4 ms·

This was definitely not the point of the article. It was to show how the decision making process @Chagify was flawed: 1) Chargify is not freemium to the custo

by jeffepp 16y ago

This was definitely not the point of the article. It was to show how the decision making process @Chagify was flawed: 1) Chargify is not freemium to the customer. 2) Trust is important when you integrate and there are significant switching costs (plus recurring billing) 3) Do not blame your customers for incorrect assumptions.

tptacek 16y ago
The same logic suggests that Rails isn't really "free"; you have to do work to build a product on it. What does Rails owe its developers?
- enjo 16y ago
  They owe them the decency not to change the terms of the license mid-stream. The nice thing about Rails, it's on a MIT license which can not be revoked. You can build on rails with the confidence that at least the current version of the software is yours forever. Chargify is clearly in the wrong here in my opinion. They gave woefully short notice. They jacked the price, and they left no guarantee that won't do it again. I'd be quite nervous as a customer of Chargify that they might do it again. I'm the same situation with Twilio. We are, right now, far too dependent on them. So far they've always gone in the other direction (gotten consistently cheaper since the day we signed up), but what happens if they jack their rates? It's scary...
  - jeffepp 16y ago
    Thank you. I am glad you understood the gist of my post. The point of the FREEMIUM argument is to show: 1) There is substantial value here companies will pay for. 2) We are investing in the company, and there is an expectation of fairness & consistency.
    - tptacek 16y ago
      It sounds like you just said that your argument is "Chargify produced something with substantial value that companies will pay for, and we've invested in Chargify by using it without paying."
    - jeffepp 16y ago
      @tptacek I am saying is that Chargify falsely presumes companies under a FREEMIUM account are worthless. My point is that they are unlikely to leave [since they have invested their own resources] unless the trust is broken or perhaps, they go out of business...
      - tptacek 16y ago
        Chargify made a business decision that the "freemium" accounts weren't worth what the freemium tier cost. You are entitled to disagree with that decision, but I'm entitled to say that to call it a betrayal of trust is hyperbolic and naive.
        jeffepp 16y ago
        Fair enough, I appreciate and thank you for your comments..
  - tptacek 16y ago
    Yes. It is scary. It is also the nature of working with new companies who are, just like you, trying to find their footing in the marketplace. You clearly want predictable pricing and delivery. Every business wants predictable pricing and delivery. What you don't appear to grasp is that established businesses pay a premium for predictable pricing and delivery. If you want to lock in a rate with Twilio or Chargify or anybody else, get their CEO on the phone and get a contract in place. That's what real businesses do. But don't be surprised to find out that the price for (say) Twilio to lock in a permanent price for you is higher than you want to pay. You're a startup. You should understand what it means to work with one.
gdevore 16y ago
I agree with points 2 and 3 but point #1 is a big stretch. Drop that and people will take the article more seriously. Chargify isn't blaming their customers for incorrect assumptions, but their customers are feeling the effects of their incorrect assumptions. With the way things are now at Chargify it costs more to maintain/support a current customer than that customer generates in revenue. You can afford to grandfather old accounts if you can still at least break even on those accounts. If you can't then you have to do something like what Chargify did or your business will cease to exist. The key is to do all that you can to not put yourself in the position that your support costs are so high that you can't be profitable on existing customers. I blogged more about it here: http://www.bluemangolearning.com/blog/2010/10/building-scalable-support-lessons-learned-from-the-chargify-price-increase/ http://www.bluemangolearning.com/blog/2010/10/building-scala...
- owkaye 16y ago
  > You can afford to grandfather old accounts if you can still at least break even on those accounts. They could have grandfathered the existing accounts for at least 6 months or so, but giving any user -- whether a paying customer or a free user -- only 30 days to start paying $100 a month when many of them expected to be paying little or nothing for quite some time? Well, I think that is the height of arrogance and disrespect for the customers on which your business is built -- and an exceptionally effective way to alienate all those free users who MIGHT have become paying customers if only they had been given a reasonable amount of time to adjust to the change ... or even a reasonable new rate for small volume users. Why not offer something like $5 a month for up to 10 subscribers instead of basically kicking all their free users in the groin? Most small businesses would not bat an eye at such a small charge even if they had only 30 days to start paying or abandon Chargify. But did they offer such a service? No, the fact remains that the guys at Chargify appear to be way too naive for any serious business to trust or rely on them at this stage of the game. They didn't "get it" when they made their blunder and from what I have seen they still don't "get it". But no worries, there are others that will pick up the slack ...
  - chopsueyar 16y ago
    Are they users or customers? You cannot alienate customers that are not your potential customers. The beauty of this service and the United States is that nobody is forcing you to use Chargify. Also, if you do use Chargify, you can stop at any time, without any penalty. In fact, Chargify uses an API, so your application can be written in a way that competing and alternate services can be integrated into your application (without requiring major rewrites to your application).

by jeffepp 16y ago

tptacek 16y ago

The same logic suggests that Rails isn't really "free"; you have to do work to build a product on it. What does Rails owe its developers?

enjo 16y ago
They owe them the decency not to change the terms of the license mid-stream. The nice thing about Rails, it's on a MIT license which can not be revoked. You can build on rails with the confidence that at least the current version of the software is yours forever. Chargify is clearly in the wrong here in my opinion. They gave woefully short notice. They jacked the price, and they left no guarantee that won't do it again. I'd be quite nervous as a customer of Chargify that they might do it again. I'm the same situation with Twilio. We are, right now, far too dependent on them. So far they've always gone in the other direction (gotten consistently cheaper since the day we signed up), but what happens if they jack their rates? It's scary...
- jeffepp 16y ago
  Thank you. I am glad you understood the gist of my post. The point of the FREEMIUM argument is to show: 1) There is substantial value here companies will pay for. 2) We are investing in the company, and there is an expectation of fairness & consistency.
  - tptacek 16y ago
    It sounds like you just said that your argument is "Chargify produced something with substantial value that companies will pay for, and we've invested in Chargify by using it without paying."
  - jeffepp 16y ago
    @tptacek I am saying is that Chargify falsely presumes companies under a FREEMIUM account are worthless. My point is that they are unlikely to leave [since they have invested their own resources] unless the trust is broken or perhaps, they go out of business...
    - tptacek 16y ago
      Chargify made a business decision that the "freemium" accounts weren't worth what the freemium tier cost. You are entitled to disagree with that decision, but I'm entitled to say that to call it a betrayal of trust is hyperbolic and naive.
      - jeffepp 16y ago
        Fair enough, I appreciate and thank you for your comments..
- tptacek 16y ago
  Yes. It is scary. It is also the nature of working with new companies who are, just like you, trying to find their footing in the marketplace. You clearly want predictable pricing and delivery. Every business wants predictable pricing and delivery. What you don't appear to grasp is that established businesses pay a premium for predictable pricing and delivery. If you want to lock in a rate with Twilio or Chargify or anybody else, get their CEO on the phone and get a contract in place. That's what real businesses do. But don't be surprised to find out that the price for (say) Twilio to lock in a permanent price for you is higher than you want to pay. You're a startup. You should understand what it means to work with one.

gdevore 16y ago

I agree with points 2 and 3 but point #1 is a big stretch. Drop that and people will take the article more seriously. Chargify isn't blaming their customers for incorrect assumptions, but their customers are feeling the effects of their incorrect assumptions. With the way things are now at Chargify it costs more to maintain/support a current customer than that customer generates in revenue. You can afford to grandfather old accounts if you can still at least break even on those accounts. If you can't then you have to do something like what Chargify did or your business will cease to exist. The key is to do all that you can to not put yourself in the position that your support costs are so high that you can't be profitable on existing customers. I blogged more about it here: http://www.bluemangolearning.com/blog/2010/10/building-scalable-support-lessons-learned-from-the-chargify-price-increase/ http://www.bluemangolearning.com/blog/2010/10/building-scala...

owkaye 16y ago
> You can afford to grandfather old accounts if you can still at least break even on those accounts. They could have grandfathered the existing accounts for at least 6 months or so, but giving any user -- whether a paying customer or a free user -- only 30 days to start paying $100 a month when many of them expected to be paying little or nothing for quite some time? Well, I think that is the height of arrogance and disrespect for the customers on which your business is built -- and an exceptionally effective way to alienate all those free users who MIGHT have become paying customers if only they had been given a reasonable amount of time to adjust to the change ... or even a reasonable new rate for small volume users. Why not offer something like $5 a month for up to 10 subscribers instead of basically kicking all their free users in the groin? Most small businesses would not bat an eye at such a small charge even if they had only 30 days to start paying or abandon Chargify. But did they offer such a service? No, the fact remains that the guys at Chargify appear to be way too naive for any serious business to trust or rely on them at this stage of the game. They didn't "get it" when they made their blunder and from what I have seen they still don't "get it". But no worries, there are others that will pick up the slack ...
- chopsueyar 16y ago
  Are they users or customers? You cannot alienate customers that are not your potential customers. The beauty of this service and the United States is that nobody is forcing you to use Chargify. Also, if you do use Chargify, you can stop at any time, without any penalty. In fact, Chargify uses an API, so your application can be written in a way that competing and alternate services can be integrated into your application (without requiring major rewrites to your application).