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I am developing a SaaS platform with a membership management system as a part of the bigger system. Tenants are allowed to perform CRUD operations on Plans, which has price and the length of the membership. Member of the tenant can come to my platform and subscribes to the plan. Member will be charged monthly according to the price for the duration, which are configured in the Plan.

To acheive this, I have two options in my mind.

Option 1 - Sripe Subscription:

Create product, price in the stripe. Each member when subscribes to the plan via my platform, my platform will create the customer and subscription. The price will be recurring monthly for certain interval length.

The problem I am thinking in this design is that when tenant user update price/duration of the plan, platform should create new price in stripe. For new members, stripe subscription will pick up a new price. For ongoing active members/customers, I have to bulk update subscription. I am hesitating to do this because the tenant can have many members per plan. Also, updating subscription can be more confusing.

Option 2 - Custom Recurring Logic with Stripe Invoice:

In this design, my platform will handle the recurring logic. When member registers to the tenant's service, I will create a customer in stripe via api. The system will create stripe invoice for the customer each month. This way, the update of length and the price of the plan can be handled easily. It also allows the flexibility to control the member active status, cancel, change membership plan and similar business requirement. However, I am not being able to see hidden limitations as I lack Stripe experience.

Any suggestions on integration logic or platform business logic is highly appreciated.

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TL;DR: Both options work well for recurring billing in a SaaS platform. However, for multi-tenant platforms with complex billing needs or frequent plan updates, Option 2 offers better flexibility and control despite requiring more development. Option 1 is preferable if the platform has stable plans and standard subscription needs, as it leverages Stripe’s built-in billing automation for minimal maintenance.

Both are viable for implementing recurring billing with Stripe in a SaaS platform. Here are some points worth focussing on:

Option 1: Stripe Subscription Model

Pros:

  • Automated Recurring Billing: Stripe manages proration, cancellations, and retries, reducing the need for custom billing logic.
  • Automated Invoicing: : Invoices can be generated automatically based on subscription settings, simplifying recurring billing. Manual invoicing is also supported, allowing businesses to issue one-time or custom invoices independently of subscription cycles.
  • Minimal Development Overhead: Stripe’s handling of billing cycles saves on scheduling and error-handling logic.
  • Flexible Pricing Management: Stripe’s API allows the creation of new prices as needed, keeping older prices for existing subscriptions. Proration options help manage smooth transitions during plan changes, adjusting for partial billing periods.

Cons:

  • Price Updates: Updating a plan requires creating a new price in Stripe, which does not apply to existing subscriptions. Updating active subscriptions individually is necessary since Stripe lacks bulk change support.
  • Limited Flexibility: Stripe’s subscription model may not accommodate advanced features like flexible billing intervals and custom discounts.

Best Fit: Suitable for platforms with stable plans that rarely change, standard subscription needs, and low customer turnover.

Option 2: Custom Recurring Logic with Stripe Invoices

Pros:

  • Full Flexibility: Custom logic allows tailored billing frequency, amounts, and conditions, enabling plan switches and direct price updates.
  • Immediate Plan Updates: Plan changes apply directly to new invoices without affecting existing subscriptions.
  • Support for Advanced Features: Requirements like custom discounts and paused billing can be handled natively.
  • Enhanced Control Over Billing Events: Custom schedules can be set up to handle recurring invoices, with Stripe Webhooks used to monitor payments and log plan details directly on invoices for audit purposes.

Cons:

  • Bigger Development Effort: Custom billing requires building reliable scheduling and proration functions.
  • Invoice Consistency: Since Stripe does not manage recurring schedules in this setup, a robust scheduler is essential for timely invoicing and payment consistency.

Best Fit: Ideal for platforms needing flexible, frequently updated plans or custom billing features.

Recommended

Option 2 offers greater flexibility for multi-tenant SaaS platforms with complex, customizable billing needs, despite requiring more development effort. For simpler, stable recurring billing with low maintenance, Option 1 may be preferable.

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  • Thank you for the detailed differences between two approaches. I opted for second option: own logic of subscription to have more flexibility and control. Commented Nov 16, 2024 at 3:43

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