#chargify

Chargify acquires Keen to bring event-based billing to its platform

Chargify, the subscription billing platform, announced today that it has acquired event streaming company, Keen for an undisclosed amount. One interesting aspect of this deal is that both companies are part of the Scaleworks private equity firm’s stable of companies.

Keen gives Chargify an event streaming business, and it has taken advantage of that by adding an event-based billing component to…

Chargify acquires Keen to bring event-based billing to its platform – TechCrunch

Chargify, the subscription billing platform, announced today that it has acquired event streaming company, Keen for an undisclosed amount. One interesting aspect of this deal is that both companies are part of the Scaleworks private equity firm’s stable of companies.

Keen gives Chargify an event streaming business, and it has taken advantage of that by adding an event-based billing…

Ack! Chargify did what? The news of the week in SaaS has to be Chargify’s new pricing scheme. For those of you living in vacuous SaaS-deprived subterranean caves, Chargify is a billing service geared toward companies with recurring payment systems. It’s a feature-rich service that’s looking to edge out competition from Recurly, Spreedly and Braintree, among others. That competition will have entertained some schadenfreude this week as Chargify hiked price rates across the board, including for existing customers. Here’s a before/after price comparison: notice most price points increased by leaps and bounds, and that “free” accounts with fewer than fifty customers will now be charged $99/mo. Nothing per year to $1,200 per year is a pretty large price hike, especially considering the complete lack of warning, and customers aren’t happy. The prevailing sentiment in the blogosphere and twitter is that Chargify screwed early risk-taking clients with unforeseeable price-gouging and marginal service improvement, ala Zendesk of this spring. It’s a PR nightmare and a competitor's best dream. To their credit, Chargify addressed customer concerns on their blog, explaining that price hikes were essential for them to stay in business and apologizing for the lack of warning. They also reversed course and offered a $39/mo plan for existing customers billing less than 100 clients. Damage control perhaps but it’s good to see that CEOs listen sometimes. The big picture stuff I’m not really interested in judging Chargify, though I’m not impressed by some of their decisions. What’s more interesting about the situation are the questions it raises. What’s the baseline treatment SaaS providers owe early adopters? How does price scale with size when services are subscription based? How do you manage and adapt to changing growth forecasts without pissing off your core clientele? Whaddya do? Lessons for clients and vendors These aren’t easy questions but, as I’m sure Chargify’s management can attest to, they’re essential. From a user’s perspective, price protection is absolutely paramount. Price guarantees, three month buffer zones, whatever it takes to lower risk and instability: offer it. Otherwise, vendor-client trust erodes, user-side cost forecasting disappears, and providers gain the upper edge in a relationship whose fundamental strength is its horizontal nature. It’s just not right and it makes SaaS deployment risky, hurting everyone. On the provider side, the answer is do your math. Chargify shouldn’t have charged nothing: it was unsustainable and endangered the stability of client companies. If their growth forecasts changed as they claimed they did, and they realized the model wasn’t working, they should have grandfathered in existing customers, implementing the new plan for future prospects only. If that wasn’t sustainable, they should have at the very, very least given users a healthy heads up, and well in advance. Users deserve it. UPDATE: Since this blog was posted, Chargify's founder David Hauser sent out an email w/ the following message:

Price assurance guarantee: We now understand that it’s impossible to grow your business if you can’t be sure how much Chargify will cost you. Going forward with our new plans, you won’t have to worry anymore because all plans will come with a 100% grandfathering guarantee for 12 months from the time of a price change. This means that any plan you’re on will be priced the same for you for 12 months from the implementation of a price increase.

A Trio of Tips That Will Help You to Successfully Market Your App

You did your research, read plenty of articles and infographics, and spent hours carefully crafting your very first app. Now it’s time to think about doing whatever you can to make sure people find it and use it. About 90 percent of people who download an app will use it for only about six months, according to Trademob. In order to help keep your app customers active and continue to use your app,…

We at Scruddle are hard at work, continuously building new and deploying new features into the beta site. Currently, our challenge is to identify and implement a Software-as-a-Service (Saas) that handles subscription payments. After all, why spend time building something that other people are (1) already doing, and (2) probably doing better than you can or want to?

The Candidates

I evaluated 4 services, based on suggestions in this article on TechCrunch covering how to build a minimum viable product. They are: 

Chargify (http://chargify.com/)

Recurly (http://recurly.com/)

Spreedly / Pin Payments (https://spreedly.com/)

CheddarGetter (https://cheddargetter.com/)

The Requirements

Scruddle is a freemium service, so when users can sign up, they will have a 1-month trial of Scruddle Premium, but if they choose not to pay for it, they still have access to Scruddle Basic. This means the subscription service will still have record of non-paying customers, making it easy if they decide to upgrade again.

This detail about the non-paying customers is important, especially for any start-up entertaining the freemium pricing model. Based on feedback from other start-ups, only 3% of your customers are going to upgrade to a paid subscription or membership. This means out of 1000 customers, only 30 are going to be paying. We'll use this assumption when calculating costs.

Also, Scruddle Premium subscribers can add additional social, email, and news profiles, beyond the standard quota. The subscription service will need to be able to support those additional features, and handle the billing each month.

Finally, we need to have environments configured for development, beta (testing), and production (live). This enables Scruddle to build for future features while avoiding impact on current customers.

Comparing Cost and "Profit"

When selecting the provider for something as critical as subscription payments, the lifeblood of this start-up, we would be remiss by not forecasting the true cost of each available plan. I used an Excel spreadsheet (download here) to plug in the fine print from each of the subscription providers, based on criteria and assumptions for Scruddle.

Inputs:

Number of non-paying customers

Transaction revenue

The non-paying (NP) customers are using the Scruddle Basic, but as mentioned above, we still carry their information in case they upgrade, or we provide for them another trial. The transaction revenue for Scruddle Premium is $4 per month. This does not include users that add additional social, email, or news profiles, although I will build that out later for a blended monthly transaction price.

Assumptions:

Paid customer count is 3% of NP customer count

For every provider, I needed to capture the cost calculation inputs:

Monthly Fee

Included Customers

Cost Per Additional Customer

Included Non-Paying Customers

Cost Per Non-Paying Customer

% and/or $ Cost Per Transaction

Once the inputs are plugged in, both for Scruddle and for cost calculations, I can calculate the monthly cost, which is:

Add'l Cust. Fee + Add'l NP Cust. Fee + Txn Fee

Once we have the monthly cost, our profit/loss is calculated as:

Gross Revenue - Monthly Cost

That's it! Using these numbers, we can figure out how long before the subscription payment feature no longer costs money. (Obviously, this is not total business P/L, as other expenses and revenue streams are not included.)

Visualizing the Data

It is particularly useful to visualize the data, based on your customer acquisition targets. As you can see, Spreedly, Recurly, and CheddarGetter look very appealing.

Cost:

P/L:

Comparing Features

Now that we understand price, we need to verify features. In Scruddle's case, we need the following:

Multiple top-level sites for our different environments (development, testing, production)

Add-on features, in addition to basic plans (for each site)

How do the candidates fare?

Recurly allows only 1 top-level site, and no add-ons

Spreedly allows multiple top-level sites, but no add-ons

CheddarGetter allows multiple top-level sites, and has add-ons in the form of tracked items (e.g. "usage")

Chargify allows multiple top-level sites, and has add-ons

Whether your start-up has the same requirements may not be important, but this information can be useful. In our case, it seems like Chargify will be the best option, strictly because of the features.

Closing Thoughts

For Scruddle, we have to strike a balance between features and cost. Still, this has been a useful exercise as we map out each and every expense we expect in our forecast. 

If you have any questions or thoughts on how I did this, or if you have suggestions for other subscription payment providers (even start-ups), I'd love to hear about it.