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What is Recurring Billing?

Recurring Billing Wiki Image from Nitrobox

Recurring billing is an automated method that enables businesses to automatically charge customers at regular intervals for products or services they have subscribed to.

How Does Recurring Billing Work?

When a customer chooses a subscription or recurring service, they provide their payment information, such as credit card details or bank account information. The business securely stores this information, whether natively or through a 3rd party. Then, their billing system communicates with the payment service provider and automatically charges the customer on a predetermined schedule, typically monthly or annually.

Customers don’t need to manually make payments or renew their subscriptions, providing a seamless and hassle-free experience.

What Pricing Models Utilize Recurring Billing?

Recurring billing is commonly used in subscription-based pricing models, such as software as a service (SaaS), streaming media, online memberships, healthcare services, and utilities. 

Additionally, it can be employed in usage-based business models. In such cases, customers are charged based on their consumption or usage of a service. This includes metered billing for utilities like electricity or water, flat fees for telecommunication services, or pay-per-use cloud computing resources (pay per API call).

Examples of Recurring Billing

Businesses across a wide range of industries follow recurring billing business models. These include the following. 

Software Subscriptions: Companies offering software subscriptions, such as Adobe Creative Cloud or Microsoft Office 365, utilize recurring billing.

E-Charging: EMSPs (emobility service providers) offer their customers a connected network of charge points that can be used on a recurring basis. Pricing is pay-per-use, and as such, billing must be automatic. Often, there are subscriptions bundled into these products. 

Cloud Services: Providers of cloud computing services, such as Amazon Web Services (AWS) or Microsoft Azure, follow this billing method to charge customers (businesses) based on their usage of cloud resources. 

Software and Hardware Leasing/Rental: Some businesses offer B2B clients the option to lease or rent software, equipment, or machinery, with recurring billing for the rental or leasing fees.

Subscription-Based E-commerce Services: B2B e-commerce platforms may offer subscription-based services to other businesses, including features like custom online storefronts and inventory management tools.

Pros & Cons of Recurring Billing


Convenience: This billing approach eliminates the need for manual payment processing, making it convenient for both businesses and customers.

Predictable Revenue: Businesses can forecast and plan their revenue stream more accurately due to the predictable nature of recurring payments.

Improved Customer Retention: By automating payments, businesses reduce barriers for customers to continue using their services. This can improve customer retention.


Potential for Churn: Customers may cancel their subscriptions or services, leading to revenue loss, especially if there is a high churn rate.

Payment Failures: Technical issues or expired payment methods can result in failed payments. This creates delays in realizing revenue and requires time-consuming follow-ups to remedy the issue.

Customer Disengagement: Some customers may forget about their subscriptions or lose interest in the services, leading to unused or underutilized subscriptions.


In conclusion, recurring billing stands as a fundamental innovation reshaping the business landscape. Its automation and seamless payment processes have created a symbiotic relationship between enterprises and their customers, ensuring steady revenue while enhancing convenience. With ongoing technological advancements, the potential for recurring billing to provide ever-greater flexibility and options for both businesses and consumers is bound to expand.
For those seeking a comprehensive solution to manage their company’s recurring billing efficiently, Nitrobox is your trusted partner. Reach out to us today to discover how we can support your success in this dynamic landscape.
Updated on 28. November 2023

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