Just wondering if you guys can give me some pros and cons of using different billing cycles, ie: Anniversary or Monthly (1st of the month billing) My business will be mostly hosting and domains plus some web design here and there.

I'm still testing out Mbill and ClientExec so havent decided which I'll be using (Actually kinda stuck as they both seems to be good so far)

Monthly - Steady stream of revenue
Yearly - Lump some to invest.

Monthly - No guarantee that customer will be there at the end of the year.
Yearly - No source of income from that customer 5-6 months down the road.

Yearly is better for you. Put those other 11 months on interest, too! Earn an extra 3% a year that way.

Monthly is better for them, and may bring more customers?

One of the benefits of seting up a monthly billing cycle is that your clients may choose to purchase add-on features or upgrade the account with less hesitation than if they were paying for a year's worth of hosting. If you get a few really good low-price upgrade features, it may be an easy way to increase your monthly add-on sales!

Thanks for the info. What I'm really after is not regarding a yearly or monthly cycle but rather:

Anniversary (A client gets billed on the day they signed up. They sign up on the 11th and get billed ont the 10 of the next month)

Monthly (prorated to the first of the month. Customer signs up on the 22 of the month but the account is prorated to the first) so their billing date is the 1st of the month.

Thanks
Arek

Ohhh!!

Anniversary. Less complicated that way.

I would agree. It's alot easier for you and the customer to have an automated anniversary billing system.

We recently changed our billing to Monthly. It was a hassle to switch, but it will be better in the long run. It is much easier to manage once your customer base grows (we learned the hard way). I say you go with monthly, if not, you will regret it.

Yep, monthly billing will also enable you for better cash flow on regular basis.

Anniversary is easier for the client... but monthly (ie: 1st of the month) is WAY easier for your billing staff. They will fall over themselves to thank you for picking monthly.

However, a good billing system should make either choice easier to manage.

I agree. I should have started with monthly.

I use monthly batch billing around the 1st of the mth. New clients pay pro-rata when they sign up. Existing clients get billed on the 1st of the mth. It's simple to keep track of late payers too, although as mrzippy said, a good billing system makes that fairly simple to track, either way. :)

There is a slight flaw with not using monthly billing on a set date for everyone!

Let's say your customer signs up on the 25th of the month in a 30 day month, they have 5 days to use their bandwidth before it starts over in cPanel. They could theoretically get twice the bandwidth when they initially start up and leave after they have used bandwidth from both of those months.

Is it really an issue? I don't think it is as long as you keep an eye on some things from time to time because honestly, not many will think this much about it. What I wanted to point out is that to me personally it makes sense to bill close to the time when cPanel will change months.

Monthly is just so much easier to work with.
For example you can issue service credits etc etc instead of having to refund money.

Yes, monthly is easier I would agree but...

With Monthly you will have a guarantee your customer will stay which is pretty obvious but would you want to know that your customer will still be with you in a year? With a yearly plan this would be a scam though and I highly do not suggest any customers signing up for a yearly plan, you could basically not support them.

I also offer quarterly plans that are a bit cheaper then paying monthly but once again it can be a hassle with this too. Just another option so you know that the customer will be with you longer and it makes it easier for the customer, save a few bucks etc...

Then last is Monthly, most of the benefits do come with this as if they stay with you at the end of the year you will rack up the most cash. This will be the easiest billing wise but the customer can always leave and they will be the most demanding. Usually they will signup for the cheap plans and they are the youngins askin for help all the time.

I find that just using the yearly cycle on our buisness works for us because we are able to offer cheaper prices and we give our customers alot more than what they pay for

Currently, I offer 3 differnt cycles:

1 Month
6 Months
12 months

-- I offer them simply for the convenice of the clients :).

Folks, this thread is not about what billing cycle option you offer your clients. It's about anniversery or monthly billing, and the pros and cons thereof. :)

Seems that everyone has a diffrent view. To be honest all the above work. It depends your cash flow and the type of clients you have.


Maybe have 2 ways either or make the client choose for themself.

Have you tried PeachTree accounting?

Although it may be confusing to some customers when they first signup, (which can be easily fixed with a simple FAQ entry in a knowledgebase) I think it would be highly beneficial to one's billing department to have all their invoices due on the same date.

You will know that on the 1st (or before the 10th) for example, the majority of your invoices will be paid. You can then setup automated late notices and suspension days that are the same for every client. Your billing department will get use to heavy activities at a specific time of the month...You can plan financial decisions around the fact that you'll have a surge of money on the Xth of the month. (i.e. new server purchases, advertising campaigns, etc.)

A lot of benefits with pro-rated monthly billing...

As far as a billing system...For shared hosting I think modernbill is the best available...v5 looks incredible... :)