How to choose the right billing vendor in 2025: The ultimate guide - part 1

Jan 21, 2025
 • 
0 MIN READ
Gold share tray icon
David Hoang
Principal Architect
Get updates into your inbox
Sample Metronome billing dashboard
Share

This guide is written by David Hoang, Principal Architect at Metronome with over 15 years of expertise in pricing, billing, and quote-to-cash systems.

When should you take billing “seriously”?

Building your first product? When you're hyper-focused on shipping features quickly and delivering customer value, billing is typically the last thing on your mind. Because of this, early-stage companies often cobble together manual spreadsheets, ad hoc scripts to extract consumption data, and simple integrations with payment gateways to collect payments. These solutions meet early billing needs but are painful and tedious. Manual processes usually work until you reach a tipping point where they become unscalable and untenable. Here’s what often happens along the way:

Product complexity increases

Offering free trials, discounts, or custom pricing packages makes managing SKUs manually inefficient and error-prone.

Revenue growth adds pressure

Once your business surpasses $1 million in revenue, even small billing errors can lead to financial discrepancies, strained customer relationships, and audit headaches.

Customer expectations rise

Your customers demand transparency and control. They expect dashboards to track spending, set alerts, and manage budgets in real time.

Team size and demands grow

As your Finance, RevOps, and Product teams grow, they’ll need accurate reports, robust management tools, and integrations aligned with their workflows. Outdated systems introduce inefficiencies that hinder progress.

Integration becomes critical

Adopting tools like CPQ or ERP requires a billing system that integrates seamlessly to enable automation and scalability.

Key takeaway: Invoice delays and billing errors caused by manual processes slow down payment collection, disrupt cash flow, and drive up costly customer support requests. Without a centralized billing system, engineers are distracted from improving your core product, further compounding inefficiencies.

Usage-based billing: the operating system for SaaS growth

Eventually, you’ll realize billing isn’t just about collecting payments—it’s fundamental to your business operations. At mature consumption-based businesses, billing serves as the operating system connecting key teams across the company. Here’s how billing supports growth:

Product management

  • Launches new products and adjusts pricing or packaging on demand.
  • Provides in-product dashboards, insights, and alerts to help customers manage their spending and budgets.

Sales and revenue operations

  • Negotiates and closes non-standard deals with custom pricing and discounts.
  • Uses billing and revenue data to calculate sales commissions.

Leadership and corporate strategy

  • Expands revenue into new geographies, sales channels (enterprise sales, marketplaces, resellers), and verticals (commercial, government, education).

Finance

  • Completes invoicing, payments, and revenue processes quickly to close the books on time.
  • Gains real-time insights into the company’s financial health.

Engineering

  • Focuses on improving the core product and collecting usage metrics.
  • Supports cross-functional initiatives without being bogged down by billing-related distractions.

Build vs. buy: Making the right choice

A good billing system provides flexibility and accelerates growth. A poor system bottlenecks the entire company and drains engineering resources. Once you understand billing’s importance, you face a critical decision: build or buy? Ask yourself these questions:

Is this a strategic asset?

Yes. A robust billing system provides strategic benefits and enables faster growth.

Do you have the team and skills to build it?

Usage-based billing is complex. It requires expertise across diverse areas like eCommerce, pricing, invoicing, taxation, payments, accounting, and revenue. Building a truly reliable, scalable system isn’t just about understanding the space—it demands engineering systems that can handle high throughput, operate in the hot path, and adapt to rapid pricing model changes. Bringing together teams with deep domain expertise and technical excellence is a considerable challenge.

Can you support it long-term cost-effectively?

Billing systems need constant investments to keep up with changing business needs. Dedicated engineering teams often face unclear, shifting roadmaps due to evolving requirements.

Here’s how billing needs typically evolve:

  • Today: Free trials and simple per-unit pricing.
  • Tomorrow: Tiered and volume pricing.
  • Six months: Prepaid credits with discounted rates.
  • Nine months: Custom credits (e.g., Snowflake Credits).
  • A year: Enterprise customers with custom pricing and terms.
  • 18 months: Selling through cloud marketplaces like AWS, GCP, and Azure.

Custom billing solutions often accumulate tech debt, making them hard to scale or enhance cost-effectively over time.

Picking the right billing vendor

We’ll explore this in detail in part two, but here’s a quick overview of what to evaluate:

  • Adaptability: Ensure the system can scale with your evolving business so you avoid costly rebuilds down the road.
  • Go-to-market alignment: Your billing should support your sales strategy, enabling smooth expansion into new markets and customer segments.
  • Proven track record: Choose a billing system proven by your industry leaders to reduce risk and handle real-world complexities effectively.
  • Pricing management: Simplify pricing changes to minimize cross-team coordination effort and maintain agility as your business grows.
  • API integration: Strong APIs streamline workflows, save resources, and scale with your needs.
  • Implementation expertise: Partner with experienced vendors who can accelerate deployment and reduce risks without straining your team.
  • Reliability and performance: Rely on a vendor with a demonstrated history of handling growth, accuracy, and regulatory requirements confidently.

Conclusion: Why billing matters

As your business scales, billing evolves from a back-office task to a critical growth enabler. A scalable, adaptable system saves time, reduces tech debt, and connects key functions like product, finance, and sales. The wrong system slows you down; the right one powers growth.

Coming up next: In part two, we’ll cover how to evaluate billing vendors to meet your current and future needs.

About the author

David is currently a Principal Architect at Metronome. He has over 15 years of experience specializing in Quote-to-Cash systems design and development. David has worked across a broad range of industries, including SaaS, FinTech, Media, and Telecom. He has led successful billing and Q2C transformation programs at clients such as Confluent, SolarWinds, Microsoft (GitHub), Paycor, Visa, MasterCard, AT&T Wireless, Verizon, and more.

Company Industry Outcome-Based Pricing Model Key Metrics for Pricing Notable Features
Salesforce (Agentforce) CRM / AI Customer Service

$2 per conversation handled by Agentforce (AI agent)

A conversation is defined as when a customer sends at least one message or selects at least one menu option or choice other than the End Chat button within a 24-hour period.

Number of support conversations handled by the AI agent

First major CRM to adopt a "semi"outcome-based pricing for AI; aligns cost with actual support volumes (clear ROI)

Addresses inefficiencies of idle licenses by charging only when value (a handled conversation) is delivered

Intercom (Fin AI) Customer Support Software

$0.99 per successful resolution by "Fin" AI chatbot - clients pay only when the bot successfully resolves a customer query

Fees accrue based on AI-solved issues

Count of support conversations resolved by the AI agent

Early adopter of AI outcome-based pricing in 2023

Lowers adoption risk by charging for resolved queries instead of a flat rate; combines usage- and value-based pricing to tie cost directly to support effectiveness.

Zendesk (AI Answer Bot) Customer Support

Per successful AI chatbot-handled resolution

No charge if the bot fails and a human must step in

Number of customer issues or tickets auto-resolved by the bot

Aimed at cost-conscious customers wary of paying for unproven AI

Aligns price with realized automation benefit; part of a broader industry shift from per-agent pricing to value-delivered pricing in support

Chargeflow Fintech (Chargeback Management)

Charges a fraction of recovered funds on chargebacks

Example: ~25% fee per successful chargeback recovery

No fees for chargebacks lost

Alert service charges $39 per prevented chargeback

Value/count of chargebacks recovered (disputes won) and chargebacks prevented (for prevention alerts)

4× ROI guarantee on recoveries

No contracts or monthly fees

Revenue comes only from successful outcomes; pricing directly aligns with merchant's regained revenue, meaning Chargeflow only profits when the client does (win-win model)

Riskified*

(source: https://www.chargeflow.io/blog/riskified-vs-forter)

E-commerce Fraud Prevention

remain fraud-free

PAYGO, 0.4% per transaction

Only charges for transactions it approves that

Number or value of approved transactions without fraud (i.e. successfully processed legitimate sales).

Provider shares financial risk of fraud with clients; pricing tied to outcome of increased safe sales

Incentivizes vendor to maintain high accuracy (they only profit when fraud is stopped)

Foster continuous improvement in their fraud-detection algorithms

Subscribe

Keep up with the latest in
pricing and packaging