The Evolution of Billing Software for SaaS: Navigating the New Wave of Platforms

The billing software ecosystem has undergone significant changes over the past five years.

Around 2010, the first billing software emerged, driven by the rise of Software as a Service (SaaS). Key players in this space include Zuora, Recurly, Chargebee, and Stripe Billing.

Today, a new trend has led to the emergence of what I call "next-generation billing software." In my view, two main factors have driven this shift:

• Legacy products have struggled to keep pace with the growing and evolving needs of revenue teams. A lack of collaboration features, customization options, and deep CRM integrations has frustrated both revenue and product teams. This is no surprise, as legacy providers focused on ensuring their software was robust and reliable—critical for any business.

• New business models, like usage-based pricing, have gained traction, especially with the rise of AI. These models require complex and specific setups, often needing customizations that go beyond existing solutions.

As a result, many new billing platforms have emerged, complicating the landscape for founders and product teams. Navigating this evolving ecosystem can be challenging.

The following lines will help you find your way through it!

What is a billing software for a SaaS business?

Let’s make a quick recap of what a billing software for SaaS businesses is all about.

Billing software typically manage all the value chain from generating an invoice to collecting the corresponding payments. They integrate with Payment Service Providers (PSPs) to process payments if they don't have this capability built in. For instance, Stripe Billing offers seamless payment processing through its core product, eliminating the need for third-party PSPs. Other billing software solutions would integrate with products specialized in bank transfers like GoCardless. However, the true strength of billing software lies in managing other critical aspects of the billing process.

Key features of billing software include:

• Automated recurring billing: Ensures payments are requested with the correct billing period and method.

• Automated invoicing: Automatically generates accurate invoices.

• Plan management: Supports a wide variety of pricing models and allows custom plan overrides for specific customers.

• Customizable checkout pages: Provides more flexibility than most PSPs' default checkout pages.

• Payment collection: Streamlines the process of collecting payments from various sources.

• Analytics: Offers insights into revenue, customer behavior, and payment trends.

• CRM integration: Ensures sales teams can manage customer plans directly from the CRM without leaving the system.

Billing software have started to emerge around 2010 with the emergence of the SaaS business model.

The historical players in the billing software space include:

• Chargebee: One of the most well-known platforms, serving over 6,500 customers. It is capable of handling a wide range of pricing models and offers robust customization options.

  
  

  
  

  

  Chargebee's home page

• Zuora: The oldest billing software in the market, designed primarily for larger companies. Zuora competes with Chargebee but is often favored by enterprises due to its scalability and depth.

  
  

  
  

  

  Zuora's home page

  
  

  
  

• Recurly: Known for its user-friendly interface and flexibility, Recurly excels at managing subscription billing and is trusted by many mid-sized companies. It stands out for its ease of integration and support for various pricing structures.

  
  

  
  

  

  Recurly's home page

  
  

  
  

• Stripe Billing: Continues to improve its product, but its core strength remains in payment processing through Stripe’s widely used PSP. It provides a solid billing solution with seamless integration into the Stripe ecosystem.

  
  

  
  

  

  Stripe billing's home page

  
  

  
  

• Paddle: Designed for SaaS and digital product businesses, Paddle simplifies global billing by offering an all-in-one platform that handles payments, subscriptions, taxes, and compliance. It stands out for its focus on helping companies scale internationally without the complexity of managing multiple payment processors and tax regulations.

  
  

  

  Paddle's home page

The emergence of a new category in the billing landscape: Monetization Platforms

These monetization platforms come to address gaps left by traditional billing platforms. They are basically a middleware sitting between the code and the billing software. This notably means SaaS business using a monetization platform would also need to subscribe to a billing software as well.

These monetization platform or “billing infrastructure as a service” position themselves differently according to the problem they want to solve:

First problem: Rapid pricing iteration

Solved by so called “Pricing & Packaging as an API” platforms like Stigg and Schematic

Pricing can make or break your product-market fit, and experimentation is essential. However, each pricing experiment traditionally requires changes in your code, which is time-consuming. Access to certain features is often gated by conditions in the code, making it harder to iterate quickly. Decoupling pricing logic from the code allows businesses to run experiments without technical bottlenecks.

While historical billing software like Chargebee has introduced no-code entitlements to manage feature access, their focus has always been on building robust billing infrastructure. Flexibility for rapid pricing iteration has not been their main strength.

Chargebee’s entitlement feature

Companies like Stigg and Schematic solve this by allowing businesses to manage pricing rules outside of their codebase, integrating directly with billing systems like Stripe and Chargebee. You simply use their API in your code, and all the business logic is handled on their platform. This is why it's referred to as “Pricing & Packaging as an API”—because it externalizes and automates the entire process.

Schematic's home page

Stigg's home page

Second problem: Implementing complex usage-based billing architecture

Solved by so-called “usage-based” middleware software or “usage-metering” software

Usage-based pricing models are complex and require a specialized infrastructure.

Stripe, for example, has made strides in this area by acquiring Octane, a tool for managing usage-based billing. However, Stripe doesn't yet support all models, such as credit-burndown.

Tools like m3ter and Openmeter.io help address these complexities. Openmeter.io, for instance, offers features like usage metering, custom dashboards, and alerts to help businesses track consumption in real time. These solutions enhance core platforms like Stripe, making it easier to manage the tweaks required for implementing your usage-based billing infrastructure.

The emergence of new generation billing software

These new platforms compete directly with the historical players in the billing software space. They aim to solve key challenges, among those are:

• Faster pricing iteration

• Improved “usage-based” pricing management

• Streamlining collaboration between the various stakeholders involved in pricing: revenue teams, product teams, marketing teams,…

• More robust and flexible integrations with CRMs like Hubspot or Salesforce.

Unlike the monetization platform we mentioned above, these new platforms cover the entire value chain, from quote to cash. This means they come to replace the historical billing software. This also means that they decided to build from scratch all the features required for a billing software (list in the paragraph entitled “What is a billing software?”)

I tend to categorize these new players into two main groups, though they overlap and compete with each other:

Rivaling Chargebee in the quote-to-cash process:

Companies like Hyperline, Maple Billing, Cacheflow, Zenskar, Sequence, and Wingback are building comprehensive solutions that cover the entire billing process.

Hyperline's home page

Focused on billing for “usage-based pricing”:

Companies like Lago, Metronome, Orb, Archetype, and Octane (acquired by Stripe) specialize in handling the complexities of usage-based pricing models.

Lago's home page

Conclusion

It's clear that the billing ecosystem is undergoing major shifts, with new players challenging traditional systems and reshaping how companies handle billing. It will be fascinating to see how the market consolidates in the coming years!

Feel free to reach out if you have any thoughts or insights on this topic—I’d love to hear your perspective!