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> So you get the steep 57% savings of 3-year no-upfront RIs with none of the commitment (you can sell them back to us anytime after 30 days) … We make money off

> So you get the steep 57% savings of 3-year no-upfront RIs with none of the commitment (you can sell them back to us anytime after 30 days) … We make money off a 20% Savings Fee Isn’t this business model fundamentally flawed? And not profitable (unless a customer uses you for > 29 months) Because ONLY companies who plan to use your service for less than 29 months (the break even of a 3 year contract where you keep your 20% cut), should be using your service otherwise it’s just cheaper for them to call up Amazon and get their own 3year RI contract. Meaning, you’re always going to be in a situation where a customer is going to sell back their RIs and you’ll become unprofitable. Said differently, you’ll only be profitable if a customer uses you for more than 29 months.

kavehkhorram 4y ago
Not totally sure what you mean by we are only used by companies who plan on using our service for less than 29 months. Can you elaborate? We sell the RIs to our other users (now in the hundreds) so we don't take a loss. We only take a loss when we aren't able to sell your RIs (which is what we use some of our Venture Capital money for).
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px1999 4y ago
I'd assume they have volume discounts or negotiated rates with Amazon that bring that point forward. There's an entire sub industry of billing partners who are profitable enough just offering eg 8% off retail prices. In my experience Amazon can be difficult to negotiate with directly if you're not willing to commit to YoY spend growth. It's easier to deal with billing partners. Why orgs wouldn't go to Amazon directly via retail is the 3 year commitment that comes with RIs. 20% over the discounts is a bit steep imo but I'm sure there's a market for RIs as a service (particularly if the RI pricing they charge is the 100% upfront covered by their own internal funds)
- px1999 4y ago
  Oops, I need to learn to read more closely -- the RIs are no upfront so it's a slightly less good deal.

kavehkhorram 4y ago

Not totally sure what you mean by we are only used by companies who plan on using our service for less than 29 months. Can you elaborate? We sell the RIs to our other users (now in the hundreds) so we don't take a loss. We only take a loss when we aren't able to sell your RIs (which is what we use some of our Venture Capital money for).

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px1999 4y ago

I'd assume they have volume discounts or negotiated rates with Amazon that bring that point forward. There's an entire sub industry of billing partners who are profitable enough just offering eg 8% off retail prices. In my experience Amazon can be difficult to negotiate with directly if you're not willing to commit to YoY spend growth. It's easier to deal with billing partners. Why orgs wouldn't go to Amazon directly via retail is the 3 year commitment that comes with RIs. 20% over the discounts is a bit steep imo but I'm sure there's a market for RIs as a service (particularly if the RI pricing they charge is the 100% upfront covered by their own internal funds)

px1999 4y ago
Oops, I need to learn to read more closely -- the RIs are no upfront so it's a slightly less good deal.