Up until now I’ve been preparing a raving review about how much I love the recurring payment service, Recurly.  Previously, at simply a fraction of the price of each payment on the service, it was very simple for any entrepreneur to get set up with the service and have an out-of-the-box solution for recurring payments on any website.  Just today Recurly sent out a note to its beta customers stating they were changing that model, and rather than charging per transaction on either a percentage of revenue or the total number of subscribers (the lesser of the two), they would be switching to a flat-rate pricing model.  The pricing would increase based on the services you used rather than the number of transactions.  As a new entrepreneur, I’m horribly disappointed by this new plan.

Just today, Recurly’s CEO sent out a lengthy e-mail explaining the terms.  In the e-mail, Isaac Hall, CEO of Recurly, blamed the new pricing on their talks with entrepreneurs, claiming what entrepreneurs would “likely be paying”, and implying that for most of those they talked to this new pricing structure was more beneficial.  Unfortunately, I was not one of those he talked to, and evidently, nor was Damon Cortesi, another entrepreneur/developer and founder of UntitledStartup (where I learned about Recurly) who responded when I shared my disappointment on Twitter, “I agree re: the monthly fees. That’s a huge hit.”

“Our pricing is simple–we don’t get paid unless you get paid.” – the old slogan

The old pricing was simple – so simple they bragged, “Our pricing is simple–we don’t get paid until you get paid”.  It offered the option of a tiered pricing level where each tier represented a number of users with accounts on your system.  If you had more accounts, you paid more.  There was also a percentage model, where for each purchase a percentage of the pricing would be charged to the transaction – they claimed they would choose the best pricing model based on your number of transactions.  Unfortunately they must not have been getting paid enough.  The new plan is just 3 tiers – $49, $99, and $199/month.  The lower tier being a basic signup solution with no way to determine when users’ cards were declined and no way to whitelabel or do one-time transactions.  The middle layer adds API support and white-label support.  The final layer adds push notifications (for when cards are declined, subscriptions are canceled, etc), and one-time transaction support.

The old pricing model

For a budding entrepreneur trying to bootstrap his company with no guarantees as to whether that company will make any money at all, even $49/month is an expensive choice.  For someone like me who can’t guarantee the user will actually come back to the site after signing up through Recurly, or can’t guarantee the user’s card will be successful the second or third month in, I need the push notification support.  Currently even Paypal offers this on a per-transaction basis, and they provide one-time transaction support (which we’re using on SocialToo).  White label is also critical for maximum fulfillment (something that was next on my list for SocialToo).

However, at $199/month, I just can’t guarantee my sales will always be enough to cover that, pay for hosting (already near $1k/mo), cover maintenance, design, and other costs of supporting the site.  It’s simply too expensive for a site still in the early stages trying to build enough revenue to make something significant.  Considering most businesses are bootstrapped in this manner and not paid for through VC money, this may be something Recurly wants to reconsider.

So, considering, I am now forced to look back at my options and I will probably be considering implementing my own solution now through a service like Paypal or perhaps something native through Authorize.net or similar just like I’m doing on the one-time payments.  I really hope Recurly reconsiders on this.  Their previous plan made it so easy to set up a recurring payment plan it was the obvious choice.  I am stuck looking for more.

You can read the e-mail from the CEO of Recurly here.

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