Subscribe Now, Pay Later or SNPL is a new phrase in the payments world. We know it’s new because we invented it (we think!)
Like Buy Now, Pay Later or BNPL, the sentiment is broadly the same: “Commit to a purchase, but defer the full payment”
You’re probably used to seeing a BNPL solution such as Klarna or AfterPay at the checkout when your doing some online shopping. They give you the option to spread your purchase over 3–6 equal instalments. You’d pay a third of the price of your item there and then, with the remaining two thirds being collected by (let’s just say) Klarna 30 and 60 days after.
BNPL is an alternative credit offering that helps you avoid using credit cards and incurring interest.
The other side of Klarna is the relationship they have with the merchant (the store / company you’re purchasing from). Once you’ve selected to pay with Klarna and you’ve verified the bits they need to know, Klarna will actually pay the merchant in full for the order. So now, the merchant has been paid in full and you’re paying Klarna back monthly, opposed to paying the merchant directly.
This has become a huge part of commerce over the past 5–7 years and 40% of consumers say they would abandon their checkout if no BNPL solution were available.
This is now migrating over into B2B commerce.
Businesses use BNPL solutions to help spread large payments like recruitment fees, rent deposits, and big one-off purchases. By spreading these payments over 3–6 months, businesses can control their cashflow better and not have to part ways with a lump sum of cash all at once.
SNPL — yep, we’re abbreviating already, however, has another positive benefit.
Businesses ‘subscribe’ to software, to power their businesses. This software is referred to as SaaS — ‘Software As A Service’. These solutions are fundamental in todays business operations. 81% of people we spoke to said they’d be adding even more SaaS to their business as they grow, so you can really understand the importance of it.
SaaS pricing is typically structured in two ways and hasn’t really evolved since 2005.
- Pay Monthly — a fixed fee per month to use the software.
- Pay Annually — a one-off upfront payment to use the software for 12 months.
SaaS providers know that the majority of their buyers will pay monthly due to cash-flow preservation and affordability but actually, providers would rather more buyers paid annually. Paying annually means they have more money upfront and less risk of buyers churning. Here’s how they try to incentivise that:
For this company, their monthly price for there most popular tier is $99 per month.
But if you were to pay yearly, the equivalent price would work out as $69 per month, a $30 per month saving. You’d just have to fork out $828 up-front.
So there’s the difference.
- Pay 12 x monthly payments of $99 = $1,188
- Pay 1 x upfront annual fee = $828
By paying monthly, you’re actually paying more over the course of the year. Companies incentivise you to pay annually by dangling a huge discount-carrot (another phrase we’ve just coined!) in front of you.
Here’s where SNPL and lemon come into play.
At checkout, you select to pay with lemon (like you would Klarna) and chose the plan that suits your business best. lemon then pays the ANNUAL fee up-front for you, directly to the SaaS company.
You then spread that price (remember, it’s 30% less) over 12 monthly payments.
So in this instance:
- $828 / 12 = $69 monthly payments. No lump sum upfront, just $69 a month.
So we help you get the best of both worlds — the best price and the comfort of paying the best price on a monthly plan.
Unlike other B2B BNPL players, lemon is laser focussed on SaaS purchases. We’re partnering with some of the vital software that you need to run your business.
SaaS companies — we’re building the easiest, best and quickest way for you to turn your revenue into your strongest asset.
Learn more about Subscribe Now, Pay Later for SaaS.