Zoho’s Latest Service Targets Subscription Economy

Zoho.com has been delivering online applications since 2005. That’s long before most of us were calling it the cloud, and today it has over 30 applications, most of which to this point have been aimed at the front office with applications such as an office suite, email, CRM and project management. But Zoho.com wants to begin focusing on the back office more –and today it announced a new subscription management service called Zoho Subscriptions that is tightly integrated with its accounting package, Zoho Books.

Zoho.com differentiates itself from the pack by offering enterprise-grade programs in the cloud for a competitive price, and they are not shy about pointing out that, while their competitors in the cloud take millions of dollars in venture capital and bleed red ink, their company has never taken a penny of outside money. It’s worth noting that Zoho.com is a division of Zoho Corporation, which also includes ManageEngine and WebNMS.

As company president Raj Sabhlok told me, they spend their money carefully and diversify across these different services, which helps keep them profitable. “We’ve never taken any funding. [We are completely] bootstrapped. So, we’ve been profitable nearly since inception, 18 years ago (when the parent company launched). The company is in many lines of business, but our guiding philosophy has been don’t invest ahead of our means. See success, and then invest more incrementally. We remain a private company, and have no plans to go public or sell. In fact, we want to become one of those rare private billion dollar companies,” he wrote to me in an email.

The new subscription service  the company is launching today is part of that diversity. They want to begin building applications aimed at back office management. Sabhlok says what separates Zoho Subscriptions from the competition is the tight integration with the accounting package, creating what he calls “a bridge between the subscription economy and traditional accounting.”

The way it works is you enter your subscription information in Zoho Subscriptions, and it handles the entire transaction including invoicing, credit card information, receipt generation and capturing the monthly revenue –and it shares that revenue with Zoho Books. So say the subscription is for a  year at $10 per month. The $10 is captured in Subscriptions, but also shows up as revenue in Zoho Books automatically in real time, so that you don’t have to enter it again. Sabhlok says this shared code base is a competitive advantage over stand-alone cloud services which may integrate with other cloud services via open APIs, but don’t have the built-in integration.

“Companies need to have an integration strategy. They may be able to get it through coopetition, but our strategy is to provide it out-of-the-box. We build everything in-house off a common code base. We believe this strategy wins out over integrations or acquisitions,” he told me. But he added that in spite of that they too offer open APIs for companies who require integration with other programs, recognizing that not everyone will use Zoho for everything.

In addition to the bookkeeping aspect of Zoho Subscription, it also provides business metrics related to subscriptions. This allows companies based on the subscription economy to see how well their business is performing using common subscription metrics such as monthly recurring revenue (MRR), average revenue per user (ARPU), life time value (LTV), churn rate and activation count, giving subscription based businesses an accurate picture of their current performance.

To entice people to try the new service, Zoho is offering a 6 month trial that includes both Zoho Subscriptions and Zoho Books for $49 per month for unlimited transactions. After the trial period, the two services cost $49 per month for 50 credit card transactions, and $5 for every additional 50 credit card transactions.

Photo Credit: (c) Can Stock Photo