What Is Subscription Billing Automation? Tools and Tips

You don’t need to run a large enterprise to reap the benefits of subscription billing automation. Whether you’re a solopreneur offering services, a growing startup, or an established small business, automating your subscription billing helps you manage recurring payments more efficiently and grow recurring revenue.

Subscription billing automation helps businesses of all sizes spend less time updating spreadsheets and troubleshooting failed payments and more time improving the customer experience and growing their operations. 

In this guide, you’ll learn about automated billing, common subscription billing models, and how to choose the recurring billing software that’s right for your business.

What is subscription billing automation?

Subscription billing automation is the process of using software to automatically bill customers on a recurring basis—such as monthly, quarterly, or annually—and manage subscription payments. 

Instead of manually collecting and processing each subscription payment, automated billing helps you streamline operations. Customers can pay using multiple payment methods—such as credit cards, bank accounts, Apple Pay, or Venmo—and the system automatically processes each payment on the subscription’s due date.

Beyond processing payments, subscription billing automation tools also support the full subscription life cycle. With billing software, you can create subscriptions that automatically charge customers on set billing cycles, allow customers to modify subscriptions, adjust pricing or plans as your offerings evolve, and monitor key metrics.

Common subscription billing models

Here are some common subscription billing pricing models that automation platforms are designed to support:

• Flat rate. This is the simplest billing model, where you charge a set fee each billing period for your products or services.

• Tiered. Tiered pricing is a flexible billing model that allows you to offer multiple subscription plans at different price points or feature levels.

• Curation. In a curation pricing model, customers build their own subscription based on their preferences and needs.

• Freemium. In a freemium model, you offer a basic level of service for free and charge for add-ons or premium features.

• Per user. Per-user pricing is based on the number of people who access the product or service.

• Usage-based. Also known as pay-as-you-go pricing, usage-based billing charges customers based on how much they use your service.

• Hybrid. Hybrid billing combines flat-rate and usage-based pricing, charging a fixed fee each period while adding charges if usage exceeds set limits.

What to look for in subscription billing automation tools

• Easy setup
• Connectivity with your tech stack
• Flexible billing models
• Tax compliance
• Self-service subscription management

There are a variety of subscription billing automation tools designed to fit different budgets and business sizes. Whether you have 50 or 5,000 subscribers to manage, these are key features to look for in your subscription billing automation tool.

Easy setup

Subscription billing automation tools are designed to make running your business simpler and more efficient. Look for tools that are easy to set up so you can focus on serving your customers instead of managing overdue payments. 

You may need to try a few platforms or trial periods to find the billing tool that works best for your business, but the upfront time investment can save time later.

For example, some ecommerce platforms (including Shopify) have built-in recurring billing features that are easy to set up, meaning you’ll spend less time on configuration and more time growing subscriptions. 

Connectivity with your tech stack

You might be using multiple platforms to manage your business, such as ecommerce software, email marketing tools, customer support systems, and payment processors. Finding a subscription billing automation tool that integrates with your existing systems can reduce manual work and prevent data silos.

Software that connects directly to your ecommerce platform makes it easier to add and manage subscriptions without disrupting your current operations. And if you sell both online and in person, look for billing tools that support subscriptions across those channels so you can manage them consistently.

Period care brand Riley, for example, connects its billing tool with other systems in its tech stack. Cofounder Fiona Parfrey shares in a Shopify Masters podcast that the company uses Recharge to manage subscriptions within Shopify and integrates tools like Klaviyo for customer relationship management (CRM) and email marketing. 

Flexible billing models

Look for subscription billing automation software that supports flexible billing models and multiple payment methods. 

For example, if your business starts with a flat-rate subscription model, you may later add other tiers or pricing options as your offerings grow. Choosing billing automation software with this flexibility allows you to adapt your subscription offerings to your audience rather than being constrained by your billing system.

Tax compliance

An automated subscription billing solution can simplify tax compliance. Sales tax rates and regulations vary by location, which increases billing complexity if you manage billing manually.

Automation helps reduce manual errors in this process, improving accuracy and consistency across all of your subscriptions. Many billing platforms include built-in tools to calculate taxes, generate reports, and help maintain compliance with tax regulations.

Self-service subscription management

Look for billing automation tools that give customers control over their subscriptions through a self-service portal. Giving customers the ability to change their subscription or update their payment method can improve the customer experience and reduce your support team’s workload. 

For example, the founders of Book Box, an Australian subscription-based book business, share in an interview with Shopify that they use a subscription management app from the Shopify App Store that not only automates billing but also allows customers to pause, skip, or cancel orders on their own. This flexibility helps customers stay in control of their subscriptions, building trust and reducing the need for manual work on the business’s end. 

5 subscription billing automation solutions

• Shopify Subscriptions
• Recharge
• Recurly
• Bold Subscriptions
• Stripe Billing

Here are five popular subscription billing automation tools that can help you simplify recurring payments. 

Shopify Subscriptions 

Shopify offers subscription billing tools for businesses of all sizes. The free Shopify Subscriptions app connects directly with your Shopify store, allowing you to manage subscriptions throughout the customer life cycle. Shopify also offers a wide selection of third-party subscription apps.

You can use Shopify Subscriptions to create and manage auto-billed subscriptions that renew weekly, monthly, or quarterly. You can also track key subscription metrics within the app. This option works well for businesses already selling on Shopify.

Pricing: The Shopify Subscriptions app is free; Shopify’s ecommerce plans start at $29 per month.

Recharge

Recharge is a widely used subscription billing platform for Shopify retailers, handling 71% of subscriptions sold through Shopify. It works well for growing businesses launching a subscription model, offers Shopify integration, and requires no custom coding.

Recharge also integrates with common ecommerce tools like Klaviyo (email marketing), Gorgias (customer service), and Tapcart (mobile apps).

Pricing: Recharge offers standalone plans starting at $99 per month, with processing fees of 1.49% plus 19¢ per transaction. Its app for Shopify store owners costs $25 per month.

Recurly

Recurly is a subscription billing platform designed to help growing midsize and large businesses launch and manage subscription programs. The software allows you to set up, test, and deploy various pricing models and includes analytics tools that track metrics such as new subscriptions, churn rate, and monthly recurring revenue (MRR). 

Pricing: For Shopify store owners, Recurly starts at $399 per month plus 1.5% of your gross merchandise value and 10¢ per subscription order. For other businesses, pricing is based on total payment volume (minimum $1 million) and contract length.

Bold Subscriptions

Bold Subscriptions is a subscription management platform that helps you convert one-time customers into subscribers and tailor subscription offerings to your specific audience. This platform integrates with Shopify through an app and allows you to customize how you offer and manage subscriptions.

Bold may be a good fit for store owners who prioritize flexibility and customizable subscription options or plan to add subscriptions to an existing ecommerce business. For example, using Bold’s Shopify app, you can add subscription options to existing products and adjust pricing to best fit your offerings and customers.

Pricing: Bold offers a basic plan for businesses with less than $2,500 in monthly subscription revenue, starting at $24.99 per month plus a 2% transaction fee. Plans with lower transaction fees start at $49.99 per month.

Stripe Billing

Stripe is a payment platform that also offers subscription billing tools. Stripe Billing may be a good fit for brands already using Stripe for their point-of-sale (POS) technology. The platform supports various automated billing models, from flat-rate recurring billing to usage-based pricing. Stripe also includes AI-powered revenue recovery features that send automated messages to customers with lapsed payments.

Stripe offers extensive customization, but setting up subscription billing may require more technical knowledge than some other tools.

Pricing: Stripe Billing offers two options: a plan starting at $620 per month with a one-year contract or a pay-as-you-go option priced at 0.7% of your billing volume.