How recurring billing works
At sign-up the viewer authorizes future charges and the payment provider stores a token for their card or account. On each renewal date the billing system charges that token and, if the charge succeeds, extends the subscription by another period.
The subscription lifecycle
- Trial: access before the first charge
- Active: charged successfully and entitled to watch
- Past due: a renewal failed and retries are under way
- Grace period: access continues for a short time while payment is recovered
- Cancelled: no further charges; access usually lasts to the end of the paid period
- Expired: access ended
What good recurring billing handles
Failed payments are the main cause of subscribers leaving without choosing to. A billing system should retry on a sensible schedule, email the subscriber with a link to update their card and keep access open for a few days meanwhile. This process is called dunning.
It should also cover upgrades and downgrades with proration, coupons, taxes per region, refunds and a clear way to cancel. Subscriptions sold through app stores are billed by the store and need to be reconciled with those sold on the web.
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