Why Subscription Billing Can Increase B2B Revenue

B2B companies are increasingly incorporating subscription billing into their models. Time and again, they’re discovering that recurring billing actually increases their revenue and sales numbers. It’ss proven to be a more efficient — and easier — billing option for many B2B companies, which is one reason that subscriptions are growing so quickly.

Let’s dig into why exactly subscriptions work so well for B2B transactions:

It’s Budget Friendly for Clients

Subscription billing is often an easier “yes” for enterprise leads, because the monthly or annual bill is smaller than a point-of-sale purchase for enterprise software. This reduces the “sticker shock” (along with the immediate cost) for a buyer. This budget-friendliness can have a significant impact on large purchases, especially for companies who provide SaaS (software as a service) products, when final costs can easily reach six digits.

It Reduces Decision Points

It’s a truism among the sales profession that decision points are opportunities for a customer to say “no.” A recurring cycle bills automatically and doesn’t require the customer to continue to say “yes,” so it reduces chances for customers to make a decision to decline the purchase or seek an alternative.

Free trials also come into play here; as we’ve discussed elsewhere, free trials (especially if it moves to automatic billing at the end of the trial) can be very effective for subscription businesses, including B2B ones.

It Works With the Strengths of B2B Sales

B2B sales are highly relationship-based, and often require extended and repeated contact between sales representatives and business clients. Since subscription billing is also recurring and long-term, it fits in well with this dynamic, and gives your sales team lots of opportunities to upsell leads as they continue their customer relationship with you. In fact, upselling and add-ons with subscriptions are usually an easier sell than a one-time product, due to the budget-friendliness mentioned earlier.

It Reduces Acquisition Costs

Service-based subscriptions in particular benefit from a “bottom up” approach, in which a software license or other service is sold to one individual or department within a company. Sales representatives can then pitch that service to other people or departments within the organization, and fold additional purchases into the ongoing subscription cycle, minimizing administrative costs. Many times, “buyer’s inertia” is a factor in these situations. In other words, as business clients form deeper relationships with their B2B sales rep, they make the decision themselves to initiate further purchases.

To find out how B2B revenue can increase with recurring billing, contact us today. Or, if you’re looking for other ways to optimize your pricing and convert more customers, check out the Rebilly guide to optimizing your pricing: