I'm in the process of developing a website that will target small to midsize restaurants. Is it worth the expense to setup credit card processing from the outset for monthly recurring billing or is it better to just get things running faster with annual invoicing via Freshbooks and accept checks via mail and credit cards via PayPal?
Offer both (monthly billing and annual invoicing) and see which one works better for you. Neither are hard or expensive to setup.
Until you have a proven and reliable service that adds value to business owners, I expect most people will opt for monthly billing. It helps with their cash flow and allows them to cancel at an earlier stage.
Hence, it is in your interest to try and achieve yearly lockdown whenever possible, even if this means a hefty discount (on the bright side, this also means less admin for you and long-term payment upfront). Once people start using your product, and if it services thier needs, they will be less inclined to leave, especially if they have invested time and energy in setting things ups and creating their workflow around the product.
The decision is up to you, but it's pretty straightforward to set up credit card processing these days if you have time. Plus, you can even use PayPal for merchant services.
Think about who your customers are. If they are restaurant owners, are they more comfortable with paying through PayPal, giving you their credit card number directly (in person or telephone), or sending you a check?
PayPal are convenient to start with but are too expensive compared to a merchant account or other card processors (protex et al).
Also, PayPal offer little or no protection to chargebacks (even blatantly false ones) so I would be wary of using them for higher value items or non-physical services (e.g. subscriptions) that are exempt from its seller protection plan. I am not sure if using FreshBooks (which is an excellent product) will buffer/protect you.
Thanks for all the great feedback. I'm going to opt for an annual billing plan implemented via the Freshbooks API for now. Since I won't have a merchant account, I will not be able to offer a recurring monthly option.
I was researching merchant accounts and processors and planning to implement an automated system via authorize.net ARB. However, I found that this would actually give me less flexibility with pricing vs. a more manual solution. If the volume gets too high, I'll worry about it at that time (a good problem to have). Since this a B2B venture, checks via mail is probably a preferred option over credit cards (at least I hope so). With Freshbooks, I can probably implement monthly billing later on via Authorize.net without many changes.
I'd say get started as fast as possible with the fastest way possible to develop. We've gone for nearly 3 years "on the cusp" of adding credit cards. Next week...
My product is based on a monthly subscription, and to give me some time at the start I offered my first customers a discount for paying in advance, the minimum advance I got was 3 months. Gives the initial cash flow a healthy boost, saves the customers a bit of money, and lets me worry about credit card processing after all the fuss of the initial launch.
Until you have a proven and reliable service that adds value to business owners, I expect most people will opt for monthly billing. It helps with their cash flow and allows them to cancel at an earlier stage.
Hence, it is in your interest to try and achieve yearly lockdown whenever possible, even if this means a hefty discount (on the bright side, this also means less admin for you and long-term payment upfront). Once people start using your product, and if it services thier needs, they will be less inclined to leave, especially if they have invested time and energy in setting things ups and creating their workflow around the product.