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Spreedly doubles pricing.

henrydillon.com

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Re: Spreedly doubles pricing.

#31

Post by ntalbott »

primigenus wrote: post #23

Last year here on HN, Nathaniel said this: "The ridiculously huge mistake I think Chargify made here was something I thought was just a given these days: they should've unilaterally grandfathered all of their existing clients, and quietly given the grandfathered plan to anyone who was already integrating but not yet launched as well." ( http://news.ycombinator.com/item?id=1781104 ) It's one thing to trash your compet…

One learns a lot in a year. I said some things then that I wish I'd had more experience to back up; if I had, I probably would have tempered them more. That said, I also said this:

"Even if you absolutely have to raise prices across the board, I think three months of warning is the absolute minimum amount of time to give a customer base before you hit them with the increase."

We're doing that, with a unilateral offer to grandfather customers for 90 days.

In general, I still think grandfathering is best when possible, but when you realize your business isn't growable (and barely sustainable) at current prices then something's gotta give. We've put this price raise off too long, hoping to soften it with new features, etc., but it's a chicken and egg problem. We can't do what needs to be done without the resources to do it. So prices have gone up, and it's the next day and we're in a better spot to help all our (remaining) customers rock.

Re: Spreedly doubles pricing.

#32

Post by ntalbott »

ohashi wrote: post #13
mikeryan wrote: post #11

Earlier quoted context omitted.

I realize that there's many HN Members who may be trying to start a company in 3rd world countries where $30 is a significant chunk of change, and this may sound harsh. But if your business, at any point, can't absorb a $30 a month increase in fees for something as important as your subscription billing system then something is wrong.

I am not really sure it's the price change that is most offensive. It's the fact they were willing to do it without regard for their current customers. I don't want to deal with a company that is happy to change their price whenever they feel like it and I get the short end of the stick.

Trust me, we weren't happy about having to raise the price. It was a painful, hard-fought decision to change it internally, and to not permanently grandfather existing customers. But in the end it's about having a sustainable business - the worst possible outcome for customers is for the service they were powering their billing with to disappear altogether.

Re: Spreedly doubles pricing.

#33

Post by ntalbott »

timharding wrote: post #22
patio11 wrote: post #6

My monthly Spreedly bill went up by approximately the amount I spent on AdWords between 9 AM and 3 PM on Friday. I know pricing discussions generate a lot of heat, but honestly, $30 is not a lot of money. Nor does it magically become a lot of money after you have 500 customers, at which point you have very high-class problems. Here, let me extend that graph with one extra line: http://images1.bingocardcreator.com/blo…

Again, it's not the fixed cost. It's your per transaction pricing that has doubled so over the lifetime of your business and as you grow you'll pay 40c instead of 20c every month for every customer.

Once you hit sufficient transactions/month your per transaction fee will drop back to 20¢/transaction.

Re: Spreedly doubles pricing.

#34

Post by ntalbott »

Silhouette wrote: post #12

I think those suggesting that this is an insignificant rise are missing the point. These subscription billing services have close to the most powerful lock-in imaginable on your business. When you commit to one, you are trusting them with a vital part of your operations. At best, switching later is going to be disruptive to your business and potentially damaging to your customer relations. This is the third of the mo…

That's certainly one perspective; prescience is something I wish we were better at. Another perspective is that a startup is a search for a viable business model, and each of the subscription services in turn has realized that their entry price in to the market was decidedly unviable. We were able to sustain ours for longer than most because we (a) never offered a free plan, and (b) have kept our overhead ridiculously low. But (b) has kept us from improving the service like we need to, which in turn hampers growth, which is a nasty feedback cycle.

So it was time, and it was painful, but now we get to focus in on the fun stuff: making the service more awesome, and growing.

Re: Spreedly doubles pricing.

#35

Post by ntalbott »

veyron wrote: post #5

If it is so sticky, why don't people sign up for multiyear contracts for recurring billing services with some sort of price guarantee?

Think businesses would bite? Month-to-month, no minimum, cancel any time is so much in vogue, it's hard to imagine there would be much traction around a multi-year contract, but maybe I'm wrong.

Re: Spreedly doubles pricing.

#36

Post by ntalbott »

bigiain wrote: post #14
happyfeet wrote: post #4

It is surprising to see this coming from Spreedly, especially in the context of their previous discussion on the same topic in HN (when Chargify increased price). When you price a subscription product, one should factor in long term sustainability at that price, for a long time. Any price increase due to additional features / facilities you provide - say 24*7 on-call support, must not be burdened on your existing use…

"It is surprising to see this coming from Spreedly" Really? A relative newcomer to e online payments space, undercutting the status quo pricing of the incumbents, suddenly finding they've underestimated the costs of running their service? Doesn't surprise me at all... If I were building a new business based on any of the new online payment services, especially if they're significantly less expensive than traditional…

This makes me chuckle - the funny thing is that we were actually the first "small business" subscription service - Chargify, Recurly, etc., all launched well after us. That said, it also meant we didn't have any point of reference when we initially set pricing. I think we actually did surprisingly well four (4!) years ago, given the lack of information we were working with.

Re: Spreedly doubles pricing.

#37

Post by ohashi »

ntalbott wrote: post #31
primigenus wrote: post #23

Last year here on HN, Nathaniel said this: "The ridiculously huge mistake I think Chargify made here was something I thought was just a given these days: they should've unilaterally grandfathered all of their existing clients, and quietly given the grandfathered plan to anyone who was already integrating but not yet launched as well." ( http://news.ycombinator.com/item?id=1781104 ) It's one thing to trash your compet…

One learns a lot in a year. I said some things then that I wish I'd had more experience to back up; if I had, I probably would have tempered them more. That said, I also said this: "Even if you absolutely have to raise prices across the board, I think three months of warning is the absolute minimum amount of time to give a customer base before you hit them with the increase." We're doing that, with a unilateral offer…

To be fair, grandfathering doesn't mean putting off a price raise for a limited amount of time, it means not changing the terms/policies/pricing for the duration of the account because they signed up with those and should keep them. You're simply giving them 90 days notice.

Re: Spreedly doubles pricing.

#38

Post by Silhouette »

ntalbott wrote: post #34
Silhouette wrote: post #12

I think those suggesting that this is an insignificant rise are missing the point. These subscription billing services have close to the most powerful lock-in imaginable on your business. When you commit to one, you are trusting them with a vital part of your operations. At best, switching later is going to be disruptive to your business and potentially damaging to your customer relations. This is the third of the mo…

That's certainly one perspective; prescience is something I wish we were better at. Another perspective is that a startup is a search for a viable business model, and each of the subscription services in turn has realized that their entry price in to the market was decidedly unviable. We were able to sustain ours for longer than most because we (a) never offered a free plan, and (b) have kept our overhead ridiculousl…

> Another perspective is that a startup is a search for a viable business model

Sure, and I personally have nothing against you trying to do that. It's a tough market to get into, no doubt, and any new business is going to have its share of stumbles in the early days.

On the other hand, that doesn't change the fact that it would be dangerous/irresponsible for the executives at most organisations to rely on your service for something as fundamental as accepting payments until you've got over those stumbles and you are clearly a viable partner for the long term. Nor does it change the fact that one way or another, you're clearly still stumbling at this point, even if you're stumbling with style! :-)

As the saying goes, it's not personal, it's just business. To me (as someone who runs businesses himself and would love to outsource all the payment hassles for just about all of them) I can't see the case for relying on a start-up at this stage of development for this sort of service. If your prospective client is already well-established, they can afford to do anything your start-up can do in-house to keep the costs down and get exactly the solution they want, so the reward for outsourcing isn't high. If your prospective customer is running a start-up themselves and looking to outsource, they could be betting their entire business on the abilities of other people outside their control (i.e., your team), which is a tough call to make without at least obvious financial backing and a proven track record behind you, so the risk for them is high.

I wish you luck in your quest to find that viable model. Perhaps you can bring enough similarly entrepreneurial folks along with you for now to reach the point where you do offer higher rewards with lower risks, at which point I'm guessing you've made it.

Re: Spreedly doubles pricing.

#39

Post by veyron »

ntalbott wrote: post #35
veyron wrote: post #5

If it is so sticky, why don't people sign up for multiyear contracts for recurring billing services with some sort of price guarantee?

Think businesses would bite? Month-to-month, no minimum, cancel any time is so much in vogue, it's hard to imagine there would be much traction around a multi-year contract, but maybe I'm wrong.

I would sign up, if that's any consolation :)

More generally, it's one of those things that you don't want to change if it works well. Maybe the best model is an short term contract (e.g. 3 or 6 months) which can roll into a multiyear contract.

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