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.
I agree, I'm working on a SaaS that is hopefully going to be deployed in a month where I was planning to use Chargify, but the $99/month seems hard to justify when I can just use paypal.
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.
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.
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.
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.
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.
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.
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.
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.
This is the evil next business model: Free "bait and switch". Get businesses to sign up with a service that is free but requires integration. Then start charging. Integration makes it very difficult to switch.
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.
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?
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
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.
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.
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.
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".
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.
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)?
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.
They've indicated that alternative arrangements can be made with existing merchants (not free, but not $99 either). We'll wait to see what those are before making a decision.
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).
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?
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.
> 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.
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.
> You can't change your pricing upwards for existing customers, ever.
That assumption needs to be questioned. There are times when it's appropriate to raise your prices for certain goods and services. In fact, there are times when you must raise your prices if your business is to survive.
But this is not one of those times. What you do is you adjust your businessmodel so your new model takes in to account grandfathering in the old customers. Who over time will fade away so the problem will take care of itself.
We're not talking about a price hike that is caused by an increase in cost of raw materials or such. And even those usually don't radically cause your business model to shift, they will just cause an adjustment of a few percent or pennies to accommodate the underlying shift.
For instance, I have a very good deal with moniker for my domains, if they underlying price changes I pay for that. This is logical because moniker has to pay it too, so they pass the cost on 1:1. It's not like they told me 'first 50 domains are free' and then suddenly turned around and started charging me $100 / month.
Why? Milk is more expensive than it used to be. Songs on iTunes are $1.29 now. I don't see any reason whatsoever that a company can't increase rates. Inflation and rising costs are facts of life. Even if they weren't, if a company realizes they can make more by charging more, then why shouldn't they?
They shouldn't have made such a massive price hike, and they should have given more notice, and I think that's the real issue.
Because milk won't go up from $.99 to $99 per month in one day.
Of course inflation and rising costs are a fact of life. But the economies of scale in a business like this lead to lower prices, not higher ones and the main excuse chargify seems to have for raising their prices is the fact that they are successful at the 'free' tier.
Which is something they should have factored in from day one, not come up with after a whole bunch of people have tied in their lot with them. This is a black eye for the whole third-party processing business, not just for chargify.
You don't remind your customers how much you have them by the short & curlies if you can help it, you make course changes nice and slow so you don't rock the boat. And if you mess up your planning you can either open your books and work it out in tandem or you can eat the loss and charge it to your education fund.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
> I haven't worked with CheddarGetter or BrainTree directly.
Let me put a big +1 in for BrainTree, then. Especially when coupled with something like their Ruby gem (http://rubygems.org/gems/braintree , written by them, not even someone else's implementation) or ActiveMerchant, it's really, really easy to integrate. Plus, since when does your card processor have articles about their git process? (http://www.braintreepaymentsolutions.com/devblog/our-git-wor...)
I have no affiliation with them other than being a happy customer.
The recurring payments capabilities of gateways, such as Braintree, Auth.net, etc. typically are not as robust as the recurring payments capabilities of the companies that specifically focused on that capability such as Chargify, Recurly, Zuora, etc.
If you just need to charge the same customers exactly the same amount on exactly the same timeframe, then the capabilities of gateways such as Braintree may be ok for you.
But typically SaaS companies and others with multiple plans, additions, features, extra one time payments, etc. need an additional layer of logic on top of those capabilities. You can either buy that logic or pay Chargify, et al for it.
I just wanted to clarify that Braintree does has additional recurring billing features that are not mentioned here. You have the ability to set up multiple plans, modify individual subscriptions, created add-ons and discounts, create one time charges and more. For a more complete list of features you can check out our website: http://www.braintreepaymentsolutions.com/services/recurring-....
Basically, braintree has a 'vault' feature where I just add a 'vault_id' attribute to my user model, then call 'response = GATEWAY.store(credit_card, :email => current_user.email)' to send their info off to braintree. Later, that lets me send a charge with their vault_id, and it charges their card.
It's probably just slightly lower-level than Chargify's...
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?
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.
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.
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.
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?
166 comments
[ 5.2 ms ] story [ 205 ms ] threadWith 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.
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.
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.
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.
To be clear: we can leave Chargify, but Authorize has us locked in.
I write about it more here: http://peachshake.com/2010/06/15/saas-subscription-billing-o...
Up to now, I've been nothing but pleased with Chargify. This change makes me question their sanity a bit, though.
http://developer.authorize.net/api/arb/
I talk a little about it here: http://peachshake.com/2010/06/15/saas-subscription-billing-o...
It was a great deal for the price, but now...not so much.
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-...
Also, they shouldn't have doubled their fees for existing paying customers.
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.
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.
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).
Not sure how you got that. I'm not taking micropayments via Chargify. I don't think you understood me.
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?
Pricing only goes down once the business model is clearly established across multiple competitors. This space simply isn't clearly defined yet.
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.
> You can decrease your prices for anybody at any point in time.
I've heard this can actually be quite tricky as it makes your existing customers feel like they've been suckered.
Not if you do it all across the board, and preferably gradually.
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.
Saw this when skimming their tweets:
"@jamiequint We're making changes as we speak for existing merchants."
http://twitter.com/Chargify/status/27063975080
That assumption needs to be questioned. There are times when it's appropriate to raise your prices for certain goods and services. In fact, there are times when you must raise your prices if your business is to survive.
We're not talking about a price hike that is caused by an increase in cost of raw materials or such. And even those usually don't radically cause your business model to shift, they will just cause an adjustment of a few percent or pennies to accommodate the underlying shift.
For instance, I have a very good deal with moniker for my domains, if they underlying price changes I pay for that. This is logical because moniker has to pay it too, so they pass the cost on 1:1. It's not like they told me 'first 50 domains are free' and then suddenly turned around and started charging me $100 / month.
They shouldn't have made such a massive price hike, and they should have given more notice, and I think that's the real issue.
Of course inflation and rising costs are a fact of life. But the economies of scale in a business like this lead to lower prices, not higher ones and the main excuse chargify seems to have for raising their prices is the fact that they are successful at the 'free' tier.
Which is something they should have factored in from day one, not come up with after a whole bunch of people have tied in their lot with them. This is a black eye for the whole third-party processing business, not just for chargify.
You don't remind your customers how much you have them by the short & curlies if you can help it, you make course changes nice and slow so you don't rock the boat. And if you mess up your planning you can either open your books and work it out in tandem or you can eat the loss and charge it to your education fund.
I'm about to launch a pretty involved startup, and we're bootstrapping. Chargify, you just DOUBLED our monthly expenses.
Thanks a lot.
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.
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.
I love the idea of a subscription management services, but this is still a very young space, unfortunately.
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!
http://github.com/blog/675-organizations-for-small-businesse...
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.
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.
http://cheddargetter.com
http://www.spreedly.com
http://recurly.com
http://www.braintreepaymentsolutions.com
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.
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.
Let me put a big +1 in for BrainTree, then. Especially when coupled with something like their Ruby gem (http://rubygems.org/gems/braintree , written by them, not even someone else's implementation) or ActiveMerchant, it's really, really easy to integrate. Plus, since when does your card processor have articles about their git process? (http://www.braintreepaymentsolutions.com/devblog/our-git-wor...)
I have no affiliation with them other than being a happy customer.
If you just need to charge the same customers exactly the same amount on exactly the same timeframe, then the capabilities of gateways such as Braintree may be ok for you.
But typically SaaS companies and others with multiple plans, additions, features, extra one time payments, etc. need an additional layer of logic on top of those capabilities. You can either buy that logic or pay Chargify, et al for it.
-Jen (Braintree)
Basically, braintree has a 'vault' feature where I just add a 'vault_id' attribute to my user model, then call 'response = GATEWAY.store(credit_card, :email => current_user.email)' to send their info off to braintree. Later, that lets me send a charge with their vault_id, and it charges their card.
It's probably just slightly lower-level than Chargify's...
You can use it with Braintree and have complete control over how the billing runs.
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?
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.
Regardless though, this was a bad way to handle the price increase.
When you determine pricing, you figure this out. Every business has customer acquisition costs.
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...
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?