Usage-Based Billing

What Is A Billing Mediation System & Why Does It Matter?

September 15, 2020

One of the most important steps in the billing process is mediation. Often overlooked, mediation plays a huge role in how to accelerate revenue growth with innovative usage-based pricing. A billing mediation system collects data from a product’s usage and then converts and transforms the data before routing to be rated and billed.

A strong mediation solution enables companies to deploy innovative charging models (such as consumption-based pricing) that attract and retain customers by giving them the flexibility to pay for what they use. A robust mediation solution helps to differentiate product and service providers. This enables them to move beyond offering simple subscriptions to accelerate revenue growth.

Early Billing Mediation Systems

The need for billing mediation systems began with the telecom industry. Telephone companies originally charged a flat rate for services, but as technology began to change, these companies quickly realized that flat-rate pricing wasn’t sustainable. It was vital for them to track long-distance calling, and then turn that call information or usage data into billing data.

The need to collect call data records and convert them into a format that can be billed to customers became paramount. With a mediation engine, telecom companies could collect call data from various network elements and transform that data into standard billing objects and route for billing, invoicing and reporting.

The conversion of this data through mediation provides straightforward invoicing and revenue statements for the company. Mediation allows data to be normalized so that the company can accurately bill customers.

Realizing the Benefits of Billing Mediation

With the growth of Anything-as-a-Service (XaaS) and the Internet of Things (IoT), more and more companies are able to offer consumption-based packages to their customers because they have adopted mediation to their billing practices. You can see very complex, usage-based packaging examples in airports, software companies, utilities, as well as media companies. In fact, modern-day pricing models come in all shapes and sizes.

A good example is Amazon. They offer per-second billing for access to their Amazon Web Services (AWS). AWS is an on-demand cloud computing solution that charges based on a metered, pay-as-you-go basis. Another example comes from the digital marketing services such as Hubspot, they charge clients based on how many emails they send per month or how many subscribers they carry.

In the case of Voice Over IP (VoIP), data can include call duration, the transfer of megabytes of data, pricing for video usage, or counting the amount of text-based messaging from short message service (SMS) or multimedia messaging service (MMS). With all this data available, a company can price dynamically for different types of services, such as charging a higher monthly rate based on the size of video storage used by a customer or based on the number of text messages sent.

And with the prevalence of IoT, businesses are equipping everyday objects with internet and data accessible devices that can provide new value to their customers while turning that usage into revenue Rather than force a rigid payment model on an entire customer base, usage-based pricing facilitates a more personalized experience for each customer.

How A Billing Mediation System Increases Your Bottom Line

Any companies with usage-based products will require a billing mediation system that is effective and efficient. And when combining mediation with billing companies can easily offer more pricing and packaging options. With built-in mediation companies can automatically collect and convert usage data and automate the rating and pricing process, providing an intuitive means for generating more revenue and improving your bottom line.

Creative Pricing Models
With usage-based pricing, your company can move beyond simple subscriptions and charge customers for how much of the service is used. These creative pricing approaches widen your customer base. For example, a small startup using the AWS on-demand cloud computing service may select the lowest pricing tier to fit its needs. However, as the business scales and grows and more space is required, they can easily switch to a higher-priced tier that provides more access.

Likewise, usage-based pricing provides a business the agility to anticipate the needs of customers. By metering usage, a business can track and analyze product or service usage data and send promotions in real-time to respond to the immediate needs of the customer.

Rules-based Workflow Management
A key to optimizing your creative pricing models is with automation. With rules-based workflow you can automate the process of normalizing data, filtering out unnecessary usage records, and routing information to the appropriate customer accounts, all with predefined rules that apply logic to the process.

These same rules allow the rates to be accurately applied to usage events automatically, streamlining billing and invoicing. Before mediation, these processes were manual, leading to errors in billing. Now, billing systems are programmed with many rules, allowing customization to fit the specific needs of different customers. This flexibility can only be supported with sophisticated systems in place to automate usage-based pricing while also supporting growth and scale.

Real-Time Updates
Robust billing systems can also perform mediation in real-time for high volumes of usage data, a critical need for fast-growing organizations. Other, rigid billing systems can only perform weekly or monthly usage updates, which can leave customers guessing at their current usage.

With real-time mediation, you can proactively identify errors, prevent inaccurate invoicing, notify customers when usage thresholds are reached, and more, with up-to-the-second usage information.

BillingPlatform’s Mediation Approach

BillingPlatform’s cloud-based solution includes built-in mediation giving you the flexibility to bill and rate on any aspect of your products – clicks, API calls, downloads, seats, text messages, minutes, bandwidth, etc. Rather than manually performing calculations or having to purchase a third-party application, our enterprise customers automate data collection, transformation and routing to capitalize on any metered offering.

We know the value that real-time mediation can provide to a business, so we make it easy for our customers to collect usage data from multiple sources. While other billing vendors require that their customers add on a separate mediation application, we’ve made it native to our platform. Our billing mediation system can be customized for any usage-based pricing model. With our simple usage mapping interface, you can set custom rules that correspond to your unique pricing strategy and quickly deploy creative models with ease.

With BillingPlatform, you can automate mediation for any industry in any part of the world. As you scale, your mediation capability will too. Should your competitors deploy potentially disruptive pricing models, you can quickly respond and update your mediation processes as needed. With these pricing options, you can increase revenue, attract new customers and maintain existing customers, all from a single solution.


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Solution Overview | BillingMediation
Blog | Usage-based Pricing Offers Higher Revenue than Pure Subscriptions

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