Build vs Buy: why billing infrastructure is hard

Building a billing system is one of those tasks that seems straightforward at first glance. After all, how complicated can it be to charge customers for your product? It's deceptively complex and filled with hidden challenges that can derail your entire business if not handled properly.

I've spent years working with startups on their billing systems, and the same question always comes up: should we build our own billing infrastructure or buy an existing solution? The answer depends on several factors, but understanding why billing is hard in the first place helps make that decision clearer.

The Hidden Complexity of Billing Systems

Billing isn't just about collecting payments. It's about managing the entire financial relationship with your customers—from pricing models to feature access, usage tracking, invoicing, and revenue recognition.

Variable Usage Patterns

One of the biggest challenges with billing infrastructure is handling variable usage patterns. IoT devices, for example, rarely follow predictable patterns of data consumption—some transmit large volumes in bursts while others send only occasional pings[[1]]. This variability extends to SaaS products too, where usage can fluctuate dramatically between customers and over time.

Traditional billing systems were built for static, one-size-fits-all models like monthly subscriptions. But modern businesses need flexibility to account for different plan sizes, billing intervals, and even seasonal usage patterns that vary across customer segments[[1]].

The True Cost of Building Your Own Billing System

When founders consider building their own billing system, they often underestimate the true cost involved.

Development Resources

Building a billing system isn't a one-time project—it's an ongoing commitment that diverts resources from your core product. Consider what you could build for your customers with those same engineering hours.

Maintenance Burden

Billing systems require constant maintenance. Payment methods change, tax regulations evolve, and security standards get updated. Each change requires development time to implement and test.

A custom billing system can result in a rigid infrastructure that becomes challenging to adapt as your business needs change[[2]]. What seems flexible today might become your biggest limitation tomorrow.

Compliance and Security Risks

Handling payments means dealing with sensitive financial data, which brings significant compliance requirements like PCI DSS. Building compliant systems from scratch is expensive and risky.

When Building Makes Sense

Despite these challenges, there are situations where building your own billing infrastructure might make sense:

Highly Unique Business Models

If your pricing model is truly revolutionary and no existing solution can accommodate it, building might be your only option. However, be honest about how unique your needs really are—most businesses overestimate their uniqueness.

Core Competitive Advantage

If billing is central to your value proposition and a key differentiator from competitors, investing in custom infrastructure could be strategic. For example, a company whose primary innovation is in how they charge customers might need proprietary billing technology.

Scale Economics

At massive scale (think millions of customers), the economics might favor building. Companies like Netflix and Amazon eventually built custom billing systems, but only after reaching enormous scale where the math made sense.

Why Buying Is Usually Better for Startups

For most startups, buying a billing solution offers clear advantages:

Focus on Core Product

Your engineering team should focus on building features that customers pay for, not infrastructure that only indirectly contributes to revenue.

Faster Time to Market

Implementing an existing billing solution can be done in days or weeks, while building one from scratch takes months or longer.

Reduced Technical Debt

Purchased solutions come with ongoing updates, security patches, and new features—all maintained by a dedicated team whose sole focus is billing.

Flexibility for Growth

Modern billing platforms are designed to handle various pricing models, from simple subscriptions to complex usage-based pricing with custom rules per customer.

Common Billing Challenges and How to Address Them

Regardless of whether you build or buy, you'll face several common challenges in your billing infrastructure.

Customization vs. Standardization

Finding the right balance between customization and standardization is crucial. Customizing every aspect of your billing system can result in a rigid infrastructure that's challenging to adapt as your business evolves[[2]]. On the other hand, too much standardization might not meet your specific needs.

The solution is to find a billing approach that offers flexibility within a structured framework—allowing customization where it matters most while maintaining standardized processes for the rest.

Managing Recurring Billing Disruptions

Recurring billing comes with its own set of challenges that can disrupt cash flow and customer satisfaction[[3]]. These include:

- Payment failures due to expired cards or insufficient funds

- Billing errors that damage customer trust

- Customer churn when value isn't clearly communicated

- Complex subscription changes that require manual intervention

Addressing these challenges requires both technical solutions and thoughtful customer communication strategies.

Construction Industry Example

The construction industry provides an interesting case study in billing complexity. Construction billing involves documentation-heavy processes that often lead to delays, errors, and cash flow issues[[4]]. The industry faces challenges like:

- Manual processes and excessive paperwork

- Late payments and unclear change orders

- Complicated contract terms requiring multi-party collaboration

While your business might not be in construction, many of these same challenges apply across industries—especially when dealing with complex, variable, or usage-based pricing models.

Evaluating Billing Solutions: What to Look For

When evaluating billing solutions, consider these key factors:

Integration Capabilities

Look for robust APIs and pre-built integrations for common enterprise systems[[1]]. Even with a strong IT team, it's often faster and more effective to partner with a provider who can support seamless integration between billing, user authentication, and service management.

Pricing Model Flexibility

Your billing solution should support the pricing models you need today and those you might want to implement in the future. This includes:

- Usage-based pricing

- Tiered pricing

- Seat-based models

- Hybrid approaches

- Custom pricing per customer

Automation Features

Automation reduces manual work and human error. Look for features like:

- Automatic payment retry logic

- Proactive card expiration handling

- Usage alerts and notifications

- Automated invoicing and receipts

Developer Experience

The quality of documentation, SDKs, and developer tools can significantly impact implementation time and ongoing maintenance costs.

The Open Source Alternative

Between fully custom solutions and commercial platforms lies another option: open-source billing infrastructure. Open source offers several advantages:

- Transparency into how the system works

- Community-driven improvements

- No vendor lock-in

- Customization flexibility without starting from scratch

Autumn is an example of an open-source abstraction layer that sits between your application and payment processors like Stripe. It manages pricing models, feature permissions, and billing flows with a simple integration approach.

The core functions of such systems typically include:

1. Handling purchases and checkout flows

2. Checking feature access or usage limits

3. Tracking usage events

This approach gives you the flexibility of a custom solution with much less development effort.

## Making the Decision: Build vs Buy Framework

To decide whether to build or buy your billing infrastructure, consider these questions:

1. Is billing a core competitive advantage for your business?

2. Do you have unique requirements that no existing solution can handle?

3. Do you have the engineering resources to build and maintain a billing system?

4. What is the opportunity cost of those resources?

5. How quickly do you need to get to market?

6. How much flexibility do you need for future pricing changes?

For most startups, the answer will point toward buying or using an open-source solution rather than building from scratch. The time and resources saved can be invested in your core product, which is ultimately what customers are paying for.

Conclusion

Billing infrastructure is hard because it sits at the intersection of product, finance, and customer experience. It needs to be flexible enough to support your business model while being reliable enough to handle your financial operations.

For most startups, building a billing system from scratch is a distraction from core business goals. The smarter approach is usually to leverage existing solutions—whether commercial platforms or open-source alternatives—that give you the flexibility you need without the maintenance burden.

Whatever path you choose, remember that your billing infrastructure should enable your business strategy, not constrain it. The right solution grows with you, adapts to changing needs, and ultimately fades into the background so you can focus on what matters most: delivering value to your customers.

Citations

[1] https://www.zipitwireless.com/blog/4-top-iot-billing-challenges-and-solutions

[2] https://www.digitalroute.com/blog/billing-challenges/

[3] https://optimizedpayments.com/insights/understanding-payments/6-common-challenges-that-disrupt-recurring-billing/

[4] https://www.paystand.com/blog/construction-billing-challenges