It was only a few months ago that the recurring billing platform Spreedly, changed their pricing. Now it’s Recurly’s turn. However, unlike Spreedly’s pricing change, Recurly’s changes appear to be good all round.

Recurly’s previous pricing was based on a series of bands. What I dislike about this method of pricing is that it causes band shock. Let me explain what I mean by this using Recurly’s old pricing as an example. 

Imagine you’ve started using Recurly. At some point, your transaction volume will reach the usage limit for the Small Plan. You’ll be forced to upgrade to the Medium Plan. In this scenario, your average transaction cost for processing 499 transaction is 24 cents under the Small Plan, however once you hit 500 transactions you suffer band shock as your average transaction cost doubles to 49 cents. These shock points are shown in the graph below.

Band shock is a subject that I’d like to discuss in a lot more detail at a later date, but for now we’ll define it as a customer’s reaction to upgrading to a higher pricing band but the average cost of using the service suddenly increases (rather than decreases).

What did Recurly get right?

Recurly’s pricing plan changes were smart for three reasons.

Removed the bands. One simplified plan.

Recurly’s new pricing doesn’t use bands. Aside from a minimum charge per month, their pricing is based on a percentage of sales value plus a 10 cent transaction fee. This percentage+fee approach is similar to Spreedly, except that Recurly doesn’t have bands.

Removing the bands, removes the band shock and any concerns around sharp increases in price. When evaluating recurring billing platforms, we had to factor in the worst cost scenario. It makes price comparison complicated. Shaun Chapman even created, BillingSavvy, a neat little tool that calculates the most cost effective platform to be on depending on your subscription price and transaction volume. Note: BillingSavvy doesn’t include Recurly’s new pricing.

Now that Recurly have simplified their plan, I believe they’ve reduced some of the cognitive load around pricing for potential customers.

Grandfathered their existing customers

The manner in which Recurly introduced this change was clever too. They told all existing subscribers that their existing plans were being grandfathered. As a customer, just seeing this sentence in the announcement immediately reassured me that there was no bait-and-hook going on. Grandfathering your existing customers keeps them calm and makes them feel special.

I appreciate that grandfathering isn’t always possible and I admit I gave Spreedly an overly hard time about this. If a pricing plan isn’t economically viable then you have to bite the bullet, force customers to the new terms and accept the consequences.

Introduced new features

Recurly also introduced some new features that were only available on the new plan. My favourite of this being a Subscription Retention Report. This was something I was struggling to get out of our existing database - so it’s release was very timely.

The lesson here is that if you change your prices without any visible change in the product, then the pricing change is hard to justify - particularly to existing customers. Adding new features is a good sweetener for migrating existing customers to the new plan.

Are the new plans more expensive?

It depends. Because Recurly’s pricing is now based on the value of each transaction, their monthly charge will vary. 

If you’re a business selling subscriptions for less than $12 per month, then you’re almost always going to gain from migrating to the new plan. However if you’re subscriptions are charged at over $30 per month, then you’re paying more. Anyone in between these price points has a mixture.

I’ve made a Google Doc that lets you plug in your average order value (AOV) and compare the plans.

Fortunately for us, our AOV are a lower price point, so it’s all win for us. We migrated to the new plan - and now have access to a few additional features like the retention reports I mentioned earlier.

Any down side?

It’s a pity that the multi-currency features are an extra charge, it would be fantastic to have these included in the simple price too.

Update: A few commenters have pointed out that Spreedly actually do support the migration of credit card data to another platform.

I can’t quite believe the news that recurring billing platform, Spreedly have over doubled their pricing.

I’m all for fair and sustainable pricing but over doubling your prices? Something must have been going severely wrong at Spreedly HQ for a decision like this to be necessary.

I’d be pretty miffed if I was one of their 300 customers - and here’s why. A recurring billing platform is immensely sticky. Once you start taking payments through your chosen platform and decide to switch to someone else, you will have to go through the immensely painful process of getting your customers to enter their payment details on the new platform. Not pleasant. It’s like you’re dunning your entire customer base with the blind faith that they will sign up again. The process is bound to result in attrition and lost revenue.

Spreedly’s FAQs state that they’ll actually help you move to a different service:

What if I need to move to a different service?

We’ll work with you to get you a full export of data, including credit card information. For obvious reasons we have to do some high-ceremony security before releasing the data, but we will make it happen.

So perhaps this doesn’t make them as sticky as other platforms.

We had Spreedly on our short list of platforms but ended up going with Recurly (which was more at expensive at the time - now it’s looking cheap). So I’m feeling like we dodged a bullet there.

Personally, I think they should be rewarding their early adopter customers by grandfathering their plan rather than presenting them with this dilemma. In fact, one of Spreedly’s co-founders, Nathaniel Talbott, even suggested this just over a year ago when Chargify modified their pricing.

What are your thoughts on this move?

Add your comments below or add to the thread on Hacker News.

AppSumo is developing a reputation for using dodgy copy to sell deals. However their latest effort is appallingly distasteful.

On the same day as Steve Job’s death, AppSumo sent a deal containing the following subject line.

Subject lines are important, and as a copy writer you’ve got to pull out the stops to get the best open rate. But at what cost?

I’m sure that this subject line performed really well and it’s probably one of the highest open rates they’ve had. However I’m sure they’ve also lost a lot of subscribers too.

Copy writers need to be careful when writing about subjects like death. It’s one of those sensitive subjects that a I would always check with someone else.

I’ve unsubscribed from AppSumo. I think this is completely distasteful. It doesn’t even pay tribute to Steve Job’s life or achievements. It simply rides off the back of a news story.

Meanwhile, AppSumo’s Facebook Wall is quickly filling up with comments from other people who have been offended by this.

We’re currently looking for an intern to take on some project work. We could easily recruit someone with existing experience, however since one in five 16- to 24-year-olds are unemployed, I thought there’s a good chance that we could hire a smart graduate and give them some valuable work experience.  

We advertised for a 3-month paid internship and, within a few days, received over 50 applications. We’re still receiving a steady stream of candidates, but I was quite surprised by the low proportion that were British students. Here are some high level stats:

• Only 30% of candidates were British students
• Applications from foreign students out numbered Brits by 2 to 1
• 31% of applications were Indian, Italian or Greek students studying in the UK
• The average age of candidates is 24 years old (youngest is 18 and oldest is 27)

Notice that students from Italy and Greece are in the top group of foreign applicants, possibly reflecting the employment and economic conditions they face back home.

This isn’t a case of foreign workers taking British jobs. There are over five times as many British students as foreign students. Figures from the Higher Education Statistics Agency show that out of a total of nearly 2.4 million students in higher education, about 85% are UK students, nearly 5% were from other EU countries and just over 10% were from non-EU countries.

This data tells me that foreign students (studying in the UK) are more motivated and tenacious when compared to British students. You could argue that they’ve already demonstrated this by making the ambitious decision of moving abroad to study in the UK. 

Final thought

The government is calling for businesses to give priority to British workers when recruiting staff. However, when only a third of our candidates are British - that really slims down our options.

If you’re a British graduate and can’t find a job - just remember; you’ve gotta be in it, to win it.

1. Make sure you create a long URL with utm campaign tags so that you can track where people have come from. You can do this here:

http://www.google.com/support/analytics/bin/answer.py?answer=55578

2. Shorten your long URL using a Bitly

http://www.bitly.com

This will also give you an independent click through counter.

3. Create a QR code for your shortened Bitly URL at:

http://delivr.com/qr-code-generator

You should choose the following options

• Shorten URL - No
• Error correction - L Approx 7%