SaaS's billing battles

The pricing complexity, high upfront and ongoing costs of packaged software is one of the primary attractions of software as a service. Comparatively, it's simple. Find a service you like, point your browser to a url, set up an account, do a little configuration of the application, pay your monthly bill and you're set.

The ease of the process and the ability to handle SaaS as an operating, rather than capital expense makes it a no-brainer for more and more companies.

No brainer for you. But pricing and billing SaaS operations is not that straightforward for the vendors themselves. They need flexible billing tools because their subscribers demand different payment options.

This week two competing SaaS billing providers are introducing new tools for online services to bill their customers, which should help SaaS customers with different invoicing requirements.

Zuora Inc. in Redwood Shores, Calif. is offering a private beta for SaaS developers to its new Z-Commerce Platform. With it, they can use the APIs in the Z-CP to code in customized links to Zuora's Z-Billing service. Later this quarter when the Z-PC is available, the company will post code samples in Ruby on Rails and Java to aid developers in how to use the tool.

That should be good news for creators of SaaS services built on Engine Yard's and Salesforce.com's SaaS development platforms, which support Ruby on Rails and Java respectively. Zuora's CEO Tien Tzuo says down the road developers working in with Google App Engine and Microsoft Azure, both of which are in restricted beta release themselves, will be able to access Z-Billing tools as well.

Also this week, Aria Systems Inc. in Media, Penn, is making version 5 of its A+ Billing platform widely available to SaaS service providers. According to CEO Ed Sullivan. Among the new features is the capability of configuring separate billing logic for a SaaS supplier. For example, one vendor may take a draconian approach to a user who skips a monthly payment and cut of the service. Another kinder-gentler sort may send out a few reminders before shutting it off.

Aria charges its customers based either a small percent of the revenue invoiced or per invoice. The Z-Commerce Platform is free to developers; Z-Billing is priced on a percent of revenue invoiced.