be defined
as monthly, quarterly, annually, or even unique
and non-standard time periods such as "every 3
weeks" or "14 days".
Reporting and Accounting:
Reporting is another important element related
to subscriptions. By setting up two products for
each subscription being sold, publishers can effectively
track revenue from "Subscription A - New Subscriber"
vs. "Subscription A - Renewal". These products
are chained together from the initial purchase
to the renewal purchase, which is chained to itself.
In GAAP Accounting, it is important to recognize
revenue amortized over the life of the subscription.
For example, if a customer purchases a $120/1-year
subscription, it is appropriate to treat the revenue
as $10 per month for 12 months, instead of the
entire $120 lump-sum as revenue during the month
the subscription was purchased. The RegNet Recognized
Revenue Report does this for publishers, and also
accounts for refunds and chargebacks.
Compliance and Sensitive Data:
Storing credit card data for the purposes of
re-billing brings a whole new level of privacy
and compliancy concerns. This is one reason that
RegNet enjoys an increasing number of companies
contacting them to handle recurring billings.
RegNet removes the burden by managing their subscription
business. Since RegNet is hosted on Digital River's
world-class data center, which features multiple
levels of redundancy and 24x7 monitoring, customers
feel more comfortable knowing their data is secure
and their privacy upheld.
Subscriptions are increasing in popularity, but
the complexities make outsourcing a wise idea,
and RegNet a smart choice. For more information,
or to discuss your subscription needs, contact
RegNet, the subscriptions experts, at RegNet.
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