"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 competitor publically. It's another to then do the exact same thing you were complaining about one year later.
This isn't about the numbers - $30 is jack squat. This is about principles. With this decision, Spreedly shows that they can say one thing and then do the exact opposite. And that's troubling.
"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.
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/blog-images/hn/spreedly-...
This subject seems tailor-made to solicit opinions from pathological customers who are not likely to be either good customers for Spreedly or successful at selling many accounts, totally regardless of whether Spreedly costs $5, $50, or $500 a month.
It is a significant difference for those starting up with small customer base (10 or 20) to pay from $23 earlier to $53.
I don't use Spreedly, but it is a similar case with the AppEngine pricing: I want providers to charge a fair price and keep providing services. Also, same as AWS: I have customers who grumble some on their monthly bills, but providers need to charge a fair market price.
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 most well-known recurring billing services to sharply increase prices in the not-so-distant past, after Recurly and then Chargify. In each case, that suggests they have either screwed up their projections so much that they had to grab extra money or deliberately screwed their customers over by dramatically increasing costs when they have an all-but-captive audience.
Either way, that is a serious black mark against an organisation that's asking you to trust them with something as important as your payment processing, particularly when those organisations are already relatively tiny compared to most payment-related services and therefore inherently risky to build on anyway.
BTW, blog posts from these services about how they are just trying to find a sustainable business model and hope their customers will understand aren't exactly reassuring. If they could get things so badly wrong before, why should we trust that they are doing any better now and won't see another rise next year?
This isn't newsworthy because of the amounts involved. It's newsworthy because it reflects on the competence of these payment services and illustrates a dangerous trend.
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.
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.
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.
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 users.
Provide a way for existing users to "opt" for those at a higher price, but leave them at the current price as they stand.
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 merchant accounts or PayPal, I'd be treating it as a short term windfall until they discover the hidden costs they're not charging you for. If they're _very_ lucky, maybe they've got some brand new fraud prevention technology that means the genuinely have lower running costs than PayPal or Visa, but I wouldn't bet _my_ business on it.
What a terrible situation to be in. I sign up for a product, in part based on their pricing, and they bump up the cost knowing it'll be too expensive for me to move.
If this happened to me, it might be too expensive for me to move an existing product away from them but it'll definitely keep me from putting another project on the platform.
For the record, I'm using Recurly, so I'm talking directly from the point of view of an existing and paying customer.
Doubling their prices certainly seems like a reasonable idea, I wonder what other models they looked at.
It's the doubling of per transaction pricing (that will just sting month after month) and the lack of features compared to now cheaper competition. Recurly at 10c vs. Spreedly at 40c.
