It starts with a simple use case. You want to charge customers every month for getting access to your SaaS. Customers must be able to pick a plan, upgrade, update their card info, download invoices, and cancel the subscription. For a team with technical resources and no prior experience with billing and payments, this use case may seem like a fun project to build internally. For veteran founders and product leads, it is the tip of a giant iceberg of SaaS billing.
In this guide, we'll discuss the unforeseen risks of building an in-house SaaS billing integration.
Build vs. buy debatable components
SaaS billing is a complex, multi-layered beast. To better understand the debate on building versus buying a billing solution, it's best to look at each SaaS billing component.
The core layers, including payments, subscription billing, and analytics, have evolved solutions that make the buy argument an easy win. Product teams don't reinvent tools like Stripe Payments and Stripe Billing for handling the logistics of payments and subscriptions. Analytical tools such as ChartMogul make it very easy to plug and play with data.
The component that is usually up for debate by the product teams is the SaaS billing user interface and experience (UI/UX). Billing UI/UX consists of all the customer-facing billing logic the end-user interacts with inside your app. Think of it as the front-end of your billing. Unlike the rest, the billing UI component has fewer solutions, developers are less solution-aware, and it looks deceivingly simpler to build at first glance.
When SaaS companies are deciding on building vs. buying the billing UI, they focus most of their energy on finding the risks rather than the values they get from buying. Will Larson, CTO of Calm, explains this well in his Build versus buy masterpiece:
"In the build versus buy decision, most companies put the majority of their energy into identifying risk, which has its place, but often culminates in a robust not invented here culture that robs the core business of attention. To avoid that fate, it's important to spend at least as much time on the value that comes from buy decisions."
Risks & values
The billing user interface is a very integral part of your billing flow. It is the bridge between billing and the customer acquisition strategy. In a survey of 136 SMB SaaS companies by Billflow, the top three factors companies looked for in a new billing UI solution were ease of set up, customizability, and reliability.
Rightfully so, development teams seek customizability, compatibility, and control over any internal or external tool they integrate with. Suppose there is a well-known solution that checks these boxes. In that case, the decision becomes simple, but when the status quo is building an in-house solution, it is the product leader's job to seek options to save time and resources. In the end, there should be a very compelling reason to build versus buying. CFOdive sums it well:
"A system that grows as your services and pricing become more complex will be far costlier and take longer than you expect."
Luckily, we've done our research. Here are the value comparisons of buying a SaaS billing UI versus building one in-house.
Initial implementation time
Building an in-house billing integration requires a learning curve for the development team. We've spoken to over 500 SMB SaaS startups. The time it takes to implement billing into an app varies primarily based on the pricing model and the user acquisition strategy (freemium, free trial, etc.). Businesses in this segment spend an average of eight weeks to architect, implement, and test their initial SaaS billing integration. Calculating the in-house resource consumption, SaaS startups spend an average of $25,000 on building their initial version of SaaS billing. Buying an out-of-the-box solution can reduce the timeline to less than a week with a fraction of the cost!
On-going maintenance & support
Maintaining an in-house billing integration is time-consuming. There are unaccounted factors that will require development work as you scale your business and pricing model. Here are some common ones:
- You may need to update your billing flow. For example, moving from flat subscriptions to the usage-based model, introducing add-ons to upsell features, adding churn surveys to increase retention, or moving from free trials to freemium.
- Features such as language support, currency localization, taxes & VATs, and payment method support will inevitably come up as you scale.
- You may want to update pricing or run promotional experiments.
- You may need to change billing-related marketing copy to improve conversion.
- Global policies could change. For example, EU requiring SCA.
Buying a solution will give your developers instant access to billing features, updates, and, most importantly, billing experts who can save your development team a ton of time. Tools like Billflow work on top of Stripe Billing with Stripe's best practices for SaaS integration.
Time is precious, and focus is nontrivial. Focusing on the core product and not being distracted by building and maintaining internal tools is essential. Billing spans to more than just the development team. Finance and marketing teams often ask for aesthetic or pricing changes that will require billing changes. With an in-house integration, a simple verbiage change will require developers' time. Reducing the building and maintenance of non-product-related code will significantly impact the hours your development team spends on the product itself.
Use low-code/no-code tools to boost your speed
SaaS companies don't build an internal video conferencing tool, email, docs system, or messaging tool. As long as the tool is not part of the core product and vision, it is much more cost-effective to pay for it rather than building your own. The same goes for billing. Don't let the recurring cost and developer's love for building internal tools hold you back from focusing on your vision. If the price is higher than your budget, communicate transparently with the vendors, new markets are more forgiving with cost as they need adaption and feedback in the early days.
Nowadays, there is a range of low-code and no-code tools available to reduce the friction of building a scalable SaaS product. They maintain the code, so your developers don't have to. A great example of a no-code/low-code billing solution is Stripe Billing and Billflow no-code billing toolkit.
If you are looking for a Stripe Billing expert advice on your billing architecture, you can schedule a 30-minute call with me here.