Recurring payments refer to the automatic, repeated payment made by a customer for a product or service. In a business that employs subscription and billing management, customers typically pay a fixed price on a recurring basis, such as monthly or annually, in exchange for access to the business’s product or service.
Recurring payments play a critical role in a subscription business, as they provide a predictable and consistent revenue stream that allows the business to plan and grow its operations. Additionally, recurring payments reduce the administrative burden of manually billing customers, freeing up time and resources that can be invested in other areas of the business.
There are several types of recurring payments in a subscription business, including Fixed Recurring Payments, Variable Recurring Payments, One-Time Recurring Payments, Metered Recurring Payments, and Tiered Recurring Payments.
Subscription billing platforms often calculate recurring payments using a variety of metrics, including the subscriber count, Average Revenue Per User (ARPU), Lifetime Value (LTV), Retention Rate, Churn Rate, and Gross Margin.
