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 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.