Monetization is a topic that is at the heart of every successful subscription-based business and worth discussing regardless of where we are in the calendar year. Before dusting off our crystal ball for a peak into agile monetization trends, let’s look at billing compared to monetization.
Billing vs. Monetization: What’s the Difference?
Virtually everyone is familiar with the term billing and understands its concept. The standard accounting definition of billing describes it as the process of generating invoices for customers on a recurring or one-time basis, depending on your business model.
Monetization on the other hand, as defined by Investopedia, is to convert something into money (cash). In practice, this means turning things into revenue-generation products, services, and activities. While monetization is closely related to billing, it has a much more encompassing role.
To summarize, billing is a business process that is centered on collecting money owed. Billing software automates many of these processes – from pricing and discounts/promotions through invoicing and taxation to collections and revenue recognition. And some best-in-class billing software systems can automate the entire quote-to-cash (Q2C) process. Monetization goes beyond billing to help organizations understand the drivers of customer value so they can successfully turn their expertise and value into revenue by upselling and cross selling, acquiring new customers, and reducing churn.
“There are so many ways to add value to people’s lives. But what’s also important is monetization. The key is to find that balance where your business is efficiently monetizing the value that it’s adding.”
― Hendrith Vanlon Smith Jr, CEO of Mayflower-Plymouth
Agile Monetization Trends are Increasing in Momentum
Introduced by MGI Research in 2015, agile monetization evolved from the concept of agile billing. Essentially, agile monetization refers to the ability to rapidly create and evolve new offerings through repetition, accelerating the speed that organizations can introduce new products.
Let’s look at the top five monetization trends.
1) Software-as-a-Service (SaaS)
Not a new trend, but the SaaS industry is growing at an accelerated pace. In 2015 the industry was worth $31.5 billion and by the end of the year it’s expected to be worth approximately $171.9 billion. It is believed that between 2021 and 2022, SaaS will see its largest annual growth rate thus far.
2) Usage-Based Billing
It’s hard to believe that just a few years ago usage-based recurring billing was only used by a handful of industries – namely telecommunications and utility companies. Today, this pricing scheme is being adopted by a wide variety of industries and for good reason. Companies that implement usage-based pricing perform better financially than their non-usage-based competitors. For this reason alone, is it any wonder that adoption of this pricing model is expected to increase from 27% in 2018 to 56% in 2022?
3) Cloud Migration
Regardless of your industry or pricing model, moving data and workloads to the cloud provides numerous benefits. Some of the key advantages include better accessibility and availability, more flexibility, improved scalability, greater security, better cost efficiency, and it can provide as much as 3.2 times the ROI than on-premise systems.
4) Configurable and Customizable Billing System
Are you using different systems to handle billing, charging, rating, mediation, invoicing, receivables, collections, and revenue recognition? A comprehensive revenue management platform simplifies billing’s complexities by supporting all your business requirements on a single enterprise solution. With a system that’s configurable and customizable your business users have the power to to quickly and easily innovate new offers using no-code point and click configurability.
5) Agile Monetization
Yes, agile monetization is also a trend, and you don’t want to be left behind when it comes to having the flexibility needed to keep up with our increasing pace of change. Agile monetization enables you to quickly offer sophisticated subscription-based pricing models, provide customers with more control over their spending, improve your ability to cross-sell and up-sell, reduce customer churn, quickly create new growth opportunities, increase revenue, and stay ahead of the competition. Want to dig a bit deeper into agile monetization? Check out The Definitive Guide to Modern Billing Models.
What do most of these trends have in common? The majority have a reliance on advancing technology. Additionally, each of these trends provide the ability to exceed customer expectations, grow revenue, and gain competitive advantage. However, to reach these goals, traditional billing systems won’t do the trick. They simply can’t provide the flexibility needed to handle today’s increasing sophistication.
There is a solution – an Agile Monetization Platform (AMP). An AMP encompasses CPQ, billing, CRM, order management, mediation, collections, revenue recognition, and more. The market for AMP software represents a new, large (and expanding) opportunity. In fact, MGI Research expects AMP spending to rise from $19 billion in 2018 to over $55 billion this year.
Does Your Business Need an Agile Monetization Platform?
If you’re not sure if your business is ready for an agile monetization platform, take a look at the following questions.
- Are you missing revenue-generating opportunities because you can’t get new offers and bundles to market fast enough?
- Do pricing model changes require billing system expertise?
- Is revenue leakage, invoice errors, and customer churn increasing?
- Does your financial team spend a good portion of their time handling invoice disputes and re-sending corrected invoices?
- Do your invoices lack transparency and clarity?
- Are you encountering hurdles when trying to expand internationally?
- Is staying compliant with regulatory standards causing additional work and non-compliance?
- Are you lacking a single product catalog?
- Does your financial team rely on excel spreadsheets and manual effort?
If you answered yes to even one of these questions, it may be time to take a closer look at an AMP.
Get Future-Ready With Agile Monetization
Rising customer expectations, personalization, increasing regulations, accelerating demand for new and creative pricing models, and intensifying competition highlight challenges that traditional billing solutions and processes can’t handle. In the face of growing complexities, businesses require a way to meet today’s requirements, while setting themselves up for whatever tomorrow may bring.
Rapid product innovation and revenue optimization are fast becoming table stakes for growth and profitability. To ensure long-term success, you need the ability to respond to changing market trends in real-time. This is only possible with an agile, cloud-based system that provides everything you need on a single AMP platform. With BillingPlatform you’re able to easily launch new offerings and pricing models, exceed customer expectations, improve operational efficiency, and grow your business across borders. Let us show you more today.