How to Grow Your Field Service Platform’s Revenue Up to 3X
As the software and payments industry continues to evolve, it’s no longer a question of if — but rather when — field service platforms will pivot to a more modern, scalable solution for payments. Embedded payments are a way to maximize revenue and remain competitive in your industry, and field services isn’t the only SaaS vertical making the change. Other verticals like childcare, fitness, medical, dental and property management are realizing that gaining more control over their merchant portfolio and customer experience is a win-win for their company.
Perhaps your solution is designed for HVAC businesses and does everything from route management to inventory to CRM, all while processing and reconciling one-time and recurring payments. If you already have payments volume flowing through your platform, you may still be outsourcing payments and finding that it isn’t generating the kind of revenue you need to scale in a meaningful way. In an industry where you are largely reliant on recurring payments, you will leave significant revenue on the table by not considering embedded payments for your platform.
Not to mention the pressure is on to account for recurring payments, coverage of all payments types, card present and card not present, and complex billing and fee models, all while delivering a world-class, seamless user experience.
Offering payments as a feature of your software increases your revenue by 2-3x and creates a stickier product, all of which leads to increasing the total enterprise value (TEV) of your software. It’s about more than just the revenue upside though. Choosing an embedded payments solution should empower you to minimize friction for your customers, be better positioned for retention and remain competitive in the field services space. In this blog, we will dig into how monetizing payments works for field service platforms and what to do to ensure your success.
The ultimate power tool for building revenue
So, what does it mean to transform your platform into a revenue generation machine? Let’s start by explaining a few key terms:
- Volume: The dollar amount of payments you are processing through your software in a given time period (monthly, annual, etc).
- Processing Cost: Cost to process the payments volume running through your platform.
- Vendor Fees: Fees typical companies in the embedded payments space will charge for a solution.
- Interchange: Transaction fees set by the card networks (Visa, Mastercard, American Express, Discover) whenever a customer uses a credit/debit card. These are paid to the card-issuing bank to cover costs for fraud and the risk involved in approving a payment.
- Basis Point: A simplified unit of measure that expresses percentages in finance.
- Net Revenue: The margin to your platform via embedded payments.
Your revenue from embedded payments is the difference between the buy rate from your payments provider and the go-to-market rate you charge your customer. For example, let’s say you’re processing $100M in payments for field service businesses through your platform. If your processing fees are ~3%, your total processing cost will be about $3M. Going a layer deeper, your processing cost is made up of ~1.8% in interchange fees (which will vary by card brand) and ~.2% in vendor fees paid to your embedded payments partner.
As a platform, you can earn up to 100 basis points with embedded payments1. Typically 1 basis point is equal to $1,000 in net revenue for every $1M in volume you process. So if you are processing $100M in volume on your platform, your net revenue from payments will be around $1M. Embedded payments transform what is purely a cost center in a traditional payments model into bottom-line revenue that can be invested back into your company.
When a cloud-based platform for lawn care, pest control and pool care businesses approached Payix with a vision to enhance their bottom line by helping their field service customers grow quickly, scale intelligently and increase revenue, we knew we had the right solution for the job. By leveraging Payrix Pro, they were able to achieve their vision in short order all while delivering a superior product and customer experience.
The partner with all the tools you need
Monetizing payments may already sound attractive to you — but in order to scale from where you are today to your maximum revenue potential —it requires a strategic approach. Choosing an embedded payment solution is a step in the right direction, but it’s not the complete formula for success.
The right partner will help you establish a payments roadmap and timeline for integration. Once you’ve thoroughly scoped how you will enable payments on your platform, develop a monetization strategy to maximize your payments revenue by:
- Charging a % transaction fee for payments that are processed through your platform
- Charging a flat fee for payments processed
- Marking up payments as a premium feature or bundle of features
- Including fees for non-traditional payment services (i.e. sign-up, monthly SaaS, funding/payout) in your pricing strategy
- A combination of the above
How you will get your customers to adopt your new solution also plays an integral role in accelerating your time to revenue. In order to move quickly, you must have a plan in place to generate adoption. Driving adoption is all about understanding the needs of your field service customers and communicating the benefits of your solution.
If you’re working with an embedded payments partner like Payrix, the resources to support your short and long-term vision will already be in place. Payrix provides an expert team that takes on the heavy lifting of maintaining the technology and managing risk and compliance, so you can focus on growing your business. With an all-in-one solution and guidance at every step of the process, you have everything your platform needs to unleash your possibilities with Payrix.
1Your annual payments revenue opportunity range is estimated based on go-to-market pricing and estimated interchange fees.