hi folks,
From a hosting companies perspective can you give me some input on monthly billing vs. anniversary billing for your customers? Which do you prefer and why?

<edit>
Blimey, I never heard of anniversary billing. I though he ment annual billing instead.

Ok, in that case my vote goes to anniversary billing.

It depends on your payment solution I guess. If you have to manually make sure you get payed each month then it would be easier to just do it all at once on the first.

But if your billing solution is automated then there is no reason to do that. Just go with anniversary billing.
</edit>

No offense Pilgrim, but I think you misunderstood the question, but then again, maybe I missunderstand. Here is what I think he is talking about:

Monthly Billing: All clients are billed on the same day of the month, say the 1st day of the month. New signups are prorated to set it up so they can be billed on the first.

Anniversary Billing: All clients are billed each month on the day equivalent to the day they signed up so that no prorating has to take place.

I use Monthly Billing. It is just easier to manage on a day to day basis. If the prorating is done right, I don't see many disadvantages. If an order is placed on or before the 15th, I prorate the remainder of the month and set the billing date for the 1st of the next month. If the order is placed after the 15th, I prorate the remainder of the month and then add the following month to the initial charge, then set the next billing date for the 1st of the month following next month.

We use anniversary billing in most cases. Each method has it's advantages and disadvantages. One of the things that comes to mind with "monthly" billing is that the provider will get all of their money for that month at the beginning of the month, so you know exactly how much you have to pay bills and whatever else. From the customer's point of view, I don't think it makes much of a difference after the first of the month, unless they prefer to get all of their bills on or around the first of the month (which I imagine some people do). I think that anniversary billing is also easier to setup in a billing system.

My $0.02. ;)

As a side note.. In either case there may be some pro-rating. If you are using "anniversary billing" to avoid pro-rating that may end up failing later as one customer ends up with multiple accounts you, and the customer, will likely want all of the accounts billed at the same time and in that case their second, third, and fourth accounts end up being pro-rated to match the 'anniversary date' of their first account.

We use 'anniversary billing' and it works out well for us in most cases. For any customers that prefer a specific bill day they are welcome to contact us and request we pro-rate accordingly...

I certainly agree that w/o the proper software anniversary billing can be a difficult task at best...

Monthly Billing: All clients are billed on the same day of the month, say the 1st day of the month. New signups are prorated to set it up so they can be billed on the first.

Anniversary Billing: All clients are billed each month on the day equivalent to the day they signed up so that no prorating has to take place.

I use Monthly Billing. It is just easier to manage on a day to day basis. If the prorating is done right, I don't see many disadvantages. If an order is placed on or before the 15th, I prorate the remainder of the month and set the billing date for the 1st of the next month. If the order is placed after the 15th, I prorate the remainder of the month and then add the following month to the initial charge, then set the next billing date for the 1st of the month following next month.

Yes, this is what i meant. How this question came up for me was with regard to billing apps like Modernbill(partially automated). It seemed like(if i understand things correctly) if I used it setup to do anniversary billing (which is the way my resold accounts are now) I could conceivably end up having to process accounts/invoicing and so on everyday of the month.

It doesnt seem like you could use anniversary billing, practically, with an app like Modernbill(it does have both capabilites built in).

Seems like you'd need something as someone mentioned that is fully automated...all the way through in that the app would submit the cc to the processor automatically.

Please educate me if i am wrong. Could anyone suggest an affordable/fully automated application?

Automation not necessarily in terms of hosting account creation on the server, but automated in terms of account signup, package configuration,recurring billing, invoicing and so on.

I hope Tina sees this thread as i wonder if her Merchant account and processor setup does this.
Thank you for all the input everyone.

Both have advantages and disadvantages. As the majority of customers don't really care, it becomes a decision of what works best for you.

For small hosts, where the owner is processing the billing, doing it once per month has advantages and, therefore, monthly may be advantageous. However, you need to look at when you have to pay. I saw one host billing the third monday of the month. Frankly, if I was using Monthly I would probably pick a due date of the 25th to cover the following month.

For larger hosts with billing departments and higher expenses, anniversary date is probably preferable as it spreads the workload and smooths the cash flow.