What is Recurring Billing? Definition, Types, and Advantages

Recurring billing, also known as subscription billing, is an automated payment system where customers are charged at regular intervals for products or services they have subscribed to. This model benefits various types of businesses such as subscription box services, Software as a Service (SaaS), membership websites, telecommunications, and cloud storage and hosting services. There are two main types of recurring billing: fixed and variable. Fixed recurring billing charges customers the same amount every billing cycle while variable recurring billing allows for fluctuating amounts depending on usage or consumption. The advantages of recurring billing include predictable cash flow, customer convenience, automation benefits, and improved customer retention. However, challenges such as handling payment errors, payment management hassles, and service disruptions can arise. Businesses must decide whether to build their own recurring billing system or leverage established third-party solutions like Togai, Recurly, Chargebee, Stripe, and Zuora.