Web Hosting Talk : Web Hosting Main Forums : Ecommerce Hosting & Discussion : What is your preference? Auto-Billing or Invoice-Billing

[cdgcommerce]

When you look at it - there seems to really be two methods for "recurring billing" in the hosting industry.

1. Auto-billing --- customer is automatically charged each month, quarter, etc. on a recurring basis without the need for customer intervention. The customer can cancel at any time to stop any further recurrings. This, in essence, is a form of "opt-out" billing with the advantage of more steady cashflow and less billing follow ups.

2. Invoice-billing --- an invoice is e-mailed to the customer for them to click on and make payment, on a recurring basis. This, in essence, is a form of "opt-in" billing. The downside is that cashflow and re-billings are not necessarily as steady and relaible as with auto-billing.

All that being said, how do YOU bill your hosting customers? Auto-Billing? Or Auto-Invoicing?

[Incognito]

At one time, I liked auto-invoicing and thought the customer would. However, so many are just disorganized and forget to pay an invoice. Then they would complain about it not being automatic. So, I found that the customers, when given a choice, overwhelmingly prefer auto-billing. Surprised me.

[rickkumar]

Do you think there are more chargebacks with auto-billing than invoices?

Thanks.

[Corey Bryant]

We have it set up recurring using our BETA program. It sends out the invoice to the customer via e-mail. If they do not click to sign on & pay, then it is billed in 7 days. This has been working for about 3 months now with 20 clients. Pretty small - but the clients range from 18 yr old running their own shoe store to a 5 member office. Some are very disorganized - almost to the point they do not even know their own e-mail or URL. And others could tell you what every piece of paper is in their trash can without looking. A wide variety.

Personally - as a consumer, I prefer auto-invoicing & I can choose to make the payment. As a business - recurring billing is better, but then you have the chance that people forget & the charge is declined. With the system above, we have not had one charge declined. Our customers either approve the charge in a day or so with the CC in our records or update it.

[Incognito]

Originally posted by rickkumar
Do you think there are more chargebacks with auto-billing than invoices?

Thanks.

Easier for someone to forget it. Auto-Invoicing serves as a reminder and requires action on their part to reconfirm their desire to pay. Auto-Billing continues with no action on their part and does have the risk that they were thinking about cancelling and just never got around to it. Also, doesn't keep your name as much in front of them.

[papaj]

I've had some problems with auto-billing with authorize.net because of constant AVS mismatches etc. and so I had to manually charge them through Authorize or send them an invoice. (this has happened quite often)

[cdgcommerce]

A few quick tips for anyone using auto-recurring billing, to address some items raised in this thread:

1) Name in front of customer: if you setup recurring billing and send out recurring e-mail receipts, you can keep your name in front of your customers to preserve that front-end loyalty.

2) Ease of cancellation/minimizing chargebacks: you can also opt to send out a reminder e-mail ahead of your recurring billing as well as on your recurring billing receipt giving your customers an option to cancel if they no longer wish to continue.

3) AVS mis-matches: ideally, once you have scrubbed on the initial transaction, you don't need to - and really shouldn't have to - continue to run an AVS match scrub on subsequent recurring transactions once they have gotten through the initial validation.

[brevig]

We actually do both, in a way. Customers will receive a statement monthly, in the mail as well as to email, reviewing their financial transactions for the previous 30-day period (we send statements on their anniversary to signup). The customer can choose to signup for an auto-bill system, but have the choice to set the limit to pay. Because of our service offerings and pricing module, the price of services tallied at the end of each billing cycle are rarely the same. So, they can choose, for example, to auto-pay the balance due if under x amount. If they chose $75, and the bill comes to $77, then it is not processed and they are given a special notice that the bill was in excess of their authorized amount for auto-billing. At that time they can either 1) pay and increase their authorized amount or 2) just pay and leave the authorized amount the same.

It may also help those reading what I just said to realize that my company offers colocation and bills each server on it's own cycle. So, they signup on the 4th, and have two servers with us, one billing on the 11th and the other billing on the 20th, they would receive a joint statement for the total of the two on the 4th. Adding to that, if they purchased any additional services or products, that would show up on their monthly statement on the 4th, too.

Richard

[rickkumar]

Originally posted by cdgcommerce
A few quick tips for anyone using auto-recurring billing, to address some items raised in this thread:

1) Name in front of customer: if you setup recurring billing and send out recurring e-mail receipts, you can keep your name in front of your customers to preserve that front-end loyalty.

2) Ease of cancellation/minimizing chargebacks: you can also opt to send out a reminder e-mail ahead of your recurring billing as well as on your recurring billing receipt giving your customers an option to cancel if they no longer wish to continue.

3) AVS mis-matches: ideally, once you have scrubbed on the initial transaction, you don't need to - and really shouldn't have to - continue to run an AVS match scrub on subsequent recurring transactions once they have gotten through the initial validation.

Chris,

I know for sure that 2CO does as mentioned in point # 2. They say it increases brand royalty of 2CO system and Vendor website. Thet also said that it helps them to keep the refunds/chargebacks low.

I think there is some truth to their statement.

Thanks.