Subscriptions

A subscription sells access on a term: a seat in your customer portal, a monitoring service, a licence, a leased measuring device with a monthly fee. Money moves on a cycle whether or not anything ships, and that is what makes it different from every other pattern in this area.

The plan model

A plan is the sellable thing. A subscription is one customer's instance of it.

Keep plans few. Three plans that most customers fit is a product; twenty plans with one customer each is a spreadsheet, and every one of them has to be maintained, priced and explained. Customer-specific commercial terms belong in contract prices, not in a private plan.

Billing cycle is not delivery cycle

This is the distinction people collapse, and collapsing it is what produces invoices for goods that never arrived.

The last row is the tempting one, and it is usually a standing order wearing a subscription costume. Ask one question: if the delivery fails, should the invoice still go out? If the answer is no, it is a standing order and it belongs on the other mechanism. If the answer is yes — because the customer is paying for availability, not for goods — it is genuinely a subscription.

Term, renewal and notice

German B2B contracts renew. That is normal and expected, and it is also the part with legal edges.

• Term is the minimum commitment. A cancellation inside it takes effect at the end of the term, not immediately.
• Notice period (Kündigungsfrist) is how far before the end a cancellation must arrive. Three months to term end is common; a notice arriving on day 275 of a 365-day term is late, and the subscription renews.
• Renewal extends by another term. Whether that is another twelve months or a rolling month is a decision worth making per plan — rolling renewal is easier to defend and easier to sell.

Set up a plan

1. Create the plan with a code, a name and a description the buyer will read in the storefront.
2. Set the term and the notice period. Both in the plan, both visible to the buyer before they subscribe.
3. Set the billing cycle, and the delivery cycle separately if anything ships.
4. Set the price. For a subscription, fixed for the term is almost always right: the plan fee is the agreement. Increases apply at renewal, announced with the renewal notice.
5. Set the renewal behaviour — auto-renew for a term, auto-renew rolling, or expire.
6. Decide the quantity dimension and whether a customer can change it mid-term. Seats usually can; devices usually cannot.
7. Attach the payment arrangement. In German B2B this is normally invoice on the customer's usual terms rather than a stored card — see Payment terms and Payment methods.
8. Publish it to the channels and markets where it should be sellable.

Mid-term changes

Three kinds, and they should not behave the same way.

Pro rata is the part to get right. A mid-cycle upgrade should produce a partial charge for the remainder of the current cycle plus the new full amount from the next one — not a full second charge, and not a free ride until the next invoice.

What to check

• Subscribe a test customer to the plan and confirm the first invoice is for the amount and period you expect.
• The renewal date and the notice deadline are both visible on the subscription, to you and to the customer.
• A plan with a delivery cycle produced the delivery — and a plan without one produced no order at all.
• The invoice reached the customer's accounting on their normal terms, with their purchase-order reference on it if they need one.

Next

• Manage subscriptions — renewals, changes, cancellations and failed payments.
• Standing orders — the right mechanism when what recurs is goods.