
Spreedly doubles pricing. - happyfeet
http://henrydillon.com/post/11765998401/spreedly-doubles-their-pricing-and-then-some
======
primigenus
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 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.

~~~
ntalbott
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.

~~~
ohashi
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.

------
patio11
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/blog-
images/hn/spreedly-...](http://images1.bingocardcreator.com/blog-
images/hn/spreedly-price-change.png)

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.

~~~
timharding
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.

~~~
patio11
$2.40 per customer per year? If you can even see this difference, raise
prices.

------
Silhouette
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 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.

~~~
olefoo
Or it could be that all three of these subscription billing companies got
shafted by their correspondent banks...

~~~
timharding
None of these guys pay the banks. Their customers are already paying a for
payment gateway for that service, they sit on top providing recurring billing
and subscription management.

------
arctangent
I'm very surprised they haven't chosen to "grandfather" existing customers, so
that they can remain on the previous pricing model.

~~~
happyfeet
True. They have proposed to "grandfather" the current plans only upto 90 days
so customers to migrate elsewhere, if they opt to.

~~~
eps
And this probably means that they did the numbers and whatever they are going
to loose with those who leaves will be offset be increased fees paid by those
who sticks around.

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

~~~
ntalbott
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.

~~~
veyron
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.

------
happyfeet
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 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.

~~~
bigiain
"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
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.

~~~
ntalbott
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.

------
MichaelApproved
Sure, users can export and migrate, but that costs time and money to do. Code
must be updated to work with the new provider and other projects would be put
on hold.

~~~
patio11
Exactly. If your engineering costs swamp $30 -- and they do -- this
announcement is a total non-event for you.

~~~
MichaelApproved
Sure $30 may not be a big deal but what's going to happen next time? And the
time after that?

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.

------
bcx
I know the Spreedly guys personally (and have been using them for years).
Honestly, they underpriced their services and need to make more money if they
are going to add features and build a better product.

Doubling their prices certainly seems like a reasonable idea, I wonder what
other models they looked at.

------
timharding
It's not so much the rise in monthly fixed costs that's the problem.

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.

------
brockf
<plug> Run your own Spreedly and stop adding service fees to your payment
processing fees! <http://www.opengateway.net/> </plug>

