Just my 2c of course, IMHO, but a major reason you are getting so much grief is because of how difficult you have made it for people who cant now afford your services at the scale they once did, and how difficult it is for people to move from your service.

>>There will always be a "cheap" or cheaper competitor out there but we are not that one.

Well not now you are not. You hold all of their customers details, moving from chargify to something more affordable is a nigh on impossible task. I'd expect that there are more than a few startups who will just shut up shop who just dont have the resource to enter into a process of getting all of the users to re-sign up with alternative providers. Thats pretty sad dont you think?

Hey David,

I suggest a massive course correction, switch back to the old plan today, inform your users, open up your books and work out a plan together with your users. I know that that may be very difficult for you at this point but you are literally killing the chargify brand with how you go about this.

Go back to where you were 24 hours ago, then make very careful moves forward in concert with your userbase. You can still do it, wait a bit longer and the window of opportunity will close. As soon as people start to throw their dreams in to the garbage and notify their end users because of changes you have made chargify might as well close up shop. Ocean liners do not turn on a dime, they'll break and sink.

If the goal of all this is to shake out the 'free' tier remember that each and every business starts at zero.

The best thing you could probably do is to find a way to put a sunset clause on the free deal in concert with your users, reasonable terms all around and then to create a limited time free offer which will automatically convert in a model that covers your costs. If they grow over that you will recoup the loss of the initial free signups.

The data you have amassed on your customers profiles will need to be brought in on figuring out what kind of model will work best for both you and your customers. My bet would be that the model that matches the chargify demographic best would be one that cuts a merchant 180 days of slack to get going, after which they enter several tiered schemes where the cost per transaction goes down as the volume goes up.

Users don't care how you want to serve them, they care that they will be served in a way that works for them, and to tack on a fixed fee where there was none before is a way that does not work for lots of your users. If you think that only the small ones will be affected you can bet that if you don't work this out in a good way that the big ones will be looking to bail as fast as they can as well.

You made a mistake, the fix compounded the mistake (I know that from your perspective it looks like meeting them more than halfway but it really doesn't, $40, at 10 sales per month works out to $4 per sale, at 20 sales it is still $2 per sale and at 40 sales you are getting in to 'reasonable' territory.

If the support costs are what is killing you then work on reducing them further, excellent guides and a team of super users to help out the newbies.

Freemium does not mean 'yesterday you were all free, today you're all premium'.

good luck!

Thank you for the feedback and you are right that the pricing does not work for someone with only 4 customers. Keep in mind that starting a business has costs, even opening a bank account and collecting money is pretty core to this so we do not expect this to be a free service.

We made many mistakes with the implementation and communication with this but do not feel that the $39 plan made this worse. We always listen to our customers and have done this for 7 years at Grasshopper and have gone through both price decreases and increases. We will continue to listen to and work with our dedicated customers and passionate Hacker News followers.

I was blown away by the newsletter earlier today. It felt like I got punched in the stomach by Rocky Balboa himself.

In the beginning I considered the same billing service providers that I'm sure every other Chargify customer has considered (Spreedly, Cheddargetter, Recurly, etc). The main differentiator was your pricing model. It was the fact that I could launch my product and see if I could get to those first 50 customers before I had to pay you. You made it almost a no-brainer because of your pricing, it was perfect for people like me just starting out. It was inspiring that you were putting trust and hope in your customers. 10 months later, I'm completely integrated with Chargify, have an app in the wild with real users, and boom... All of a sudden Spreedly, Cheddargetter, Recurly, etc are looking a lot better.

Aside from the massive price increase, I (like many of your beta users) spent a year testing out your application and giving you a lot of feedback to improve your product. I have also responded to several of the "[name] is looking at Chargify, can anyone help us out?" tweets and have said nothing but great things about Chargify since day one. I have helped several of your customers via email, support forums, blogs, and twitter with integration issues, and more-or-less evangelized your product. And I'm happy to do that for great services, and I'm guessing I wasn't the only one. But this was all under the impression that what I signed up for was what I was, well, signing up for.

Receiving that newsletter made me feel like I was (we all were) being used to help establish Chargify as a viable option, only to get shit on in the end... and that sucks. It's a horrible feeling.

I understand your needs for a price increase and that you can't support freemium at a massive scale, but to be honest, even $39/month is $39 more than what I signed up for considering the first 50 customers were free. I never have needed (and probably never will need) to call you on the phone, so I'd be happy to be on a plan where 24/7 phone support isn't an option.

It seems like your early beta testers and customers, who shouted to the world how great Chargify was, should if nothing else at least be given exactly what they signed up for. Now I'm just getting started, so I don't know the ins and outs of business, but that seems like an obvious play to me.

Unfortunately, there's now a big lack of trust in Chargify... what will happen to its customers in 2 or 3 years from now when we're even more locked in? After this move, that's a little scary, and potential grounds for departure.

I still feel like it was a bait-and-switch to me, after having written an integration for one of our apps that was supposed to go live TODAY, only to find out that we had to reevaluate all the billing solutions... again. Good lesson for companies that buy these solutions - make sure your agreement does not let the vendor change their price on you whenever they want with no notice, especially when you are integrated like this. Having one more comment saying that we didn't like the pricing change probably won't change anything - but it sucked to get ready for a go-live today and then have to put on the breaks. I spent my weekend finishing up the integration and Monday find out that that time was spent integrating with a company that has basically no regard for the smaller users. This $39/month plan doesn't restore our faith in you - we're more likely to build something home-grown at this point just so nobody can do that to us in the future. After all, you make us buy authorize.net, then customer information manager... so we could build basically the same thing integrating to authorize.net's ARB (automated recurring billing) system for $10/month. I still am not getting my weekend back, or the stress from getting burned by you guys today.

David,

Thank you for emailing us. We have been using chargify for a couple months now and we now have about 700 paying customers. Under the new scheme, it looks like we will need to pay $350 for those 700 accounts. Is my understanding correct? If so, this price change is going to put a very heavy burden on us as it will take us some time to get to 2000 accounts so that the average cost is lowered.

Would you considered a more closely geared pricing model that does not penalize us every-time we successfully grow pass one of the pricing thresholds? For example, please check out Sendgrid's pricing structure, which scales very intuitively. They provide a different type of service and so the exact numbers are not relevant. However, their structure could be a good reference for Chargify.

Even $39/mo is still prohibitive. Considering the cost of modern cloud hosts, your bottom plan is still more expensive than a web server in some cases...

As someone building a bootstrapped side project with absolutely zero customers, I wouldn't mind a stripped down $20/mo / 50 customer plan that had no phone support. But anything more than that, it really doesn't make any sense to be paying more for Chargify than the server - after all I still have to get a merchant account and go through all the BS with that on top of it.

Paypal is starting to look better and better every day, and its kind of a bummer because now if I want to support direct payments later on I need to account for Paypal, and I'd be more likely to just roll my own system

One of the problems you have is that your reason for pricing doesn't jive with how you're doing it. If it's really a question of support costs, just charge for support at the lower tier(s).

Plus let's be honest, once someone is up and humming, support costs for them (provided your service is as solid as you sell it to be) shrink very drastically.

I'm all for you making money, we want you to survive as much as you do. But given the locked-in nature of what you're selling (i.e. you've got us by the short hairs), and the extremely high cost to integrate with you, waking up one morning to a massive change like this is deeply, deeply unsettling.

To sell a product, that takes months to integrate, and change the pricing structure completely without warning is basically insane business practice. At LEAST provide a per user rate for the little guy, and change the t+c to assure customers there will be fair warning and 'not more than x% per annum increase'. A price change for a product like that should be given 6months notice and an incentive to grow into the new structure (ie grow to over 100 customers before we change the price and you'll get 10% off for another 6months.

Yeah, not to pile on... but I have to believe that pricing, at least on the lower end might be out of whack with what I still think is your target clientele - a group that likely all have some inhouse development resources. Faced with the reality that at least some integration is likely to be needed, I'm not sure Chargify would even get on my radar given the new pricing structure. To me, I always thought Chargify was "get full fledged service up and running quick, by the time we're rolling along, why mess with a good thing".

The PCI compliance bit is somewhat misleading, as at least for integrated solutions, just because Chargify is PCI compliant, doesn't let us off the hook. So if we have to be PCI compliant(integrated solution), we are basically paying for dunning management? I'm being facetious but hopefully that illustrates what others are probably thinking. My approach will now be, build out simple customer management system, tie into a payment gateway and build out related services as site/business grows.

Sucks for me... I spent a decent amount of time integrating/understanding how Chargify works and now I realize that Chargify is simply not an option(trial users were actually my biggest draw).

Anyway, you have guys have built a great service. Wish you the best.

Respect your desire and need to price accordingly. I also believe you need to respect the need for current clients that had certain expectations (a bootstrappable billing service that starts at $0).

If you are not going to grandfather the old prices, at lease give a long transition period. I would suggest six months given that this is a service that requires integration and customer interaction.

100% agreement. Our small team has spent the better part of 2 months getting ready to rollout subscription pricing for two separate apps with Chargify's model in mind. We cannot roll them out faster and loved the option to grow slowly. Once we had 50 customers we knew there would be no hardship in paying for Chargify. It was great that these guys "got it" and really understood what bootstrappers go thru. Now it does feel like we got "punched in the gut" as another user said.

Yes, exactly. I thought the same thing. "Finally, there's someone out there who understands the needs of a bootstrapping, young business". But apparently it was a scam. If it's too good to be true, it probably is.

There's no way Chargify would have the customer base they have now having launched with these pricing plans from day one. With the several other options out there, someone starting out with nothing would NOT choose to pay $100/month right off the bat, without even considering hosting costs and merchant/gateway costs, knowing there are other options out there for $19/month. I'm happy for them that their "too good to be true" pricing sucked in some customers, but it sure does suck for us.

The attitude that "there will always be cheaper options out there, but we won't be one of them" is a far cry from how it was early on. It used to be "we understand, and offer the best pricing around". It was so relaxing to know that $50/month would get you up to 500 customers, with 49 of them being at no charge (even 10-15 at no charge would be great). Coming from that, no, $39/month for as little as 1 customer does not feel like a good deal, unfortunately. Downgraded from $100, maybe, upgraded from $0, no.

I'm truly shocked the old prices aren't going to be grandfathered in.

I think I'm going to bite the bullet and (re-)integrate with someone else. Ugh.

I am so lucky because I just started to shop around for payment system. I will have to switch to CheddarGetter which at least provide 20 free users. For those who stuck with Chargify, well, you have my sympathy.

Firstly, thanks for the change of plan. But don't think you're off the hook that easily! :P

I understand the need to ditch free users. It's a common tale that supporting free users is just not worth the effort. But realistically, dropping a bomb like this on the many customers you already have which are either "only just" paying or "about to pay" is just plain horrible. Startups who are just ticking over to the base paid plan are particularly vulnerable, not to mention the hundreds of customers who are no doubt not that far yet. The point is, that EVERY one of your customers starts off with ZERO of their own customers. That's what made your pricing so great for bootstrapped startups like us. Today, you've made it just that little bit harder for people like us.

We started using Chargify in production about 60 days ago. We were just about to write our first cheque to you, and I've even mentioned to Lance that I was actually looking forward to it. In my mind, getting to 50 paying customers was something of a milestone. But to go from budgeting for $50 a month to now budgeting $100 a month on top of the all the merchant fees for both is just about a show stopper. I guess that just means we're not in your target market.

I don't think anyone expects businesses like Chargify to offer their (awesome) product for free. But for someone who has been in business for so long, it is hard to believe you guys are so naive as to think this would go down at all well. Especially when it has happened time and time again with others only recently.

Chargify is in the unique position of having a fairly substantial "lock in" on customers. The switching costs for us is huge. For us to change to competitor would be prohibitively expensive. When you're in that position, it's unpleasant to be reminded just how much power a third party has over your own business.

I mentioned in another post here that UsabilityHub has just shy of 10,000 users. 90% of those were migrated from our previous system (paypal) which wasn't subscription based. At the time I made the decision to keep those users out of Chargify rather than paying $40 a month to maintain them. I felt dishonest for doing so, but now that I'd be getting charged $1000 a month for those "free" users, it was possibly the best decision I ever made. We got out relatively unscathed, but that is how close we come to being forced to shut down our product because of pricing decision made by a third party. Let that be a lesson to all.

The moral of the story here, however, is that you guys have spent nearly a year building up some pretty awesome goodwill amongst the startup community. Today you've turned around and told all of us that we don't matter to you. You guys have spent so long telling us how the banking sector is "doing it wrong", is too expensive and has too many fees, and then you turn around and join them.

To underline all of this, Chargify is now the most expensive part of the billing chain for startups. Congratulations.

EDIT: I'm currently in the process of implementing "one time" purchases using Chargify. This is our most requested feature. Given that all these users will be counted as "active users" in Chargify, we'll be getting billed for every one of our 10,000 users that decide to make a "one time" purchase even though they're not actually subscribers.

So I guess I need to explain to our customers why we won't be doing that any more.... this just keeps getting worse.

I've met David and he is a great guy that really cares about entrepreneurs, so I'm surprised about how they went about this pricing change.

The pricing change itself makes total sense (startups who never get any traction/paying customers end up costing a ton and never pay anything) - but changing to a pricing structure that can hurt so many entrepreneurs (like in toast76's case) seems the wrong way to go.

Is the cost to grandfather in all the existing customers really worth all the brand damage this created? Not to mention the startups that are now cash-flow negative since they are being suddenly charged for all their free users (and apparently one-time payment users).

The icing on the cake is that their branding is focused around being the service provider to entrepreneurs.

That's the bit that upsets me. I've dealt with Lance in particular quite a bit. These guys are fanatical about helping out. I WAN'T to give these guys money. I love their stuff, I love their spirit. If this was Paypal I wouldn't be posting here... I'd just be closing my account.

Very thoughtful response and love the passion. We are in a very limited segment of Chargify customers that actually have many freeium customers and we would love to work with you to make sure pricing works for you.

There is much talk about freemium but over 12 months of data show that companies actually doing this that are using are system are under 2% of our customers. Feel free to email me, send me a twitter message, anything you want and we will figure out something that will work for you.

I am surprised with so many concern towards new pricing, and they do let you know and they try hard to let you know. I believe this means people are loving your service.

But this way, you could kill that love and may effect chargify future. With a tons of similar services from quite establish provider, there will be no more reason for people to use chargify.