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Stripe: how to build a complex subscription system
Subscriptions are everywhere these days, and for good reason. Subscriptions generate predictable revenue, improve customer satisfaction, and reduce the time spent chasing down payments. They’ve become the backbone of successful businesses across industries—from software and entertainment to e-commerce and beyond. But building a rock-solid subscription management system that can handle the complexities of modern business? That's no easy feat
Smart tools and smarter development are the answer. Building a winning subscription management system is about more than just processing payments. It’s about seamlessly managing the entire customer life cycle. That’s why we use platforms like Stripe. Stripe’s reliable yet flexible APIs provide the building blocks to deliver seamless subscription experiences, from sign-up and trial periods to upgrades, downgrades, and even cancellations.
In this guide, we’ll show you exactly how we do it, introduce you to the Stripe tools we love, and show you a real-world example of our work at EffectiveSoft.
Benefits of using Stripe
Setting up subscription management involves utilizing the entire features package that the payment solution offers. Here’s why Stripe consistently wins us over.
Developer friendliness
Stripe has all the documentation you could possibly need to integrate Stripe with custom solutions. It also has pre-built libraries in many different languages, so you can add the API to your original codebase without writing extra code. That’s a huge time-saver, especially when you’re working on something as complex as a subscription management system.
Testing environment
Stripe’s testing environment is a developer’s dream. Want to simulate a specific payment scenario without processing real money? No problem. Stripe provides test API keys right in the Stripe Dashboard, which you can use to generate and fetch simulated data to ensure flawless integration before you go live. And don’t forget the handy test card numbers—perfect for imitating different payment situations and finding bugs early on.
Financial software development
Explore our expertiseVarious payment options
Stripe is more than just a payment gateway; it’s a comprehensive subscription management platform. It gives you the tools to handle the entire subscription life cycle with ease.
- Sign-ups and trials: Create frictionless sign-up flows and offer enticing trial periods to hook new customers.
- Flexible billing management: Easily handle recurring billing, prorations, invoices, and failed payments.
- Upgrades and downgrades: Let your customers upgrade or downgrade their subscriptions with a few clicks.
- Cancellations: Make the cancellation process as painless as possible while gaining insights into churn.
Global reach
Stripe makes it easy to expand your business globally and keep your customers happy no matter where they are.
- Selection of payment options: Stripe handles everything from traditional credit and debit cards to popular digital wallets like Apple Pay and Google Pay. It also supports bank debits, transfers, and a wide array of international payment methods to guarantee you can reach customers worldwide.
- Multicurrency support: Say goodbye to currency conversion headaches. Stripe allows you to process payments in over 135 currencies and counting. This means you can display prices in your customers’ local currency with no unnecessary fees, creating a smoother checkout experience.
Security first
When it comes to handling sensitive financial data, security is crucial. Stripe takes data protection seriously, offering multiple layers of security.
- Rock-solid encryption: Stripe uses the TLS protocol to ensure that all sensitive data, including credit card numbers and bank details, are encrypted during transmission.
- PCI compliance: Stripe system is fully compliant with the Payment Card Industry (PCI) data security standard, the highest level of security certification in the payments industry, so you know your customers’ data will be handled with the utmost care.
- Proactive fraud prevention: Stripe’s robust fraud prevention system, Stripe Radar, uses advanced machine learning algorithms to identify and block suspicious transactions. This helps safeguard your business and your customers from financial harm.
Subscription metrics monitoring
Stripe provides you with near-real-time insights into the key subscription metrics you need to make informed business decisions. Below are examples of the most critical metrics.
- Monthly recurring revenue (MRR): Tells you how subscription revenue is trending.
- Customer churn: Identifies why customers are leaving so you can take steps to improve retention.
- Customer lifetime value (CLTV): Helps you understand the long-term value of your customers and optimize your pricing and marketing strategies.
Stripe’s reporting dashboard also offers pre-built reports and customizable dashboards to give you a comprehensive view of your subscription business. You can even automate reports to be delivered right to your inbox, saving you time and effort.
The apps allow creating and sending out estimates and invoices, tracking time and expenses incurred, and accepting or making online payments.
Drawbacks of Stripe
Despite its many advantages, there are a few concerns to be aware of when considering Stripe for subscription management system development.
Stripe: benefits and drawbacks?
| + | – |
|---|---|
| Developer usability | Geographical constraints |
| Testing capabilities | Considerable fees |
| Multiple payment options | |
| International currency support | |
| International currency support | |
| Great security | |
| Extensive reports |
Geographic limitations
Stripe is growing fast, but it’s not everywhere. Right now, it’s up and running in 46 countries, but not all features are available in all countries. Before you begin development, make sure Stripe is right for your target market and offers the features you need.
High costs
Stripe usually charges a fee for each transaction. This can be a pain for businesses with high transaction volumes but slim profit margins, like subscription services with affordable monthly plans. Those percentage-based fees can really eat into your profits, especially when you factor in additional costs for certain payment methods or currency conversions. It’s important to crunch the numbers to be sure Stripe’s pricing aligns with your business model.
The process of subscription system creation
Ready to build a subscription management system that runs like a well-oiled machine? We can help. Here’s our approach using Stripe:
Design your subscription plans
First, you need to figure out what you’re offering. Come up with attractive subscription tiers that people won’t be able to resist. Each should have its own set of features, access levels, or services. And don’t forget about free trials—let potential customers try before they buy. Stripe makes it easy to set up different pricing plans, manage trial periods, and handle prorations seamlessly.
Establish the checkout process
When it comes to ensuring a fast and secure checkout process for your customers, you can forget about development headaches: Stripe Checkout makes the checkout process a breeze. Just redirect your customers to the Stripe Checkout page when they’re ready to pay and Stripe will take care of the rest—from collecting payment details to confirming the transaction. It’s secure, PCI compliant, and designed to get the best conversion rates.
Or, if you prefer a more customized checkout experience, you can use Stripe Elements, which offers individual user interface (UI) components that you can add directly to your website’s payment forms. Elements lets you control the design and flow of your checkout process while keeping your customers’ sensitive data safe, including credit card numbers, expiration dates, and CVVs.
Create user-friendly customer portals
Let your customers manage their subscriptions with ease. You can set up a customer portal where they can update their payment info, view their billing history, upgrade or downgrade their plans, and even cancel. Stripe’s API and webhooks make it easy to keep everything in sync and provide a smooth customer experience.
Automate billing
No more manual invoices and payment reminders! Stripe takes care of all the heavy lifting when it comes to recurring billing. It will generate invoices, process payments, handle failed payments, and send out automated notifications. You can even configure Stripe to automatically try again if a payment fails, reducing the likelihood of customers leaving without paying and ensuring a steady flow of revenue.
Benefit from real-time updates
Stripe’s webhooks are like having a direct line to its system. It sends automated notifications to your app whenever important events happen, like a successful payment, a subscription renewal, or a customer cancellation. This real-time data lets you keep your systems in sync, trigger automated actions, and gain valuable insights into your subscription metrics.
A solution for property management companies, landlords, and tenants aimed at streamlining the property management process end to end.
Our project
Our client is a data analytics provider focused on the maritime domain. We initially created an automated analytical system powered by machine learning, offering data visualization tools and data processing solutions, along with integrations for third-party data providers, ETL, and more. The client then tasked us with a subscription system implementation.
The model was designed to offer trial and basic annual subscription options, with plans varying based on the number of fleets and users, as well as access to additional features. The client also asked us to establish plans for one-time purchases of valuations and valuation certificates for both subscribed and unsubscribed users.
We began by defining the subscription and application usage process, which allowed us to outline user types and roles and develop a permission structure. Then, we worked on pricing models and terms for trial and basic system subscriptions, taking into account the options of upgrades, one-time purchases, and discounts.
The proposed process included the development of an Admin app that allows new companies, offices, and office admins to be added to the system. We also needed to develop an appropriate interface for the Main app, enabling office admins to create and manage users, alter company details, buy office subscriptions, and track subscription details like payment history, certificates issued by users, paid features added to the plan, and more. Stripe facilitated some of these subtasks.
Stripe was integrated to manage payments, including the checkout form, final subscription calculations, managing and applying discounts, UIs for canceling current subscriptions and changing the default payment method, as well as storing credit card details, transaction details, and product prices.
However, the pricing model we developed presented some issues that could not be addressed by standard Stripe tools, for example:
- Existing subscriptions affect the prices of valuation certificates.
- Prices can vary depending on the number of fleets and users.
- Prices may differ for subscribed and unsubscribed users.
- Terms must be flexible for updates to existing subscriptions.
Taking these factors into account, we devised a hybrid solution that distributes responsibilities between Stripe and the developed application. As a result, the client manages the custom subscription builder page, validates user-selected subscriptions, oversees the usage of valuations and certificates, and handles the pages for selecting quantities of one-off product management.
Divided responsibilities between Stripe and the App
| APP SIDE | STRIPE SIDE |
|---|---|
| Custom subscription builder page | Check out form |
| User-chosen subscriptions validation | Credit card details storage |
| The number of used valuation certificates management | Transaction details storage |
| Pages for choosing quantities of one-off products | Product prices storage |
| Final calculations implementation | |
| Discounts management | |
| UI for current subscription cancellation | |
| UI for changing the default payment method |
Cross-platform app development
Explore our expertiseFinal word
Using Stripe, we created a sophisticated subscription model with a wide range of plans, multiple stakeholders, several nonstandard conditions, and various subscription management interfaces. Our impressive results are due to the support Stripe offers developers, including comprehensive documentation, libraries, testing environment, and more. While Stripe can’t manage the entire billing process in such a complicated system, it ably handles most tasks, facilitating the development process and ensuring features are launched quickly.
F.A.Q. about building a subscription system with Stripe
Stripe system typically charges a percentage for each successful transaction made with a U.S.-based credit or debit card. Therefore, the decision to use the tool should be based on the specific details of the business, including the products offered and transaction volumes.
Stripe provides several key features for creating subscription billing systems, including recurring billing, adjusting billing when customers upgrade or downgrade plans mid-cycle, trial periods, automatic retry for failed payments, flexible pricing models, custom invoices, and comprehensive reporting.
Apart from the pricing, which may seem excessive for some businesses, challenges include geographic limitations, as Stripe is currently available in only 46 countries and certain functions may be inaccessible in some regions. Another challenge is its complexity in terms of customization. Many Stripe users note that heavily customized flows can require significant development resources and expertise.
Some well-known Stripe alternatives are PayPal, Square, Adyen, Braintree, Verifone, Amazon Pay, and Worldpay. Each offers various features, usage terms, and pricing. As far as subscription building is concerned, some of the best Stripe substitutes are Braintree, Chargebee, Recurly, and Paddle.
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