At SaaSPay, we get this a lot.
Why BNPL for SaaS?
Buying a SaaS tool or subscription might look like a simple decision on the face of it. It solves particular problems and automates manual tasks, leading to higher productivity. Moreover, it’s great from a cost-benefit perspective.
In reality, though, it’s easier said than done.
For starters, most B2B SaaS tools are quite expensive and burn a hole in the customer’s pocket. This holds true even if it's a funded startup or a company with good cash flow that is buying it.
Get this: the average amount raised by startups in the first round of funding is about USD 750,000.
Now, imagine you’re a startup founder who has raised this first round. In a few months, you realize you need to buy two SaaS tools for efficient work management. Well, shelling out an amount in the range of USD 50,000-70,000 for these SaaS tools will literally cost you 10% of your entire funding round.
Even if you’re cash-rich, this amount equals a mid-level employee’s salary for an entire year. Not what you had expected. Right?
Secondly, while basic SaaS tools are planned purchases, customers may not realize unforeseen SaaS expenses are also a reality. The very first stroke of success and they may need high-ticket tools to enhance the tech stack.
Salesforce for the sales teams, Hubspot for CRM, or even Slack helps growing teams but these are pricey SaaS platforms. The point is, a lot of SaaS purchases are not planned in advance. When such high costs are unplanned, they tend to eat into the company’s cash flow. They also shoot north of what was budgeted for.
This makes customers wonder whether they should use the money to purchase SaaS or to deploy it in growth. Additionally, this leads to delays in the purchase decision, which is not a good sign for SaaS sellers.
To add to all of this, the pricing model of SaaS tools may not always suit the customer.
Essentially, there are 2 ways in which a SaaS platform typically bundles its offerings - an annual subscription and a monthly subscription.
• In an annual subscription, the customer buys the tool for the entire year and the SaaS company gets the money upfront. Here, the platform is generally priced at a 10-30% discount compared to the monthly option, because the seller is assured that the customer is going to stay for the entire year. The problem with this plan is that the seller needs to offer a 10-30% discount. On the other hand, the customer needs to spend the entire amount upfront.
• Then there’s the monthly subscription, where customers renew their purchases every month. Here, while the customer manages better cash flows, the product could be 30% more expensive. And for the SaaS company, there is no guarantee that the customer will renew it next month. Again, not a very happy situation for either.
The SaaS industry, therefore, needs a solution that creates a win-win situation for both, the buyer and the seller.
A Buy Now Pay Later ( BNPL) option is the sweet spot between the annual and monthly plans. It’s basically a plan that combines the best of both worlds.
With BNPL, the customer buys the SaaS product at the annual subscription price i.e. a 10-30% discount on the monthly price but pays for it later at favorable payment terms.
If you want to know more, here’s how it works.
With BNPL, the SaaS customer partners with a third party like SaaSPay to help finance their purchase. The third party then pays the entire annual subscription cost to the seller, upfront. The customer then makes periodic payments to SaaSPay, at a frequency mutually agreed upon. SaaSPay collects the amount through a flexible bullet payment model, after 8 to 12 months. This generous credit period further reduces the friction for the buyer.
In order to finance the customer, the financer charges a small interest depending on the repayment duration and frequency. And even after paying the interest, the purchase remains more cost-efficient compared to a monthly plan.
While this may sound like a tedious process, it happens in less than 70 seconds, completely digitally.
The customer gets the software at a discounted price while not having to shell out the entire money upfront, so he’s happy.
The seller, on the other hand, gets an upfront payment, with a guarantee that this customer is not going anywhere for a year, so she’s happy.
Technically, a win-win.
The lending landscape is thriving with interesting financial products today, especially in the BNPL space. There is no lack of choice for businesses looking to partner with B2B lenders.
But we do not aspire to be just another BNPL provider in the market to join the long line. We are a B2B BNPL player with a purpose.
With SaaSPay, we want to revolutionize the SaaS purchasing process. SaaSPay is a financing option designed to be beneficial for all parties involved. We have talked to multiple people -- partners, former CFOs, and CEOs, about the complex lending demands of existing credit instruments.
Credit cards and other financial institutions like banks do not simplify the process of buying SaaS tools.
SaaSPay is here to give SaaS users an escape from inflexible payment options by introducing a B2B BNPL for SaaS buyers in India. We take into account standard credit data and give you access to longer durations of credit period that ranges between 8-12 months.
On the other end of the spectrum, SaaS sellers are constantly worried about solving complex customer journeys when it comes to SaaS sales. Here, the sales journeys for SaaS sellers can be streamlined with flexible payments via professional service providers like SaaSPay.
The outcomes are higher AOV from consumers. SaaSPay encourages them to buy annual contracts giving them lenient payback time. Our business model and payment methods ensure that SaaS platforms and cloud resellers get their revenue upfront on day one.
The payment experience via the SaaSPay dashboard is state-of-the-art. It needs minimal manual intervention which means slashing down on the expense incurred on payment chasing. Our current list of seller partners is diversified enough to feature small SaaS sellers as well as large enterprises. In fact, we are driving annual SaaS subscription sales for all of them alike.
If you’re a SaaS seller and want to offer financing to your end customers, sign up with us and it can be the beginning of a powerful partnership!