Thanks to everyone who has contributed feedback about our pricing. We have been researching our pricing strategy for several months in an effort to build a competitive and sustainable business. During the beta, we reached out to several customers about our new pricing. I strongly believe our new pricing is closely aligned to our value in helping you deploy subscriptions with minimal effort so you can focus on building a valuable service.
As an entrepreneur, I love the ideas of the lean startup movement. It is responsible for a new wave of startups that watch their cash flow carefully and are capable of explosive growth once they find the right product/market fit. Love it. However, it is important to remember that being a lean startup is not synonymous with being cheap. Being a lean startup means spending money where it counts.
I believe that our pricing should be very attractive as you build your business. Yes, you’re paying more upfront (especially if you have no revenue today), just as you’re already paying for your merchant account and payment gateway. At the same time, you’re getting a guarantee that our prices are not going to increase as your revenue grows. You’re likely paying the payment gateway and merchant account about $80-100/mo because they are necessary costs to collect revenue. Recurly can save you months of development time, offer you lots of flexibility around your pricing strategy, give you options with your payment gateways, and guarantee that we’re not going to increase our fees when you become successful. That’s a strong value proposition for just $99/mo (for most companies). Our pricing tops out at $199/mo — previously it would scale up to $2,650/mo.
If your revenue stream today is less than $150/mo, I am sympathetic that you’re losing money on your billing expenses (payment gateway, merchant account, billing system). It’s tough being an entrepreneur. My advice would be to find out how you can create a valuable product before you implement the billing piece. Otherwise, you’re losing time & money on a product that no one is using. Get some early adopters, find a good market fit for your product, and then you’re primed to turn on subscriptions. Recurly started paying about $200/mo back in November 2009 because we have three different production payment gateways and a merchant account. Yesterday, we finally started charging. I could have saved my company $900 had I waited to acquire the production payment gateways until we were ready to charge. (Of course, our scenario is slightly different because we used these gateways to make sure our service worked for you. But the point is still the same.) I think it’s a pretty common situation because it happened with my last startup as well.
Regarding our feature set, I would like to point out that we give you robust set of payment gateway flexibility. At any time, you can switch between payment gateways without any consequences. And, we do not require Authorize.NET’s CIM (unlike one of our competitors) so we can save you an additional $20/mo. We also offer the best hosted payment page experience — this feature is complete and there are some new features around this that will be documented this weekend. Recurly works wonderfully internationally since we have an understanding of the fraud controls required to maximize transaction acceptance rates internationally, support multiple gateways and currencies. Our developers are also hard at work at some very exciting new features.
Our new pricing model allows us to build a sustainable company and continue innovating with all the feature requests that are pouring in. We want to be your partner as you grow your business. That means that we need to position ourselves for the long term.
Speaking to our beta customers, I realize our pricing announcement may have been abrupt for some of you. We truly want to see you succeed. If your began integrating with Recurly before our pricing announcement, we are happy to extend your trial period up to 3 months while your revenue is below $5,000/mo. If at the end of the trial period, you still want to leave, we will return your subscription data to you so you can securely migrate to another solution. If you’d like to continue, please subscribe to a plan before April 24th and send us an email at pricing@recurly.com (pricing null@null recurly NULL.com) so we can increase your trial period.
Either way, we encourage you to send us your feedback privately or publicly. Please feel free to comment publicly — we will not censor our blog. You may tweet to us @recurly (http://twitter NULL.com/recurly). Or, email us at pricing@recurly.com (pricing null@null recurly NULL.com) if you’d like to leave private feedback and I promise to read your comments. I look forward to hearing from you.
Sincerely,
Isaac Hall
Recurly, CEO
23 Comments
I appreciate that you are marking to ‘start ups’ with your new pricing plan, but I’m not running a stereotypical VC funded Silicon Valley start up, I just have a website providing a nice service that I’d like to monetize. I need to be able to do this with minimal investment but still the prospect for growth. This isn’t my life, it’s a hobby, and you just lost that market with your new prices.
I don’t like being critical – your service and support has been wonderful. I’m considering your 3 month trial and whether that could work for me, but there are alternatives out there, with a pricing system that would allow me to get started easily.
No VC funding here either.
I’m looking at the feasibility of the $50 package – does it have any API access at all? I’m trying to work out how my app would keep track of who my active subscribers are. I thought that just listening for push notifications would be the simplest method, but that’s kind of out the window now. If I had API access I could set up a cron to check Recurly for a list of active subscribers and update my database accordingly.
Dear Recurly,
The recent pricing change has prompted us to move to spreedly.com . It isn’t the only factor, we have discovered several bugs in the system (we understand it is beta) that presented challenges for implementation (https support, 0.00 subscriptions, silent failures in push notifications, lots of misc. internal server errors). Those issues made us question your service but as a beta we were willing to live with them (https support and push notifications are still not resolved). Now with the pricing change we would have to pay $199.00 a month so see if your service even really works, that is unacceptable. I also think the sudden immediate and complete rework of the pricing policy leaves a bad taste in everyone’s mouth.
I think spreedly hit the pricing target very fairly. If you adjusted your pricing again so that the levels were not feature based but tiered volume based that would be more acceptable I think. There is something to be said for pricing that can be explain in 4 words: $19/month + 20¢/transaction.
Obviously you need to make money and balance the “richer customers” with the “poorer customers” but this seems like a very clumsy way to do so. I think Amazon and their “pay for what you use” model has proven very successful and will continue to spread.
You mention those who aren’t clearing $200/month in fees, but I think that fails to take into account reality. Which is more likely a service that will take 1-2 years to grow, starting with $0 a month in revenue. At the end of a year that service has to overcome a total fee of $2400, that seems pretty unsustainable for a lot of services just getting started. It has taken us 2+ months now just to start trying to work around your bugs.
Thanks.
Likewise, I’m running a small self-funded startup which is currently bringing in $0/month. Recurly looked like a great solution with the previous pricing model since it was going to be completely free until we reached 50 users. But, you know what? It’s *still* a great deal.
Do you realize how much time and energy you’re save with Recurly? Seriously, I was sweating bullets a few months ago when I was thinking about how to offer subscription plans to my future customers. That would take me 2-3 months of development time and there would still be bugs. Now, we can offer potential customers seamless upgrades/downgrades, cancel at any time, etc….and all I have to provide are a couple of callback URLs on my side. At $50 or $100 or $200….that’s a pretty sweet deal, and it’s a huge selling point to offer my customers.
I just don’t think it’s realistic or fair to expect to get this much functionality for free, or near free. I’m in total agreement with Isaac, spend money where it counts. For me and my start-up, we’re sticking around.
Issac –
It appears from these comments that one of the issues with the abrupt bait & switch like method you used in changing the pricing structure is the lack of transparency into why. I think many of us, myself included, would feel a bit more comfortable if you treated us more like partners using a valuable service and less like trial rats.
As such, let us know WHAT happened. You clearly didn’t do this on a whim and there has to be sound business rationale other than “we need to make more money.” Let us in (slightly) behind the curtain. What was wrong with the old model – were too many people using the system who were not generating any money BUT costing you money? Was the amount you make in a transaction-based plan simply not business feasible? Is this a customer support issue, cost issue or something else?
Explain to us a little bit more about WHY this change happened and why it was required. I think many of us would prefer for you to charge like this AND stay in business than do what you were doing and be gone in a few months but without any insight into why the old model was failing Recurly, it’s very hard for us to be supportive.
p.s. I think that charging or forcing a charge if someone just wants to test the system without going live is a mistake. Take a credit card up-front if you want, but dont start charging us until we are ready to switch from test to live.
Isaac,
This big change isn’t far off from a bait-and-switch for many of your beta users: You attracted us with your low pricing, then give us the “So sorry, that’s not available now – why not try this way more expensive plan? Isn’t it worth paying for?”
I’m not saying you should’t change – obviously if a company can’t turn a profit, price changes should be considered – but at least have the basic decency to grandfather in beta users to the earlier pricing.
I may give serious consideration to sticking around just based on a raw cost perspective, but I’ve lost all trust in Recurly at this point, and certainly don’t have anymore “goodwill” – which is the polar opposite of how I’d have characterized my view of Recurly as of yesterday. Especially since your post is defensive & not even remotely apologetic.
@Brian, sure, Recurly saves time – but so do the other guys, to greater or lesser extents. And no one here expected free – we just expected that Recurly wouldn’t act callously toward its beta users. You know, the ones who’ve given Recurly valuable feedback and have spent time integrating with them.
Dave
@Brian I’ve already implemented subscriptions 3 times. It’s not as hard as it’s made out to be. And paying a developer to implement it for your startup is a one time cost, not a minimum of $2400 per year Recurly is now charging for any kind of integration with your app. $2400 can buy you that developer and you don’t have to deal with Recurly’s bugs.
I was just recommending Recurly on Hacker News, AGAIN, just yesterday in the thread about recurring billing for startups. That goodwill is simply gone, those recommendations won’t happen again.
On top of that, deciding to radically switch the pricing with no warning or explanation seems to have been all this company was capable of doing all week. Nobody has responded to new support tickets since at least last weekend. I’ve got customers trying to sign up hitting 404 pages, push notifications are coming in 45 minutes after the fact if at all, and nobody’s even acknowledging the tickets in the support site.
I don’t want to be so negative. I was 100% behind Recurly until today. But it is what it is. Now I need to figure out what my options are for not being dependent on a single payment gateway while maintaining PCIDSS compliance. That might mean going back to writing my own subscription code and buckling down to set up a compliant off-network storage setup my own.
I’m also completely confused about how the features were broken out. It seems like push notifications should go with the hosted payment pages, not with the highest tier. Think about PayPal. The free service includes the push notifications (IPN) because that’s how a site can integrate with them without hosting their own payment pages. You pay to upgrade to Website Payments Pro and get API access. It’s not the other way around.
Regarding the comments about the bait and switch, that is not our intent at all. We conducted dozens of 1 on 1 customer interviews about our pricing and felt confident that it was the right direction for the company. I realize the pricing announcement is sudden and that’s why we’re offering a 3 month trial, starting today to our customers who signed up before this pricing announcement.
Did your customers interviewed realize that they had to go to the highest tier, $199/mo, for what every other payment processor in the world considers the low tier (hosted payment pages and notifications, the one where the customer that doesn’t have lots of resources doesn’t have to be PCIDSS compliant). That seems to just be kicking in for some people who were shocked but think $49/mo isn’t *that* bad. It takes a while to realize, hey, there is zero way to integrate a website with that tier.
I’m still waiting to hear about that too. I have no idea how I’d even use the lowest tier. Am I supposed to monitor my subscriptions via the Recurly dashboard, and mark users as subscribed or not by hand?
Charging by volume is how every payment processor works and it just makes the most sense. With flat rate pricing, you’re driving away your small customers and losing money on your big ones. I don’t see how you’re going to be successful with that business model.
$49 a month is a reasonable starting point for your service, but push is simply a required feature which means your service really costs $200 per month. I don’t see anyone being able to even seriously consider any of the other tiers.
By the way, you should ask every single one of the people whose testimonials/quotes you splash on your homepage if their praise is still valid. Because your pricing is a core part of your service, and as of yesterday your service became an entirely new one. Continuing to use their praise when it referred to a very different service could well be misleading, unless they let you know specifically that it still applies.
And as far as bait-and-switch not being your intent, well, this sure feels uncomfortably close to one for anyone who was lured in by your other pricing and who were counting on not being gouged from the outset. You got us “in the store”, so to speak, and let us sink our time into integrating, and then you sprang the news on us that you were so pleased to announce – “oops, we’re out of that.”
I’m still puzzled as to why you’ve done this.
As it stands at the moment, you’re only going to ever take $200/mo from a company, even if they’re turning over millions, whereas before you would have had a sizeable percentage.
I can only assume that you’re finding that the vast majority of accounts are very low turnover and thus not paying their way, in which case why not introduce a monthly minimum charge?
I just don’t see any logic here..
Isaac,
I understand the reason for the pricing structure is the old 80/20 rule, and your structure before had you maintaining many small accounts that would generate almost no income.
Our company has been working with the recurly api for the past few weeks and we are about to implement it, in our system. One thing that made me think that recurly was the way to go, was the API + push notifications, which I think is a bit unreasonable to be on the $199 package, when the notifications could be on the $99 package, and it seems that $49 doesn’t offer you much without the API.
We love the product and we will be paying for the $199 package if needed. But I had to give you my input, because I feel like you guys have lost market with this new price structure.
Thanks,
I LOVE THE NEW PRICING!!!
Way to go, Recurly!!!!
It’s simple, straightforward, affordable, and removes any future concerns about the service becoming too expensive.
In the process of changing it, you may shed a bunch of customers who are not the right fit for your business model, and this is painful, but you made the right move and I applaud you for it.
Keep on improving….
Sam
ZOMG, I LOVE THE NEW PRICING!!!
You may have completely screwed over a bunch of customers you lured in with your pricing, but I applaud you for that.
Keep on improving….
Dave
Hey Recurly,
The gateway provider that I am going with is charging for recurring capabilities and so I came back to this site having reviewed the previous pricing model because it was a lot more cost effective — and then I found this post and realized what had happened.
Unfortunately I am going to have to go with the recurring capabilities of that provider, they charge $15 per month, whereas before Recurly was more of a slam dunk for me. Then again you guys need to “eat” too so I understand why the change was needed. That’s business, the deal has to be profitable for both sides other it isn’t a good deal.
–Kevin
Hi,
I am using your API for subscription and i would like to change next invoicing date manualy.
Please suggest how we can change the next billing date through code request and what will be date format for this.
Thanks in advance
Vineet
Hey guys,
As a beta subscriber this has come as a BIG shock. Especially since you laid completely different pricing out at the start. I’ve overlooked the emails you must have sent as you must appreciate us start-ups get hundreds.
Anyway I’ve dropped you an email about extending our plan for the 3 months – Please do. Random interuptions to the service dont fill us with confidence. I appreciate you wanting to do whats best for your company but this really has been sprung on us.
After that we’ll have to see. We’ve had very little time to concentrate on converting our subscribers due to a tender we have been working on. We are going to have to see how our conversions go over the next few months to see if your new pricing is worthwhile. If you have faith in your customers (ie. us) then you will realise that your old pricing is a better long term option anyways
I really like you guys from the few times we have spoken, but you should stay true to your words. Fair enough to implement changes for new users but your loyal beta users shouldn’t have this happen to them. After all we have chosen to use another beta service on faith as opposed to more established and ‘reliable’ services.
Paul
1DayLater.com
Assessing the cash flow is another important element within the company strategy format, so as to sustain a normal money flow to meet the important capital needs. Probability of monetary crisis and also the ways of crisis management must be pointed out in the structure. The company strategy should consist from the advertising plans and technique leading to the expansion in the organization.