How to optimize revenue for your service business with the help of your billing system?
In today’s economy, the best-valued companies typically are service organizations or provide a large part of their offering in services. We have seen the rise of the subscription economy, servitization, and the X-as-a-Service, and of course, the digital services industries, including the well-known marketplaces.
What makes services exciting is the lasting nature of the customer relationship in service business models. Done well, services provide a higher margin for companies, provided you have a clear eye on the cost of service delivery. In this blog, we look at the trends and aspects of Service Monetization.
As monetization is in essence in the process of monetizing a client relationship, in services this means that the client is part of the process and the final judge of the service value. A great service strikes a balance between the client’s needs, the service delivery model, and the desired outcome. More flexible service models will allow the client to loosely bundle the services to meet his needs, provided we can coherently deliver them and also bill them coherently. The bill should reflect the value provided to ensure a great service experience.
How do we price our services, provided that services are perishable (We cannot make up for a hotel room that was left empty yesterday), and intangible (if we do not register the service we provided, we will not be able to bill them to the client)?
As we develop new service business models, we will also have to have a good look at our service operations. Do we capture all costs? Are we taking all billing items into our pricing model?
Often the key to optimizing service monetization lies in the billing system. An agile billing system tells us what we have been able to charge for the services provided, what we left on the table, and most importantly, our delivered and projected margin for our service items.
As a service business is essentially a future delivery against a set contract, it is necessary to keep track of your in, and outgoing cashflows in light of the agreements made with your clients. After all, this is where you monetize your service business model.
The more complex your services, the more you need to keep that in mind. People often underestimate the huge impact more simple SaaS or subscription pricing decisions will have on your business model.
A traditional system might be too rigid to provide the oversight needed and cater to the flexibility that makes your business model so attractive.
An agile billing solution will always put your contracts in the spotlight. Your service contracts can be the result of negotiations, and even your generic pricing might need to be adjusted to reflect changing market situations. So, your system needs to be as flexible as possible to fit all your contracts in. Once your contract is put in the system, executing on it is easy.
Just think of the endless monetization possibilities you have if you can capture all your contracts in an agile system. Only then the promise of a service business can be fully fulfilled.
If you want to capture on new service business opportunities and you feel your future billing needs will outgrow your current billing solution, or if you are just curious to learn how Good Sign does things differently, feel free to take us to the test! We will gladly take on your challenge and prove to you it can be done, and that the new world lies beyond your company boundaries.
We help our customers solve existing pain points in monetizing service contracts and managing subscriptions and pay-per-use services. We help companies freely grow scalable services.
Feel free to contact us and let’s have a chat on how we can support your company.
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