Indian startup simplifies billing for SMBs

Summary:Chennai-based startup, Chargebee, offers software tools targeted at enterprises and SMBs to manage recurring subscription payments. Co-founder and CEO Krish Subramanian gives the low-down.

A lot of businesses today offer services that require customers to sign up online, and many are both startups as well as karge enterprises. As the customer base grows for these enterprises, managing their billing becomes a tougher task.

With this increasing fast, it becomes a challenge for businesses to manage these signups on their own especially if the startup or enterprise has a global offering or service. Keeping track of recurring bills manually is certainly not an option. Businesses should focus on providing their product or service to customers and can save money and time if they're able to resolve the hassle that comes with managing these online subscriptions. That's where Chargebee comes in. 

The Chennai-based startup is your off-the-shelf plug-and-play billing tool that's delivered on the cloud. You can connect with ChargeBee via API (application programming interface) if you are technically inclined or use PCI-compliant hosted payment pages to collect payments, and go live in a matter of minutes.

ChargeBee says it provides a robust and flexible billing system to enable your sales and marketing team to run special promotions, as well as the right tools for your support team to bill accurately and respond faster for billing queries. And it helps collect payments online from payment gateway of your choice.

I had a word with Krish Subramanian, co-founder and CEO of Chargebee, over an e-mail interview where he gave an idea of what his product does and how it helps various startups and enterprises. 

Q: How did the idea for Chargebee come about?
Krish: Zoho was one of the early companies that saw the opportunity in cloud and transformed itself from a Network Management Service provider (then called Adventnet) to a cloud-based services provider. That is a well documented story.  

KP Saravanan was one of the early employees of Adventnet, and Rajaraman Santhanam and T. Thiyagarajan had been with Zoho for over 10 years. So the opportunity was very clear to us. Rajaraman and I were classmates during engineering days and we have always wanted a startup of on our own. So that is how we all came together and decided to start ChargeBee.

We could see rapid SaaS (software-as-a-service) adoption as an area which requires subscription, besides the fact that the world is moving toward a subscription economy.

Chargebee Team
The Chargebee founders

 Sample of the subscription economy:

  • Online TV, digital magazine, retail subscriptions, health center, school fees--all of them have an element of recurring payments about them.
  • Today you no longer need to buy a BMW or Audi to use it. You can lease it. The pay-as-you-go model is not new to car rental, real estate rental, media or insurance industries.
  • Adobe , one of the big players in traditional installable software is soon moving away from the one-time licensing model and taking the leap toward subscriptions.
  • With large-scale adoption of SaaS and supporting services coming up online, we see this as a huge opportunity to build a platform that serves the SMB segment in providing billing services. The application of online subscription billing as a model is tremendous across multiple verticals, as the business model by itself is quite nascent. It has a long way to mature.

What business problems were you looking to solve through Chargebee?
If you are building an online product or service, there is a core value proposition that your customers try out before they decide to buy. The quality of the product and, more importantly, the service itself is what sets you apart from your competitors. You need to continuously iterate and improve on the product while customers continue to use it on a daily basis. This is like changing the engine of your car while it's running.

To help you deliver that service phenomenally well, you also need some great supporting applications to enable you do it well. For example, you'll need CRM, analytics, helpdesk, and accounting systems to automate your operational pieces and gain insights. We believe ChargeBee is a service in this category that will continue to enable cloud applications to serve their customers way better by being a subscription-based infrastructure provider.

Since three of the founding team members are from Zoho, we understand which components get built over and over again, and subscription management is a component that needs to be built for every service that is launched--just like login management. We believe we are emerging as a billing infrastructure player for online businesses to provide customer lifecycle management and recurring billing.

12-Dec-2012_ChargeBee_Subs

When you started out, were there startups in the market offering similar services?
Zuora is the biggest player in the subscription billing space serving enterprise customers. Other players addressing the SMB segment are Chargify and Recurly, specializing in recurring payments.

Interestingly we joined hands with our competitor Spreedly, which is pivoting to a slightly different model, to provide support for additional payment gateways and the external vault for storing the credit card data. Times of India's BoxTV.com is one of our first customers under this partnership. 

What kind of pricing do you offer customers. Is this customized?
Our pricing model is based on the number of invoices generated and not as a percentage of the transaction amount, unlike what our competitors offer. This ensures we make money only when our customer makes money. We offer three price-points: Silver plan at US$49 per month for 200 invoices; Gold at $149 per month for 750 invoices; and Platinum $249 per month for 2,000 invoices. Rates for additional invoices vary as per plan.

The service is free until our clients hit 10 invoices per month. And of course we offer custom pricing for customers with higher volume.

This is an interesting point that most subscription businesses need to think about--it is essential to experiment with pricing until you figure out your ideal price-points. However, you also need to ensure clients you are on firm ground. By this, I mean you should always "grandfather-in" the pricing for existing customers even while introducing new pricing for new customers. This is absolutely non-negotiable or you may break the trust with your customer base.

So, at ChargeBee, we assure minimum guarantee of two years grandfather clause in our prices. We also make pricing experimentation a breeze for our own customers. Grandfather-in of prices is the default behavior for even those businesses that use ChargeBee for their payments.

How many transactions does your company now support? Can you provide some stats?
We are doing over 5,000 transactions a month with over 100 customers which have integrated with us. We're growing at 25 percent month-on-month in terms of the number of transactions. There are close to 50 customers that have live transactions delivered via our system right now.

What are the biggest online billing problems your customers face which you want to address?
In SaaS, the pricing model is either based on number of transactions, licenses, or number of users--similar to how it's done for CRM and helpdesk systems. And you expect the customer's business to grow and pay higher amounts while using the service. This brings interesting opportunities and challenges.

Your product not only needs to do its core functions well, you also need a set of tools integrated with the application to manage them well. It requires a customer lifecycle management system and recurring billing tool that helps track, retain, manage, and nurture users that are signing up to become paid customers.

Because you need to collect repeat monthly payments, you need the ability to do frictionless payments and collect these automatically. This is non-negotiable as any amount of friction will lead to customer churn. Typically payment gateways with recurring capability are not built for these use cases.

And you need to allow thousands of customers to "try" the service before a small percentage of them become paid users. A low-touch sales model is required to hand-hold customer, convince them to use product, and explore it themselves while staying engaged through the trial period. Businesses that figure ways to build engagement are super successful.

This is definitely one area where Chargebee helps online businesses.

Who are your primary customers? Can you share some insights on the demographics?
Chargebee caters primarily to SMB customers in the United States, Western Europe, and Asia-Pacific--primiarly Singapore and the Australia and New Zealand regions.

We provide verticalized products for SaaS, subscription commerce, and digital media services which are mostly premium newsletter services. We make invoice generation, payments receivables run like clockwork besides providing value-added services like conversion analytics, transactional e-mail system, and integrations with CRM and accounting softwares.

What's the future of subscription billing like for India? 
ChargeBee's primary customer base is outside India. We work with over 30 payment gateways like Braintree, Stripe, and Authorize.net. That said, we support 2Checkout as the payment gateway for Indian businesses that have a global customer base. 

As you may be aware, recurring billing is still a challenge for Indian businesses due to the RBI (Reserve Bank of India) regulation, particularly if you are selling within India. We support 2checkout.com which is a PayPal alternative for Indian businesses that sell globally.

What major challenges do you face as a startup?
Although we do not have much to complain about I feel that, as a ecosystem, we have much work to do to enable startups to thrive within proper regulations. Subscription as a business model is a raging phenomenon in SaaS community globally and validated in various verticals, but it is unfortunate that it is stifled in India due to regulation challenges. 

Many startups are spending precious time solving a regulation problem with technology, when we should be focusing on solving business problems. In the context of India, I hope regulation challenges can be overcome sooner. We have more than 400 startups in India registered with us asking for a tool, but we have fewer than 10 customers using our product from India. The reason being it is hard to solve the problem completely. 

Imagine the possibilities if e-commerce companies can experiment with newer business models like the Zaarlys and BirchBoxes of the world here in India. Or even for the pharma industry to deliver medicines for chronic illnesses. The possibilities are endless, only if startups can focus on solving real-world issues than having to overcome regulation challenges.

What's one key feature in your product that's popular with your customers?
That would be the frictionless upgrade and downgrade of plans. We also provide our customers the ability to easily configure add-ons and promotional offers such as coupons, discounts and so on within seconds. 

Are you hiring? 
We are a 13-member team. We also have five interns--three engineering interns from Anna University and VIT, and two management interns from IIM-K. We are always on the lookout for some great talent to join us on the engineering and marketing side, in entry-level positions with product experience.

Topics: Software, India, Start-Ups

About

Srinivas is an avid blogger and a technology enthusiast who has worked for a couple of digital/tech startups in India since 2010. He has also worked with a few technology clients dealing with tech startups in India and Asia-Pacific, giving him an insight on the country's startup space. In his spare time he listens to audiobooks, podcasts... Full Bio

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