What is SaaS Billing?

SaaS billing is the specialized process of charging customers for software services. It covers how software-as-a-service companies invoice and receive payments based on subscription plans, usage, or contracts. In other words, SaaS billing handles everything from recurring subscription fees to metered charges for software use.

How SaaS Billing Works: 

• SaaS billing systems are designed to support recurring revenue models. They automatically generate invoices when a customer subscribes to a plan or uses certain features. 

• The billing platform tracks usage data (like API calls, user seats, or storage) and applies the pricing rules for each plan. 

• When a billing period ends (monthly, yearly, etc.), the system creates the invoice and processes payment through integrated payment gateways. 

• If customers upgrade or downgrade their plan mid-cycle, the billing software can apply proration to adjust the charges accordingly.

Examples of SaaS Billing: 

Examples of SaaS billing practices include;

• Tiered subscription plans (e.g. Basic, Pro, Enterprise) and 

• Usage-based add-ons. 

Popular SaaS platforms like Salesforce, Slack, and Zoom all rely on sophisticated billing systems to manage subscriptions, collect payments, and update accounts automatically.