
Chargify New Pricing - MicahWedemeyer
http://chargify.com/blog/chargify-news-new-pricing-features-more/
======
jacquesm
> we do need to migrate everyone to the new pricing

You can't change your pricing upwards for existing customers, ever.

You can change your price to anything you want for new customers.

You can decrease your prices for anybody at any point in time.

Something like chargify is the basis for the business models of other parties,
if you made a deal in the past you have to honor it, so that your customers
can honor the deals that they made.

~~~
davidu
Agreed.

First, it's crazy that Chargify is not talking about this here and responding.
(Update: they are responding quickly via Twitter)

Second, when will companies understand and learn that you simply CAN NOT do
this. Hell, how can any board member let a company do this?

We just started looking at Chargify for all OpenDNS enterprise users (doing
many $mm/year in transactions) but we thought their pricing might not scale up
for us. So we had it on hold. The distinction between free and paid customers
was critical for us.

Now I know I was right not to pursue it. We'll continue with our home-built
solution.

~~~
jackowayed
> _Update: they are responding quickly via Twitter_

Saw this when skimming their tweets:

"@jamiequint We're making changes as we speak for existing merchants."

<http://twitter.com/Chargify/status/27063975080>

------
markbao
Wow, really? Chargify just lost its position as the best choice for
subscription management. Extremely glad we didn't launch yet with Chargify...

Here are some Chargify alternatives that we are looking at: Recurly,
<http://recurly.com/pricing/> at 200 transactions and 500 users $29/m -
Spreedly, <http://spreedly.com/info/pricing/> at $19/m + $0.20/transaction or
2% per transaction if less - CheddarGetter,
<https://cheddargetter.com/pricing> at $39/m -> 1000 customers, $0 per
transaction.

At the moment, we're probably going to switch to Spreedly, since the rates
look good and they've been around for a while. Depends on what kind of dunning
management they have.

Correct me if I'm wrong, but it's pretty ironic that it was part of the lean
startup bundle.

~~~
cglee
Last time I looked, Spreedly's API and functionality wasn't even in the same
ballpark as Chargify's. I've worked on integration projects with both, and
Chargify is much better and more configurable. Spreedly may have improved,
it's been a while.

~~~
ntalbott
On the one hand, I agree with you - Spreedly's not as feature rich as some of
the competition. On the other hand, we have a lot of _very_ happy customers,
so that doesn't mean we're not a good fit for a significant set of startups.

~~~
cglee
Very true, please count me as one of your satisfied customers. In a different
comment, I did say Spreedly would be a great fit for those who just want a
straight forward recurring billing solution, without deep API integration and
other features offered by Chargify/Recurly. I forgot to note that here.

~~~
jacquesm
Deep API integration translates in to 'more lock-in'. Better try to handle as
much of the business logic other than the initial add, the rebilling and the
deletions upon account expiry yourself.

Keep your interface to services like this as thin as you can get away with
without compromising customer comfort, in the long run you'll be very happy
you did.

------
matt1
I've been slowly integrating Chargify into my app for the last several weeks
and was blown away to read about this just now. One of the big selling points
for me was the fact that it was free for up to 50 customers. I thought this
was brilliant on their part because neither Recurly or Spreedly offer this. It
got you locked into using their service, which is huge.

That being said, I bet that 95% of their users are under the 50 users/month
threshold and it must cost a bit to support them all. They must have
calculated that it just wasn't worth it.

I wish they would offer a cheaper plan for up to, say, 100 users. I think that
would a great middle ground for new apps.

I wrote a blog post a few weeks ago comparing the costs of Recurly, Spreedly,
and Chargify and concluded Chargify was way in front [1]. I think they're way
behind now.

[1] [http://www.mattmazur.com/2010/08/comparing-recurly-
spreedly-...](http://www.mattmazur.com/2010/08/comparing-recurly-spreedly-and-
chargify/)

~~~
MicahWedemeyer
This seems like a big shoot-self-in-foot moment. To get to 50+ users you have
to start at zero. Cut out all your <50 customers and you'll never have any >50
customers. Seems blatantly obvious to me. I guess I must be missing something.

~~~
alextgordon
I don't know why they don't just charge a set monthly amount for each user (up
to a threshold). Say $1. So if you have 20 users you pay $20/month. That would
allow them to keep their existing customers, cover their costs and provide a
path for people to work up to $99/month.

Also, they shouldn't have doubled their fees for existing paying customers.

~~~
3pt14159
I empathize with you're sentiments, but I ran a split test for a SaaS based
business and it turns out "packages" convert better, at least for their target
market (law firms). It would be nice if everything was just a continuous
curve, but people are more sold on "plans".

~~~
alextgordon
Hmm. I can understand that. But I don't think it applies here, since the
distinct plans would still be there for customers with more than 500 users.

The per user $x pricing would only change things for customers with less than
100/x users, which let's face it, they're not going to be making _any_ money
off now.

------
dh
My name is David Hauser (@dh) and I am a founder at Chargify as well as the
Grasshopper Group where I have spent the last 7 years serving hundreds of
thousands of entrepreneurs and helping them to succeed. I want to respond
directly here and invite anyone to reach out to me personally on Twitter or
email to talk about this or anything else.

We made a mistake with how we implemented and communicated a massive price
increase and in doing so totally ignored our loyal and amazing customers that
spent the time to integrate with Chargify. After starting many companies with
NO outside capital I understand the struggles of a bootstraping company or
lean startup so we should have done better with this.

Listening to the feedback here and via many other channels this was very clear
and we wanted to make a quick change. We have released a $39/month plan that
supports 100 customers for anyone that has signed up for an account, does not
matter if you never used or have not started to integrate. Some important
points.

\- Only active customers are ever counted in your customer count

\- $39/month plan will be available for anyone that has a Chargify account
now. Do not worry that you will miss signing up, it will be available for you

\- Offering the type of support that we want to is not cheap, and it is how we
do business

\- PCI Level 1 is both expensive and valuable and we want to provide that to
our customers

While we firmly believe that Chargify and many competitors provide great value
to a company that wants to do recurring billing we realize the mistake that
was made. We will not go back to free as it will not allow us to support our
customers the way we want to. There will always be a "cheap" or cheaper
competitor out there but we are not that one.

~~~
toast76
Firstly, thanks for the change of plan. But don't think you're off the hook
that easily! :P

I understand the need to ditch free users. It's a common tale that supporting
free users is just not worth the effort. But realistically, dropping a bomb
like this on the many customers you already have which are either "only just"
paying or "about to pay" is just plain horrible. Startups who are just ticking
over to the base paid plan are particularly vulnerable, not to mention the
hundreds of customers who are no doubt not that far yet. The point is, that
EVERY one of your customers starts off with ZERO of their own customers.
That's what made your pricing so great for bootstrapped startups like us.
Today, you've made it just that little bit harder for people like us.

We started using Chargify in production about 60 days ago. We were just about
to write our first cheque to you, and I've even mentioned to Lance that I was
actually looking forward to it. In my mind, getting to 50 paying customers was
something of a milestone. But to go from budgeting for $50 a month to now
budgeting $100 a month on top of the all the merchant fees for both is just
about a show stopper. I guess that just means we're not in your target market.

I don't think anyone expects businesses like Chargify to offer their (awesome)
product for free. But for someone who has been in business for so long, it is
hard to believe you guys are so naive as to think this would go down at all
well. Especially when it has happened time and time again with others only
recently.

Chargify is in the unique position of having a fairly substantial "lock in" on
customers. The switching costs for us is huge. For us to change to competitor
would be prohibitively expensive. When you're in that position, it's
unpleasant to be reminded just how much power a third party has over your own
business.

I mentioned in another post here that UsabilityHub has just shy of 10,000
users. 90% of those were migrated from our previous system (paypal) which
wasn't subscription based. At the time I made the decision to keep those users
out of Chargify rather than paying $40 a month to maintain them. I felt
dishonest for doing so, but now that I'd be getting charged $1000 a month for
those "free" users, it was possibly the best decision I ever made. We got out
relatively unscathed, but that is how close we come to being forced to shut
down our product because of pricing decision made by a third party. Let that
be a lesson to all.

The moral of the story here, however, is that you guys have spent nearly a
year building up some pretty awesome goodwill amongst the startup community.
Today you've turned around and told all of us that we don't matter to you. You
guys have spent so long telling us how the banking sector is "doing it wrong",
is too expensive and has too many fees, and then you turn around and join
them.

To underline all of this, Chargify is now the most expensive part of the
billing chain for startups. Congratulations.

EDIT: I'm currently in the process of implementing "one time" purchases using
Chargify. This is our most requested feature. Given that all these users will
be counted as "active users" in Chargify, we'll be getting billed for every
one of our 10,000 users that decide to make a "one time" purchase even though
they're not actually subscribers.

So I guess I need to explain to our customers why we won't be doing that any
more.... this just keeps getting worse.

~~~
rksprst
I've met David and he is a great guy that really cares about entrepreneurs, so
I'm surprised about how they went about this pricing change.

The pricing change itself makes total sense (startups who never get any
traction/paying customers end up costing a ton and never pay anything) - but
changing to a pricing structure that can hurt so many entrepreneurs (like in
toast76's case) seems the wrong way to go.

Is the cost to grandfather in all the existing customers really worth all the
brand damage this created? Not to mention the startups that are now cash-flow
negative since they are being suddenly charged for all their free users (and
apparently one-time payment users).

The icing on the cake is that their branding is focused around being the
service provider to entrepreneurs.

~~~
toast76
That's the bit that upsets me. I've dealt with Lance in particular quite a
bit. These guys are fanatical about helping out. I WAN'T to give these guys
money. I love their stuff, I love their spirit. If this was Paypal I wouldn't
be posting here... I'd just be closing my account.

------
youmon
Chargify can charge what it wants, but the pricing change was abrupt and BIG.
Apps on the ground floor went from FREE to $1200/year. No grandfathering, 30
days to accept. For a service that needs to be integrated, that's a terrible
move that shows no respect for startups.

~~~
wheels
What's worse is that if you're already using them, you basically have no
choice in the matter since the alternative is trying to get all of your
customers to sign up again, which is basically a non-starter. Note that they
also doubled prices for their first tier of _paid_ customers from $600 to
$1200.

~~~
MicahWedemeyer
Well, technically you have all the customer data in your gateway's info
manager (like Authorize.net's CIM), but it would still be a real bitch to take
that and do anything useful with it. Plus, the clock is ticking on your 30
days to get it migrated to your new setup.

~~~
jacquesm
CC, EXP and CVC as well ?

Without those you won't be doing much in terms of migration.

Other than contacting the customer, figure you'll lose 75% or more of your
business that way.

~~~
MicahWedemeyer
In our case, all that stuff is handled via the Authorize.net CIM. Chargify
stores everything in the CIM and just makes calls to Authorize's API.

To be clear: we can leave _Chargify_ , but _Authorize_ has us locked in.

~~~
jacquesm
What does chargify do for you that the authorize.net api can not do for you?

~~~
MicahWedemeyer
Honestly, I haven't looked closely at the raw A.net API. I heard about
Chargify, pricing looked good, and it fit my model. Basically, I wanted
someone else to deal with dunning, expired cards, running the periodic
charges, etc, etc.

I write about it more here: [http://peachshake.com/2010/06/15/saas-
subscription-billing-o...](http://peachshake.com/2010/06/15/saas-subscription-
billing-or-how-to-avoid-getting-your-nts-in-a-vice/)

Up to now, I've been nothing but pleased with Chargify. This change makes me
question their sanity a bit, though.

~~~
jacquesm
Here is the PDF with the authorize.net recurring billing integration
information:

<http://developer.authorize.net/api/arb/>

------
thetrumanshow
Spreedly: $20/month + $0.20 per transaction. .. and I'm using it on 2 apps.

I was considering trying out Chargify, but not anymore. Unlike Spreedly,
Chargify apparently wants me to pay a lot more up front for users I don't even
have yet.

~~~
symkat
Thanks, I've never heard of them!

------
MicahWedemeyer
This spooks me a bit. I'm a big fan of Chargify, but for their prices to jump
like this and totally remove the free plan is scary. That will make it much
less attractive to brand new web apps that don't have a proven business model.

With the new pricing scheme your setup cost for accepting credit cards are
merchant account, gateway (ie. Authorize.net), and $99/mo for Chargify. For
most brand new web apps that's going to be significantly more than you pay for
server/hosting costs. That's a bitter pill to swallow when you're not even
sure if anyone will actually pay for your service.

~~~
sv123
this is disappointing. we were looking forward to starting to use chargify
because of the free tier. Now I would be reluctant to even sign up until I was
sure I had at least a few paying customers. I don't remember exactly but the
free tier seemed pretty generous, maybe cutting that down to under 5-10
customers is free? To at least get people hooked on it without such a big
barrier to entry.

~~~
owkaye
Even giving me 5 customers free would encourage me to try them, but they can
forget that now -- because I'm not going to commit to anything close to $99 a
month unless I actually have hundreds of paying customers. Just my personal
point of view, but it feels like they have so much business now that they no
longer care about getting any new customers.

------
toast76
Wow. What a kick in the nuts.

UsabilityHub has just shy of 10,000 users. The VAST majority of those are free
users, and a fair percentage of those are inactive. My Chargify bill would've
just gone from $50p/month to $999p/month! And pretty soon I'd be looking at
having to NEGOTIATE my pricing. What the fuck chargify?

Fortunately for us, we saw the potential for asshole acts from Chargify and
never registered our free users with them. If we had...well...we'd be royally
screwed. $50 to $1000 with one newsletter.

I feel like a moron the number of times I pointed to Chargify as a great way
to do business. They were startup friendly, they helped you grow your business
to the point where you'd be happy when you start paying them. I know we were!
Most of all, Chargify were the beacon of freemium pricing. Not only were THEY
freemium, they were very freemium friendly.

In one swoop they've gone from the cheapest part of setting up your billing to
being BY FAR the most expensive part. What a bunch of suckers all your
customers are...us included.

Chargify, you will NEVER under the hate you've just brought on yourselves.

------
davidedicillo
Some Chargify alternatives:

<http://cheddargetter.com>

<http://www.spreedly.com>

<http://recurly.com>

<http://www.braintreepaymentsolutions.com>

~~~
cglee
Just a note that Recurly did this exact same thing several months ago, though
they've since changed their prices again. We were literally 1 day away from
launching on Recurly when they changed prices. Spooked by the sudden price
hike, we spent a good deal of time re-writing our ecommerce on Chargify. And
now this. Maybe it's time to just bite the bullet and roll our own solution.

Spreedly doesn't provide the same functionality, but it's great if you just
need a basic recurring payment solution without the frills or deep API
integration.

I haven't worked with CheddarGetter or BrainTree directly.

~~~
jacquesm
If you can at all afford it get your own merchant account and work with an
IPSP directly, keep control of your own data as much as is allowed and make a
deal that if they go belly up that you will get access to your accounts for a
one-time migration to another IPSP. Otherwise you're just setting yourself up
for big trouble down the road.

Middlemen in the payment business have a habit of going down when you need
them most (when your business is successful and you are growing like mad, have
a bunch of employees and suddenly your income evaporates).

iBill, DMR, now Jettis in trouble and many others besides.

All it takes is one big VISA fine for not following procedures and these
operations will fold like a house of cards.

~~~
boundlessdreamz
braintree looks like the best option then. They are PCI Level 1 compliant and
they are too big to go belly up and they have a great reputation.

------
apowell
I was piloting Chargify with about dozen customers to see if I wanted to make
it the default platform for all of my customers. Now, definitely not. This
bait and switch shows a complete lack of respect for everyone who has invested
in the platform.

Chargify, I'm sure you'll be laughing all the way to the bank, but not with my
money.

Does anyone sell an installable non-SaaS replacement for Chargify that
integrates with Authorize.net CIM?

------
bobx11
I spent the last two days porting our code from paypal web payments pro over
to chargify... and then they just jacked up their prices for starter level
from 0 to $1,200 a year, and you still have to subscribe to authorize and the
customer information manager - so they're just providing the gateway for
$100/month. Ruined my afternoon, and probably tomorrow as I look at the other
options like recurly.com , spreedly.com , cheddargetter.com , etc.

~~~
carbocation
If you want to waste a bit more time, it would be great if you would take
notes and submit a blog post to HN with what you find.

------
atldev
You can predict the response based on a similar move made by Zendesk back in
May (<http://techcrunch.com/2010/05/18/zendesk-pricing/>). Spoiler alert:
there will be backlash.

It also strikes me as a dangerous strategic move. The reason I originally
selected Chargify over competitors like Spreedly and CheddarGetter is because
they had the lowest entry cost. I can experiment and find product market fit.
By that point, I don't care so much about the monthly cost (and I'm locked in
to a product that I like, which helped me reach my goals). The new pricing
model is extreme enough to make me revisit the decision. I'm sure I'm not
alone.

I find their product and support to be great, and I'd like to see them keep a
similar model. Maybe they should lower the thresholds (free up to 10 paying
customers, for example). I'm sure there are other models that will work for
them and their customers.

------
matt1
Question, since this is getting a lot of discussion right now and it's
relevant for anyone this impacts:

If you run a subscription-based web app and you determine that you need to
increase your prices, what's the best way to do it?

Grandfathering existing customers obviously makes sense, but what if that's
not an option? What if you need to charge them more to survive?

~~~
Goosey
Make the old customers part of a 'legacy' tier which allows them to continue
to pay the same and receive the same, but don't allow new customers to join
that. Put new customers in the 'fancy shmancy' tier and allow old customers to
migrate there (with price increase) for whatever new features you are adding.

It's still going to be a bitter pill for the old customers, but it IS better
than saying "Sorry, you gotsa pay more now! Suckers!"

------
teye
I find the new pricing chart to be misleading. By listing the free account
next to their customer-enabled plans, at first glance I expect it to allow me
to serve customers.

<http://chargify.com/pricing-and-signup/>

Took me a minute to realize I get nothing (except the ability to integrate...
SCORE!) by signing up. Smart to drive signups this way, but I think
expectations are being set incorrectly.

------
ntalbott
Full disclosure: I run Spreedly, an earlier to market but much less funded
competitor to Chargify.

Here's the dirty little secret that Spreedly discovered about 18 months ago,
and that I'm sure Chargify - like Recurly before them - has now found out for
themselves: there are plenty of people who want to start subscription
businesses, and out of those, the _vast_ majority will not succeed and will
actually end up costing more than they ever bring in. That leaves businesses
in this space two options: either focus on successful startups and actively
filter out the "losers" (by charging a minimum of $99/month, for instance), or
minimize costs for "low probability" businesses - and they're all low
probability early on! - and use "cheap to try things out" as a star search for
the few businesses that will end up getting big.

Note that Chargify paired this price increase announcement with two other
significant announcements that have largely been overshadowed by the
hullabaloo: PCI Level 1 compliance, and 24/7 phone support. This pairing is
not coincidence - I'm pretty confident that the pricing change is very firmly
tied internally to these two new "features". PCI Level 1 compliance is a hefty
upfront cost _plus_ a large ongoing price tag. Good 24/7 phone support is
crazy expensive to provide, and means that free customers would eat their
lunch since so much of the support needs for one of these businesses is on the
front end.

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. When Spreedly
made our last pricing change - from percent of transaction fee to flat per
transaction fee - it was a price drop for most of our customers. But not all:
anyone with super low prices would've ended up paying us more, so we
explicitly made it the minimum of $0.20 or 2% of the transaction. There's just
no excuse for ticking off existing customers - it makes you look like a cell
phone company. 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.

So, that's my $0.02 - hope it helps folks understand why I think this is
happening. Questions, feedback, etc., welcome.

P.S. I think in some areas Chargify's definitely ahead of Spreedly
Subscriptions in terms of functionality - all of that extra capital definitely
shows in the end product. But that's because we've been focused on "what's
next" after you figure out the naive business model doesn't work in this
space. I said above that there are two options. That's a lie - we're working
on a third option. If there are any angels reading this that would like to
invest in a team that's been thinking deeply about this space since before
Chargify and Recurly were a twinkle in their founder's eye, drop me a line.

~~~
jacquesm
> here are plenty of people who want to start subscription businesses, and out
> of those, the vast majority will not succeed and will actually end up
> costing more than they ever bring in.

That's not exactly news, that's why you try to get a good grip on the life-
cycle of a cross section of your potential customers before you set a pricing
scheme.

A free customer should work out at any level of scale and any life cycle that
that customer can go through, the fact that there are 'many of them' or that
the distribution is not what you expected points to a lack of research of your
prospective customers.

Bait-and-switch by accident or by design makes no difference to your
customers.

> Note that Chargify paired this price increase announcement with two other
> significant announcements that have largely been overshadowed by the
> hullabaloo: PCI Level 1 compliance, and 24/7 phone support.

Wait until they start getting in to more and riskier transaction volumes,
they'll have to add up to 30 cts per transaction worth of fees for various
services to help with scrubbing the bad stuff from the good stuff to keep the
chargeback rates in check.

Otherwise they'll be spending a lot of money on airline tickets to warm and
sunny places trying to get merchant accounts from banks that mere mortals
would rather not deal with just to stay in business.

> 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.

100% agreed on that one, I really can't fathom with they decided to shoot
themselves in to both feet at once like that.

Do you guys do segregated merchant accounts (one merchant account per
customer)? If not how will you deal with a merchant account issue once your
volume is larger and you start to attract 'bad apples'? (like everybody else
that ever did multiplexed merchant accounts)

~~~
dangrossman
> Wait until they start getting in to more and riskier transaction volumes,
> they'll have to add up to 30 cts per transaction worth of fees for various
> services to help with scrubbing the bad stuff from the good stuff to keep
> the chargeback rates in check.

Selling a billing logic service to businesses isn't exactly high risk. Their
customers' users' payments do not go through Spreedly/Chargify... they just
talk to the API of the customers' payment gateways using their customers'
credentials. Any end-user chargebacks related to the subscriptions are on the
customers, not Spreedly/Chargify.

> Do you guys do segregated merchant accounts (one merchant account per
> customer)? If not how will you deal with a merchant account issue once your
> volume is larger and you start to attract 'bad apples'? (like everybody else
> that ever did multiplexed merchant accounts)

You misunderstand what these services are. They do not provide payment
processing in any way. They are only selling business logic the app developer
would normally have to write.

~~~
jacquesm
Yep, I got it now. They're even thinner than I thought they were.

I figured they did the actual processing but they just pass that on to an
upstream provider of such services.

Interesting niche.

------
proexploit
I just joined Chargify Oct. 7th after the AppSumo bundle offered a $200
credit. 4 days later, they've raised their prices. I'm going to scrap the work
I've done and go out of my way to use other services. The money isn't an
issue. $99/month is fine, but I wouldn't pay it to get started.

~~~
frankkysly
Just an FYI they have a free plan as well as a $39 plan.

------
adamhowell
I feel like I'm missing something, because going by these pricing charts --
<http://chargify.com/pricing-and-signup> \-- it seems like if you're a
Chargify customer, "freemium" is no longer possible.

We (<http://mocksup.com>) happily use Spreedly and only send customers to them
when they're upgrading to a paid account. Can you not do this with Chargify?
And if you can, what do they count as a "free" user?

~~~
toast76
At UsabilityHub we (fortunately) circumvented their "free" user count by never
sending them to Chargify in the first place. If we did, we'd be now getting
billed $1000 a month. We did this because when we switch to chargify a couple
of months ago we had over 8000 users and didn't want to migrate them all to
Chargify.

We'd be shutting up shop right now if we had.

I'm doubly lucky as I was about to start migrating users to do "one off"
billing using Chargify. Given that every one of those would now count towards
our monthly fee we'll be using a different service for "one off" purchases.

------
endlessvoid94
Wow.

I'm about to launch a pretty involved startup, and we're bootstrapping.
Chargify, you just DOUBLED our monthly expenses.

Thanks a lot.

------
podman
This was very disappointing to read. If their product were rock solid I
wouldn't have minded as much but it's far from being a complete solution.
Unfortunately, a lot of chargify needs a lot of work. I'm especially unhappy
with the metered components as they enforce integer cent prices for the
components and only allow integer usages on those components. It's impossible
to charge fractional usages. I guess it's time to start writing my own billing
system.

~~~
jon_dahl
Agreed on the metered components. Chargify's metered billing system is not
ready for primetime.

I love the idea of a subscription management services, but this is still a
very young space, unfortunately.

------
steveaz98
We just launched globalfolders.com using Chargify (on a very slim budget),
thinking we could justify their costs once we graduated to a larger plan. This
change erases that idea.

It hurts more than just Chargify and their customers, it hurts anyone running
such a service as people will be more likely to avoid services that they can't
trust to keep their pricing stable (or at least give plenty of advance notice,
6 months to a year).

These kind of changes definitely make me think much harder about outsourcing a
service. How can we trust the current pricing? Do we have to change our
pricing every time they change theirs? How many customers do we lose based on
their bad business decisions?

Chargify knows that people have spent time integrating with their service.
They hope that this will give them a percentage of paying customers, knowing
full well that they will lose a lot of customers. This is definitely a bad
move for Chargify and a good decision for their competitors.

------
dh
We appreciate the feedback from all of our loyal Chargify customers and we
will have an update shortly to show we understand this support. A plan only
available to those that already have accounts that will be much less and have
a smaller number of customers.

We are very sorry that we did not show this understanding in our announcement
and pricing. No excuses.

------
jread
If you are bootstrapped and need low cost recurring payments capabilities here
are a few fully outsourced and PCI compliant services you could consider:

PayPal Website Payments Standard: 2.9% + $0.30/trans
[https://merchant.paypal.com/cgi-
bin/marketingweb?cmd=_render...](https://merchant.paypal.com/cgi-
bin/marketingweb?cmd=_render-content&content_ID=merchant/wp_standard)

Google Subscription Payments (experimental): 2.9% + $0.30/trans
[http://code.google.com/apis/checkout/developer/Google_Checko...](http://code.google.com/apis/checkout/developer/Google_Checkout_Beta_Subscriptions.html)

Aria SubscriptionPlus (via PayPal partnership): Free trial, then $40/mo
[https://merchant.paypal.com/cgi-
bin/marketingweb?cmd=_render...](https://merchant.paypal.com/cgi-
bin/marketingweb?cmd=_render-content&content_ID=merchant/subscriptionsplus)

------
patio11
Guys, if this upsets you, you are not in the target market. (Much love, but
the real world spends real money on revenue drivers.)

~~~
cglee
It's not so much as the money that's upsetting, as much as the broken trust
when prices are adjusted upwards so dramatically. For example, our monthly
prices will go from 0 to $99/month. You can say that may be a good thing,
forcing us to focus on customer acquisition. But the point is that a service
we budgeted X dollars for suddenly, dramatically increased. Of course $1200/yr
is not life threatening. However, the trust is gone (or, at least it's
dissolving quickly). As I wrote in my email to Chargify, if they're
experiencing increasing costs, let us (their customers) know and be sincere -
we are their fans! I WANT to pay them, because they have a quality product.
But right now, it looks like a money grab after locking in developers. That
part is upsetting.

------
mthomas
Chargify requires that you setup both a payment gateway and a merchant
account. Why would you use them instead of just integrating with the gateway
directly?

~~~
MicahWedemeyer
Chargify handles a lot of the recurring aspect, dealing with expired cards,
notifying you if someone doesn't pay, etc, etc

I talk a little about it here: [http://peachshake.com/2010/06/15/saas-
subscription-billing-o...](http://peachshake.com/2010/06/15/saas-subscription-
billing-or-how-to-avoid-getting-your-nts-in-a-vice/)

It _was_ a great deal for the price, but now...not so much.

~~~
rwhitman
Your post did a good job of pitching chargify, I was passing it around the
other day for justification to go with them. Such a bummer that they pulled
this

------
detst
It's clear that none of these services have quite figured out how to best
price their service but it seems that CheddarGetter is the only reasonably
priced option.

Why is it that they seem to be perceived as also-rans? With Chargify, you'd
have to bring in $60,000/yr before they would begin to be reasonably priced.
Completely unreasonable for a bootstrapper seeing if they have something that
will stick.

------
jread
Chargify just sent an email offering existing customers a "Bootstrapping"
plan. $39/mo for up to 100 customers.

[http://grasshopper.com/email_assets/chargify-
bootstrapper.ht...](http://grasshopper.com/email_assets/chargify-
bootstrapper.html)

------
speric
We have about 35 customers in Chargify, and growing steadily, but $99/month
will eat almost half our monthly revenue. Really disappointed.

~~~
traskjd
Really? Almost half your revenue is $99 off 35 customers? You charge your
customers marginally more than $2.80 a month?

Maybe I'm misunderstanding something here with the pricing, but this sounds
more like you're getting hurt because you're trying to take micro payments
which typically isn't a solved problem (yet).

~~~
speric
>>Really? Almost half your revenue is $99 off 35 customers?

Not sure how you got that. I'm not taking micropayments via Chargify. I don't
think you understood me.

------
matt1
Update on the Chargify support forum:

 _We appreciate the feedback and will make something available to anyone that
built their business around this. It will not be free but we will give a large
discount for a smaller plan. More information to come shortly._

[http://support.chargify.com/discussions/support/3987-new-
pri...](http://support.chargify.com/discussions/support/3987-new-price-plans-
very-concerned-feedback)

I wonder how it will work for someone like myself, who has spent a month
integrating Chargify into my app but who hasn't launched yet. Discounted plan
or $99/month?

------
workhorse
Moral of the story is, it is OK to offer a free plan to gain traction, and
then remove it once you have it.

This decision worries me on so many levels.

I am so glad I went with Braintree Payment Solutions instead of Chargify.
Chalk up another victory for my gut instinct paying off!

~~~
pjscott
I think the real moral of the story is that it's _not_ okay to offer a free
plan and then suddenly remove it and jack everybody's prices up. Your
customers will feel betrayed, and it'll be a PR disaster. I'm not sure if
people will ever trust Chargify again.

------
rwhitman
Wow thats a real bummer, I was about to integrate it into an app, but I
certainly don't want to blow $99/mo on something that may or may not earn me a
small fraction of that

Has anyone used Spreedly or CheddarGetter etc? Thoughts?

Are there any robust open source self-hosted solutions? (For Django, Rails,
PHP?) Considering its just a subscription management wrapper for
Authorize.net, shouldn't be too hard to cut out the middleman

~~~
stympy
Yes, self-hosted Rails solution here: <http://railskits.com/saas>

Shameless self-promotion, yes, but it's actually relevant. :)

------
petercooper
It's not quite apples to apples but Recurly is similiar and is $29/mo for 500
users and under. They have some great Ruby integration demos too :-)

------
MJR
It seems very clear that the free pricing was a great incentive for customers
to sign up, allowing Chargify to get their business off the ground.

Now that their business is running and they have paying customers, they have
little need for keeping the free accounts and helping other businesses get off
the ground.

In my opinion, a really poor move and completely opposite of the mindset and
spirit of their initial offering.

------
davidedicillo
From their support site:

All,

We appreciate the feedback and will make something available to anyone that
built their business around this. It will not be free but we will give a large
discount for a smaller plan. More information to come shortly.

------
CoffeeDregs
Bummer. I just integrated this into a client's app... Wouldn't have done so
with this pricing.

Also, the price increase is _possibly_ a sign of a problematical revenue model
at Chargify. Probably not, but there's a chance that they really _need_ to
improve revenue and that gives me other doubts about whether to integrate with
them.

------
jtchang
I got this e-mail today and was totally floored.

This is going to turn into a marketing/PR disaster for Chargify. They even
sent out another e-mail to try and make up for their initial "mistake".

Customers are very sensitive to pricing changes. The minute you decide to
change pricing you should be thinking about it long and hard. While you are
doing it you should be communicating to customers that you are _thinking_
about a pricing change and solicit feedback. You need to be gently breaking
the news to them.

I signed up for Chargify to check out their pricing. I liked the fact that you
could have 0-50 without paying anything. Considering development for a
specific platform is not free this sudden pricing change has forced me to
consider alternatives.

As a customer who was just considering using them I feel kind of violated.

------
amccloud
They need to include 50-100 customers for the free developer plan. If I was
bootstrapping a service, I wouldn't pay $99 a month for customers I don't have
yet.

------
zefhous
I fail to see how this could possibly be a good business decision for them.

Seems pretty plain to me that they need to be going for the low end of the
market — new startups with 0-100 customers — rather than the high end.

------
proee
Bypass the SAAS model altogether and check out <http://www.opengateway.net>

One-time fee for the script and you get all the power of chargify on your own
host.

~~~
carbocation
Am not well versed in this, but wouldn't the onus be on you to be PCI
compliant then?

~~~
brockf
If you have a hosted order form with Chargify, there's no difference between
OpenGateway and Chargify when it comes to PCI compliance. VISA and MasterCard
say you should be PCI compliant either way.

Also, OpenGateway doesn't store credit card information which is always good.

------
railsjedi
That's a pretty huge price increase. With all the competition in this space
(Recurly, CheddarGetter, Spreedly, many others), I would assume the prices
would be going _down_ , not skyrocketing up.

They obviously are banking on the fact that their customers are already tied
up with their API, so it would be difficult to switch. This is pretty sketchy,
and it's going to make me very suspicious of these guys in the future. Also..
no grandfathering clause for existing paid clients?

~~~
heimidal
I don't think you can expect these services to lower pricing any time soon.
Why? It's clear now that Chargify and Recurly, who have both tried a very
friendly freemium model, vastly underestimated the costs and problems
associated with the businesses they are building. In both cases, it's a good
bet that they needed to either raise prices or go out of business.

Pricing only goes down once the business model is clearly established across
multiple competitors. This space simply isn't clearly defined yet.

------
symkat
Your pricing page does not look right in Chrome 6.0.472.63 on Mac (latest
current). Screen cap: <http://i.imgur.com/ffxIy.png>

As someone who will be looking for this type of service in the near future, I
agree with Michah that the pricing for a start up, _especially_ one that's
bootstrapping is not attractive at all. At this pricing it makes more sense to
build my billing system and use Authorize.net.

------
adraper
As a Chargify customer from very early on & having been in a paying position
since early March (we launched in mid-January & it took a month & a half to
hit a paying level) would we have used Chargify from the get-go if we had to
pay for it? I can't say for certain but it's quite likely as it still would've
been cheaper than moving development cycles into building a billing system (as
it is we're still backlogged in that dept).

If I was running a business that relied on a lot of freemium customers I might
think twice, but then unless you're asking for credit cards up-front just
don't put them into Chargify until they upgrade and give you their CC details.
We handle gift subscriptions this way, unless they convert to a 'real'
subscription when their gift is up they never go through Chargify.

For what it's worth, it's safe to say after using Chargify for almost a year
and having an active site using it for 9-10 months, the level of service and
support we've received has been more than worth what we're paying — our
development backlog is already a pain-point, I can't imagine what it'd be like
if we were rolling our own billing system.

------
podman
Their justification on Twitter seems to be that they needed to get rid of
their free tier. That makes some sense, but that doesn't really explain why
they double the price for their lowest tier and increased the pricing on their
other tiers as well. It's unfortunate that they're increasing their price
without adding any extra value to the product.

~~~
jacquesm
And the way to get rid of the free tier is to switch it off for new customers,
not to scare the crap out of all your existing customers.

Damage like this is hard to repair, it violates the trust between service
provider and customer, in a b2b setting that is most unwise. B2c you _might_
get away with it.

------
tworats
Here's the feedback I just submitted to Chargify:

While I entirely understand the need to charge and make money, I find the
sudden and significant change in pricing jarring. Many people just went from 0
to $1200 per year.

I'm guessing the cost of supporting the formerly free (0-50 customers) tier is
close to zero from a technical/infrastructure perspective, but relatively high
from a support/feedback perpective.

People in the free tier will either grow or go out of business. For those that
grow, your cost is the same - you'll have the same questions whether you
charge them day 1 or day 100.

So the real issue is the cost of support for those who signup for the free
tier and either flake out or go out of business.

In my opinion, the rate of customer growth you'll get from having a free tier
is worth the extra support cost. With no barrier in place, people will try
Chargify, see that it's a high quality product, and if they have a viable
business, will use it. That was our experience.

With a barrier in place ($100/month from day 1), they'll do a lot of research
and probably try the cheaper options before trying Chargify.

For our particular case, I'm quite happy with Chargify as a product, but quite
unhappy about the way the pricing was handled. With the former pricing tier we
had the luxury of growing in cost as we grew in revenue. With the new pricing
structure we have an immediate unexpected cost.

Now we have to go and investigate the other recurring payment options, which
bums me out entirely, since I was hoping we were well past that.

You should, at the very least, grandfather the old users into the old plan. In
my opinion you should keep the free tier around, but find ways to reduce your
support costs. For my business, we treat support questions as the leading
indicator for where we need to make the product more intuitive. We invest in
improving the product, thereby also reducing costs.

Of course that's just my opinion.

------
Chargify
Hey all, we've gotten a ton of feedback through Twitter, emails, tickets, and
a few phone calls. Plus we interacted with a lot of people over the past
couple of months.

All of these inputs are coming together in a smaller plan we're releasing for
existing merchants. Details will be out soon on our blog, via Twitter, etc.

~~~
jacquesm
Stupid question: Didn't you see this response coming?

------
nezumi
I was seriously considering Chargify, but now... I just hope they take a leaf
out of GitHub's book - remember this?

[http://github.com/blog/675-organizations-for-small-
businesse...](http://github.com/blog/675-organizations-for-small-businesses)

------
primigenus
Ironically, we just wrote a blog post ([http://blog.quplo.com/2010/10/the-
payment-provider-shortlist...](http://blog.quplo.com/2010/10/the-payment-
provider-shortlist-part-2-chargify/)) about Chargify as it was in our
"shortlist" of 3 remaining (subscription) payment providers that don't give
European businesses a hard time. Chargify got a pretty good end of the stick,
short of a couple of weird things like charging for free users.

But with this pricing change, they're off the list. Sorry. So far it looks
like Spreedly will be getting our money.

------
davidedicillo
I found out about the change of pricing friday and I was really bummed about
it. 50 free users were the perfect amount of user to guarantee some steady
income before tackling the expense. It's also true that with a $25/mo you
would need 7 clients to at least cover the billing costs
(chargify/gateway/merchant acc.). Maybe instead they could have just change
the free plan to 10 customers + no support.

I looked at Spreedly, I loved their simplicity, but at the same time I feel
they are missing some important features like discount and coupons management.

------
pauldoc
This is a truly despicable and irresponsible business decision. Not only did
Chargify pull a bait-and-switch but they completely pulled the rug out from
under both developers and merchants by providing virtually no warning on this
price change. Unfortunately, we launched with Chargify just a few months ago.
Big mistake!

Ning.com did this not long ago but did it in entirely responsible manner but
providing many, many months of notice.

------
cpr
With Patrick, I guess I understand the screams of pain on the unlooked-for
price hike, but, even at the lowest non-developer level, you're only paying
$0.20/month per customer. Assuming you're charging your customers at least
$5/month, that's only $.04/customer/month, or less than 1%.

Seems like a reasonable amount to pay for removing all the pain of recurring
billing.

~~~
carbocation
It's only $0.20/month/customer if you have 500 customers. If you have one
customer, then it's $99/month/customer.

~~~
cpr
Good point, but if I were starting something that depended on recurring
revenue, I wouldn't really begrudge $100/month to one of the most critical
parts of the whole solution.

Compare it to the $65/month I pay for a single Verizon Mifi data card, and it
doesn't seem bad at all.

Maybe you can't really look at per-user costs when you only have a handful of
users. Everything looks badly distorted as you head up asymptotically from
zero users.

~~~
carbocation
Yes, I think you're right about not looking at per-user costs while you're in
the very-few-user stage. And if one doesn't grow to the point that these
services are worthwhile at $100/month, then it's probably the case that one
didn't get to a sustainable place, anyways. The $40/month offer that they
added for existing customers is also a more accessible price point for those
bootstrappers _just_ getting started.

------
ohwaitnvm
So the 2001st customer costs you $650 - how much they're paying. Still, that's
probably > $600 for most startups, especially when you include trialing or
0-cost plan customers.

I'd much prefer a graduated system, with different overall price deltas for
each subsection (Dev/Start/Grow/Max) per member.

For comparison:

The first customer costs you $100-$price,

The 501st customer costs you $250-$price,

The 2001st costs you $650-$price

------
ericd
As a side note, rolling your own subscription code using Authorize.net's CIM
service (where they hold on to the CC numbers for you) is cheap and not really
that hard, and it gives you the ability to do whatever custom stuff you want
at lower cost. The API is a bit annoying, but I don't think I spent more than
a day integrating it.

------
dangrossman
Deja vu. This is exactly what Recurly did to its users a few months ago. It
was a bad move, with negative effects for their company that were serious and
lasting enough that they had to backpedal with new pricing a few months later.

~~~
raerae7133
At Recurly, we did roll out new pricing in May of this year, and immediately
received a lot of feedback from our users.

We then modified our pricing plans again in July to reflect their feedback,
and grandfathered existing users in, if they so preferred.

Dan, I wish I could work with you to change your opinion of Recurly. I'd love
to talk to you about your experiences and see what we can do to make it right.

Rachel, Recurly Support

------
youmon
On TC now: [http://techcrunch.com/2010/10/11/subscription-billing-
system...](http://techcrunch.com/2010/10/11/subscription-billing-system-
chargify-missteps-as-it-switches-from-freemium-to-premium/)

------
dterra
What I like about this is that Web Apps are now starting to remove the free
plan. Makes it more exciting. People need to get used to pay, and not get
everything for free. That way we can make money!

------
edanm
I'm not sure I understand - what does the free developer option give you? Just
the ability to integrate with your site (but not actually charge anyone)?

~~~
matt1
Until today they offered a plan that let you use their service for free until
you reached 50 customers.

Now there's no free plan that you can use after you've launched your site. And
for existing apps that use Chargify and have less than 50 customers, they're
going to have to start paying $99/month to keep using the service.

 _Edit_ : I understand your question now. Yes, the current free plan lets you
integrate it into your site, but you can't actually start charging customers
until you upgrade to the $99/mo plan.

~~~
speric
I am that boat (existing app that uses Chargify, with < 50 customers). Sucks.

------
schammy
Did they learn nothing from the Recurly debacle a few months back?

I don't think their pricing is bad but they need a starter plan that's less
than $99/month.

Also, why are both Chargify and Recurly doing "bucket" plans with such high
starting price points? Why not charge based on actual usage? If you have 500
paying customers you can justify $99/month no problem, but most people are
going to take a while to build up to that size of customer base. These people
can't start off with a $99/month plan. At least give maybe the first 10
customers for free, or charge on actual usage, e.g. $X per 10 customers or
something like that.

One thing's clear at least, if I ever go into the recurring payment business,
Chargify and Recurly are both very good examples of what NOT to do to win
customer loyalty.

~~~
gdevore
The problem with charging for actual usage is that most of Chargify's support
costs are probably incurred while their customers are setting things up. And
that is when they don't have any users. Once you get chargify set up you don't
have to touch it too much.

Regardless though, this was a bad way to handle the price increase.

~~~
run4yourlives
Are you suggesting that basic customer lifecycle management is an issue for
them? That's not exactly reassuring.

When you determine pricing, you figure this out. Every business has customer
acquisition costs.

