Ash Rust

Jul 15, 2020

1 min read

Custom Pricing Plans

Hello, everyone. Today, we’re talking about pricing plans. As an early stage startup, you should try to avoid a la carte pricing — that is where a customer can pick and choose what features or usage they want from your service and pay only for that. A good example might be Twilio’s pay-as-you-go pricing for text messages and phone calls.

So here are the reasons why you should try to avoid a la carte pricing:

1: It’s hard to implement. You’re going to have more than enough trouble getting payments to work correctly as it is. Complex pricing structures are tough to code, leading to bugs and that causes lots of customer support requests. You want to get a customer upset? Mess up their billing.

2: You’ll make less money. You’re giving customers the chance to reduce what they buy to the absolute minimum that they need, when they take advantage of this, their bill will drop and so will your revenue.

3: Even though companies like Twilio and AWS appear to offer customers a la carte plans, they actually push all their larger customers to fixed commitment plans by offering big discounts. Predictable revenue is that important to them.