Trial Period Ignored when Billing Monthly?
I've set up a Pricing plan to bill $10 monthly, with a 7 day trial and no setup charge. When I subscribe a new customer to this plan, I see that the CG UI shows a next billing date of 30 days from the date of subscription. I had expected to see a billing date of 7 days into the future. Have I set up something wrong?
Discussions are closed to public comments.
If you need help with Cheddar please
start a new discussion.
Keyboard shortcuts
Generic
| ? | Show this help |
|---|---|
| ESC | Blurs the current field |
Comment Form
| r | Focus the comment reply box |
|---|---|
| ^ + ↩ | Submit the comment |
You can use Command ⌘ instead of Control ^ on Mac
1 Posted by jbritten on 09 Nov, 2009 03:31 PM
A correction - when a plan is set to bill monthly with a 7 day trial, the first billing date is set to 1 month AND 7 days into the future (not 30 days into the future as I had first stated). I would expect 7 days into the future.
Support Staff 2 Posted by Marc Guyer on 09 Nov, 2009 03:48 PM
Sorry for the delay in responding. We were just trying to replicate and couldn't. You're latest message confirms that it's not replicable.
The behavior you're seeing is intended. CG is technically an arrears billing system since it is not only a fixed pricing plan billing system but also one that bills based on usage. So, CG waits until the end of the first period to bill for the period. This is so that usage charges can be calculated. This allows for incredible flexibility in pricing strategies.
By default, a pricing plan includes a free trial for the length of the first billing period. 'Trial Days' is used to increase the trial period. To start billing earlier, you might find this interesting. We are also considering a feature that would allow for specifying when the first regular invoice will bill.
3 Posted by jbritten on 09 Nov, 2009 08:08 PM
Hmm, this behaviour strikes me as a bit odd.
I would have never guessed that Trial Days would really mean "extra days added to first billing period" and that CG requires all clients' plans to come with an initial Trial Period equal to their billing period. This is quite an assumption.
So, what if my app doesn't have a free trial? I need a recurring billing SaaS solution just like CG, but I'd like subscribing customers to pay their first month immediately when they sign up. CG can't do this?
Support Staff 4 Posted by Marc Guyer on 09 Nov, 2009 08:41 PM
Yes, you currently can use the setup fee to charge for the first month up front.
The reason CG behaves this way is because billing in arrears makes everything easier. If you bill in advance, you have to defer revenue on your books. If you bill in advance, you haven't earned the revenue yet. It sits on your books as a liability until you've earned it.
If you use a "setup fee" to bill up front, you can book that revenue as soon as the setup is complete, presumably right away.
If you bill for a month of service in advance, you'll often have customers clamoring for a refund the day after they're billed. If you're billing in arrears, there is no refund. If you don't bill them for the fraction of a month after their last bill, then they get that time for free. A negative becomes a positive. You don't get the fraction of a month of revenue but you've eliminated contention and that amount of revenue is insignificant. It's a win-win. Less hassle, more good will.
Anyway, enough ranting. Those are some of the reasons why CG works the way it does. However, CG will evolve over time and will likely include the ability to bill a standard invoice in advance among other things.
5 Posted by jbritten on 09 Nov, 2009 09:30 PM
Hey Marc -
Thanks for the great response. This makes a lot of sense -- especially from an accounting perspective.
I hadn't thought of using the setup charge as a first month's bill. This is a fine work-around.
Cheers,
Justin
Marc Guyer closed this discussion on 10 Nov, 2009 07:30 PM.