Short Answer
SaaS companies bill for professional services using structured methods such as fixed-fee milestones, time and materials (T&M), or blended hybrid models. Billing is typically triggered by project phases, time logs, or completion events and handled separately from recurring software subscriptions.
Trigger Logic / Key Formula
Professional Services Billing = Scope of Work (SOW) defined → Billing method selected (Fixed Fee / T&M / Hybrid) → Milestone completion or hours tracked → Invoice issued per terms
How It Works
While SaaS revenue is typically subscription-based, many companies offer add-on services like implementation, training, and integration support. These are non-recurring services billed under separate terms. Here are the most common billing methods used:
- Fixed Fee: A set amount invoiced upfront or by milestone (e.g., 50% at kickoff, 50% at go-live)
- Time & Materials (T&M): Billed hourly or daily based on tracked time, often with a not-to-exceed (NTE) cap
- Hybrid: Combines fixed project phases with flexible hourly support for change orders or ongoing services
Billing events may be triggered manually (by project managers) or automatically (from time tracking systems or project milestones). Invoices typically include labor line items, service descriptions, and contract references.
Real-World Example
A vertical SaaS platform providing both onboarding and API integration billed its implementation services using a fixed-fee milestone model. Payments were collected 40% at contract signing, 40% at sandbox deployment, and 20% at final handoff—reducing DSO by 30% over T&M contracts.
Frequently Asked Questions
Yes, but most billing systems keep them on separate schedules for clarity and compliance.
For T&M, it’s time logged. For fixed-fee, it’s milestone completion or phase delivery.
Not always. Some teams use ERP modules or separate project accounting tools.
Related Reading
For examples of SaaS platforms automating variable billing, read our deep dive on usage-based billing
Need to automate billing for both SaaS subscriptions and services? Explore Ordway’s Recurring and Metered Billing Platforms
