Unless your startup is supported entirely by advertising, you need (or will eventually need) a billing system: a way to securely and efficiently accept payment from your customers. The only question is: build it or buy it? Unfortunately, there is no “one size fits all” answer to this question - the choice is entirely dependent on your own unique circumstances. If you aren’t sure which way to go, assess where your startup stands on the following issues:

Time Sensitivity

The first factor affecting whether to build or buy a billing system is time sensitivity. Do you need a billing system immediately? How about in the next 30-60 days? If so, it probably makes more sense to buy, as your short time horizon will not be tolerant of mistakes or project setbacks. A few extra weeks of development time (which is quite common in software development) could be ruinous to your business if you need a billing system right away.

The less urgency there is, the more it potentially makes sense to build instead of buy. Delays and obstacles in the development process (though certainly frustrating) will not drag your business under.

Unique Sales Process

Some companies create an in-house billing system to save money. Others, meanwhile, have special requirements that ready-made tools won’t support. Maybe it’s an extra form field, maybe it’s a tie-in with your company’s proprietary database, maybe it’s a high level of encryption - it could be anything. If a feature you want or need is not available in existing billing services, building your own becomes attractive, if not an outright necessity.

On the other hand, if another company has already gone through the trouble of creating a billing system that does exactly what you need it to, why re-invent the wheel by creating a brand new one from scratch?

At Chargify, we are pretty active on Twitter and see a lot of tweets looking for recommendations on which recurring billing application to go with.  Whether it’s about Chargify, or our competitors, people turn to the Twitterverse for advice on which application is best for their business.

Back when we started, Chargify was one of a few recurring billing applications.  Now-a-days there are quite a few to choose from, so how do you decide if Chargify is right for you? While you wait for the Twitterverse to respond to your tweet, you could check out some of our competitor pages:

• Chargify vs. Google Checkout
• Chargify vs. PayPal
• Chargify vs. Aria
• Chargify vs. Zuora
• Chargify vs. FreshBooks
• Chargify vs. Authorize.net

Or, you could just ask us! We are always happy to answer any questions you may have about us or how we compare to other billing applications out there.  Tweet at us, write on our Facebook wall, or leave a comment here!

It’s no surprise technology has changed over the past 10 years. Heck, it’s no surprise that technology has changed over the past two years!  There’s always something new and exciting replacing something we previously thought was new and exciting. So how has recurring billing changed?

Obviously the technology has changed (the recent influx of billing apps lately should prove that) but more so, the things we now bill for are much different. Let’s take a look at the past ten years to see just how things have changed:

Music

2001: Home Delivery Clubs

Anyone who grew up in the 90’s remembers these. You got 20 free CDs and then had to order at least one per month to stay in the club. While 2001 was surely the end of the home-delivery music subscription service, it was fun while it lasted.

2011: Internet Radio

Pandora, Grooveshark, Last.fm. These internet radio apps are the new music subscription services. Listen to whatever you want on your computer or your Smartphone for minimal cost or even for free!

Newspapers

2001:  The Newspaper on your Doorstep

You wake up, walk out to the paperbox, go back inside, have a cup of coffee and see what happened in the world. Not only did you have a physical bill to pay, you also had a paperboy to pay it to. While the physical newspaper isn’t completely dead, it’s certainly not as popular as it once was.

Today’s entrepreneurs face an important choice: to bill customers online or offline? To the brand new start up focused solely on product development, it may seem like a waste of time to think about billing at all just yet. However, as all entrepreneurs discover, it’s ultimately all about getting customers to pay you. We believe a wisely implemented online billing strategy will make this process easier for the following reasons:

Simple Setup

A common objection entrepreneurs have to online billing is that they believe it’s a huge hassle. This idea stems from the brick-and-mortar world, where a new convenience store or restaurant has to buy expensive machinery to process credit card orders. Knowing this, many entrepreneurs assume the same types of headaches are involved in online billing and refuse to look into it any further.

But truth is, in 2011, online billing is a breeze. Provided you have a merchant account and a payment gateway, services like Chargify can literally have you up and running with the ability to bill customers online in one day. The entire setup process is five steps long and can be completed by anyone with a modicum of business and technology skills.

In 2010, any company that receives a substantial number of credit card orders faces a grave threat: chargebacks. For those unaware, a chargeback is when a customer reverses an order they made from you and then gets their money back. Originally, chargebacks were created to protect consumers from unscrupulous merchants. Rather than endlessly arguing about unauthorized charges, customers could simply initiate the chargeback and be done with it.

Unfortunately, the ease of initiating a chargeback has created a class of unscrupulous consumers. Increasingly, consumers who have not been wronged in any demonstrable way are using chargebacks heedlessly. Other chargebacks arise from innocent clerical errors. All chargebacks, no matter the source, have the potential to wreak havoc on the cash flow of card-accepting businesses. Below, we’ll explore several ways that companies can protect themselves from chargebacks.

Know Each “Reason Code”

While chargebacks are designed to be easy and automatic for consumers, they cannot simply be executed without reason. Rather, there are four separate “reason codes”, one of which customers must state to their credit card issuer and which they, in turn, are required to provide the merchant.

Chargify is officially entering into public beta today, and we couldn’t be more excited!

Having originally launched at the TechCrunch50 Conference (http://techcrunch50.com) in San Francisco, CA on September 14th, 2009, we’ve been steadily growing our beta list this past 6 months while making numerous improvements and adding new features.

Some highlights/ improvements include:

• Through today, Chargify has accepted over 2000+ companies into our beta and we’ll be letting any that are pending in over the coming days – allowing any and all companies who sign up going forward into the public beta

The team here at Chargify has been hard at work on a bunch of new features. We just flipped the switch on two of these: Prorated Upgrades/Downgrades and Metered Components.

Metered Components

Metered Components give Sellers the ability to charge for a product on a per-usage basis. For example, a cell phone provider could charge $1 for each text message that was sent, or a Web Hosting company could charge for storage by the number of gigabytes used. Creating metered components is quick and easy. Simply give the component a name, specify the unit used to measure it, and give it a per unit price. Usage of metered components is tallied throughout the billing cycle and the charge is seamlessly integrated as a line item on the Customer’s next invoice.

For more information on how to create Metered Components, and how to record usage via the API, see:

Plan on attending SWSW (South by SouthWest) 2010 in Austin, TX from March 12th - 16th? Or are you already at SXSW enjoying Austin? If so, you are in luck because the Chargify team is there too and will be through the 16th.

Curious to meet the team behind the company? Or maybe you just want to get your hands on some Chargify schwag?

Either way keep an eye out for us. if you need a reference as to who we are check out our About Us page and put a face with the names.

We have a few surprises up our sleeves as well so be sure to keep tabs on us on Twitter @chargify.

This is a guest-post from Sean Harper, co-founder of TransFS.  He is a zealot about making sure business owners get a fair shake from their financial services providers.

1. Know what your requirements are and find a processor that has lots of experience with those requirements.
The worst credit card processing outcomes occur when the business owner doesn’t screen the processors that don’t have experience fulfilling that requirement. Fortunately, there are lots of processors that are experienced dealing with SaaS and web services companies and providing the gateway (auth.net or otherwise) that they need.

Welcome to the Bullring, the blog dedicated entirely to empowering entrepreneurs and developers to start and run successful businesses based on recurring revenue models. 

Let’s lay it out there. Recurring billing is a pain in the ass. Credit cards get declined for a million different reasons, you have to deal with upgrades/downgrades, proration, refunds, credits, customer communication, fraudulent transactions, and the list goes on. It’s no small task to implement a system that handles all of the potential pitfalls of billing on a recurring basis.

Acronyms can be corny, right ?

Sorry that this post is so long! It covers 3 years of experience, as well as my recent journey with some great folks to help provide a solution to a problem that’s been affecting entrepreneurs, web startups, and SMBs over the past few years.

The businesses I’ve been involved in since 2006 are all about billing the same customer repeatedly. The product never “ships”. Instead, the product is something that flows continuously from us to our customer, and money flows back to us.

Consequently, billing customers involves more than it used to.

BAM!

The activities that surround recurring billing touch many parts of a business. These activities, added together, can be seen as a business unit, just like Marketing or Human Resources. As a business unit, BAM can include all of these things: