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I have to defend the Recurly folks here. They made a bet on flat-rate pricing over per-use pricing. Turns out that a flat-rate plan hurts you on the low end (

I have to defend the Recurly folks here. They made a bet on flat-rate pricing over per-use pricing. Turns out that a flat-rate plan hurts you on the low end (people who won't use you at all, and where the uproar was) and on the high end (you're leaving money on the table from your potentially most profitable customers). Flat-rate pricing works for the vast, vast majority of internet companies since the day AOL won over CompuServe because they went to the $20 per month unlimited plan back in 1996. The lesson I've learned from Recurly is that developers find per-use to be less risky than flat fees, which is the opposite of normals.

fjabre 16y ago
Wait so are you saying that flat rate is usually better than per-use from a biz perspective or vice-versa? EDIT: I guess it depends. Flat rate seems like an attempt to get more cash upfront to cover costs initially. The problem is you are leaving money on the table with large customers and you're potentially leaving a lot of money on the table at that. Flat rate makes sense up to a point but is anything really truly unlimited?
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- dangrossman 16y ago
  The reason for the uproar wasn't so much that flat-rate pricing is a problem, but that the company switched the API functions that were previously global across any pricing plan to the $199/month plan. So even if you could justify $50/month or $100/month for their service, you didn't have the option. You already implemented the API and can only keep using that implementation with the $200/month service. I don't even pay my payment gateway $200/month, and they do automated recurring billing and credit card data storage too. At the same time, the competing subscriptions-as-a-service startups already offered flat rate pricing. The per-transaction pricing Recurly offered was their main differentiator to some of these alternatives. That's the reason so many bootstrappers chose them, so switching to a $200/month fixed cost with zero notice (time to switch) and no grandfathering was a hit right to their primary customer base. Of course I can't say for sure that's who most of their users are, but the fact that they've now backpedaled again, removed their pricing page entirely and started apologizing to users seems to indicate it wasn't a good move for them.
  - detst 16y ago
    Sorry, I deleted my comment because no one had responded and I actually agree with you after I looked into it. These services are asking for too much for what they do but I think everyone is conditioned to giving away so much to services that touch their money, that they think that they can get a piece of the pie.
jacquesm 16y ago
It may just as well have been that they misjudged the demographic of their prospective customer base to be mostly the larger accounts, but instead they found themselves with prospects a lot smaller than the ones they hoped to target.

fjabre 16y ago

Wait so are you saying that flat rate is usually better than per-use from a biz perspective or vice-versa? EDIT: I guess it depends. Flat rate seems like an attempt to get more cash upfront to cover costs initially. The problem is you are leaving money on the table with large customers and you're potentially leaving a lot of money on the table at that. Flat rate makes sense up to a point but is anything really truly unlimited?

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dangrossman 16y ago
The reason for the uproar wasn't so much that flat-rate pricing is a problem, but that the company switched the API functions that were previously global across any pricing plan to the $199/month plan. So even if you could justify $50/month or $100/month for their service, you didn't have the option. You already implemented the API and can only keep using that implementation with the $200/month service. I don't even pay my payment gateway $200/month, and they do automated recurring billing and credit card data storage too. At the same time, the competing subscriptions-as-a-service startups already offered flat rate pricing. The per-transaction pricing Recurly offered was their main differentiator to some of these alternatives. That's the reason so many bootstrappers chose them, so switching to a $200/month fixed cost with zero notice (time to switch) and no grandfathering was a hit right to their primary customer base. Of course I can't say for sure that's who most of their users are, but the fact that they've now backpedaled again, removed their pricing page entirely and started apologizing to users seems to indicate it wasn't a good move for them.
- detst 16y ago
  Sorry, I deleted my comment because no one had responded and I actually agree with you after I looked into it. These services are asking for too much for what they do but I think everyone is conditioned to giving away so much to services that touch their money, that they think that they can get a piece of the pie.

jacquesm 16y ago

It may just as well have been that they misjudged the demographic of their prospective customer base to be mostly the larger accounts, but instead they found themselves with prospects a lot smaller than the ones they hoped to target.