Recurring billing is a payment model where merchants automatically charge their customers a set fee at regular intervals for their products or services.
Recurring billing is convenient for both the customers and merchants, and is an integral part of a subscription business.
Some examples of recurring billing would be memberships to a streaming service like Netflix or consumable goods like pet food.
For customers recurring billings offers a lot of convenience, stability, and value. For physical subscriptions you're getting your favourite products delivered right to your door: no re-entering payment information, and often merchants will provide a subscribe and save discount.
For merchants, benefits include a predictable stream of revenue that makes it easier to forecast for both inventory and expenses.
This also means increased customer lifetime value through reduced customer churn, offsetting the cost of customer acquisition.
So let's recap!
- Recurring billing is a billing model that charges customers at regular intervals
- Customers, benefit from convenience, stability, and value
- Merchants, can see increased LTV and reduced customer churn
If you're looking for a way to increase your LTV and reduce churn, consider trying out subscriptions.
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