FoxyCart's New, Fair Pricing
As we prepare to release the next version of FoxyCart, we’re excited to share with you some changes we’re making to our pricing.
This blog post contains two parts. The first (“The New Pricing…”) introduces the new plans, while the second (“…And the Reasons Behind It”) describes why we’re changing things up and what we’ve learned along the way.
If you have any questions at all after reading through this, please let us know. We’re here to help.
The New Pricing…
Our New Pricing, As Fair As Possible
We've spent years (we started in 2009) discussing various approaches to pricing, and we've finally come up with an approach that we feel is fair to all our users. Rather than have a complicated pricing matrix that places arbitrary restrictions on things like bandwidth, downloadable storage space, # of products, # of admin users, # of coupons, # of subscriptions, or anything else, we're focusing on what probably matters most: the transaction. And we're making everything else unlimited.
We'd love feedback, but we think it's fair for a merchant doing 100 transactions/month to pay less than a merchant doing 1,000, and for that merchant to pay less than a merchant doing 10,000. We feel this is a solid foundation on which to approach pricing, and it's allowed us to rethink what's important to us and to you. This pricing will result in higher prices for some users (should they choose to upgrade and adopt the new pricing), but it will result in lower prices for many, many more users.
Here are the new plans. Please let us know what you think of them in the comments below:
- All plans now include unlimited:
- Downloadable storage space (previously $20/GB/mo)
- Multiship (previously $10/mo)
- ZIP Code based tax rate lookups (v1.0; we were planning on charging extra for this)
- Twig template language support (v1.0; we were planning on charging extra for this)
- Everything else you've come to expect from FoxyCart
- The Standard Plan
- $15/mo (paid annually) or $20/mo (paid monthly)
- 100 transactions/month included
- 15¢ per transaction thereafter
- Forum and email support
- The Advanced Plan
- $250/mo (paid annually) or $300/mo (paid monthly)
- 1,000 transactions/month included
- 5¢ per transaction thereafter
- Forum, email, phone, and live chat support
- The Enterprise Plan
- Starting at $2000/mo, annual or quarterly billing only
- Flexible transaction limits and fees
- Custom support options, Terms of Service, SLAs, failover solutions, and other functionality as needed
- The only add-on is:
- The Custom Subdomain SSL, which will be $100/yr (up from $90), and will only be available to stores paying annually. This makes more sense to us, and should simplify the billing (and SSL authorizing) significantly.
We know that a per transaction fee might be a turnoff for some, but it's the most equitable way we could think of to ensure that we don't end up with "micro" merchants subsidizing the small, medium, and large businesses that use FoxyCart. Our hope is that we can clearly communicate our intent with this pricing, which is to provide the most powerful ecommerce platform available, at the best value for merchants from micro and enterprise.
What do you think? Please let us know. This isn't set in stone, but we're excited about it and want to make sure it makes sense for you as well.
How the New Pricing Will Work, and Who Will Get It?
Every FoxyCart user prior to v1.0 will keep their current pricing while they are on their current (pre-1.0) version. So if you're currently paying $15/mo or $19/mo, you can keep that so long as you remain on your current version. On upgrading to v1.0 you'll be given the choice of selecting one of the new pricing plans. (If this is a problem for you, let us know and we may be able to provide the legacy pricing moving forward.)
So, again: Whatever your current plan, you can continue with it (indefinitely) on all pre-1.0 versions. For the average FoxyCart user, upgrading will either save them $48/yr (if paid annually) or cost them $12/yr (if moving from $19/mo to $20/mo). We hope you consider this as fair as we think it is.
If you select an annual billing plan, any transaction fees will be charged monthly, which is relatively common for annual billing agreements. This will avoid a situation where you could be hit all at once for 12 months worth of transaction fees.
The new pricing will be available as soon as our next release goes into public beta, which should be no more than a few weeks from here. (It's currently in private beta for our integration partners, so they can ensure their systems are fully compatible when we make it publicly accessible.)
…And the Reasons Behind It
We've had the pleasure over the years of serving merchants from brand-new businesses to established national brands, and everything in between. We started in 2007 with a single one-size-fits-all price of $15/mo, and it supported the organic growth that allowed us to prove the concept. A few years later (Feb, 2010) we raised our price to $19/mo for a few reasons.
First, at that point we were experiencing some growing pains as we were being used by larger merchants putting more strain on our systems. We had a few instances where a single merchant's good publicity seriously impacted our ability to keep our systems up for all of our users. The price increase was meant to provide us with a little extra revenue to make significant improvements to our infrastructure. And, a few years later, it has allowed us to do so.
Second, we wanted to encourage our integration developers by providing an affiliate program, and adding a few dollars to our $15/mo price allowed us to do that. (It should be noted that we're a self-funded company, so when we talk about "our revenue" we're talking about our ability to pay for our costs, like our systems and our teams' salaries. We're not out to drive up our valuation so we can be bought out. We're in this to provide you with the best ecommerce platform available in a responsible and sustainable way.)
In both of those counts, the $19/mo price seems to have worked out. In hindsight, however, we think we could have better served our different types.
- We should have done multiple tiers instead of continuing the one-size-fits-all approach. We'd already had experiences with a single store taking considerably more resources than the rest of our users put together. So we should have thought of this, but we didn't take this approach.
- $19 is an absolutely horrible price. Everybody, from bloggers to Twitter users to people calling, say things like, "So FoxyCart is just $20/mo, right?" $19.99 or $20 or anything other than flat $19 probably would have been better, since huge numbers of people seemed to just assume it was $20 anyway.
- For a large number of our users doing very few transactions a month, the move from $15 to $19 seemed to be big enough to discourage using FoxyCart. Our signups did drop as a result of this price increase.
We knew we had to fix these problems, and even hired a pricing consultant in 2009 to help us work through some of these issues. But we’ve always erred on the side of serving our users by adding and improving features, and we never felt 100% confident in any of the pricing changes we’d worked out.
The Problem with Our “One Size Fits All” Pricing
With our v1.0 release, our growing team, our new API, our new website, and our approaching Visa CISP Level 1 Service Provider registration, 2012 is promising to be our most exciting year ever. And with that comes a growing realization that our current one-size-fits-all pricing approach just doesn't seem fair, to us or to our users.
The single biggest point of unfairness, in our opinion, is that we have many, many merchants doing 1 or 5 or 10 transactions a month. They're paying the same price as those merchants doing 100 or 500 or 5,000 transactions a month. The small businesses are subsidizing the large. Nobody wants that. As we continue to add features (like getting ready to turn on our hot failover environment in Arizona), we have to ask ourselves, "Who is this for? The people that get a few sales a month, or the people that get a few sales a minute?" The answer is clear, but the current price doesn't reflect the very robust and advanced system we're offering.
So, What to Do?
Because this has been such a long and winding road for us, and because pricing is something that almost all of our users deal with at one point or another, we want to provide a little more info on how we've arrived where we have with the above plans.
Differentiating Through Simplified Pricing
One thing you'll notice if you look at pretty much any of our competitors is a pricing structure with 4-5 tiers, each differentiated from the others with at least 4+ restrictions. Most common are the # of SKUs, # of admin users, bandwidth, and storage space. FoxyCart, however, is unlike any other system in that it’s not a turnkey, all-in-one solution. So we wanted our pricing to reflect this difference when a new visitor sees our pricing page. By focusing the pricing on the transaction itself it helps clarify that FoxyCart deals with the checkout process, and not the website.
(We want to publicly thank Patrick Pitman, an ecommerce business consultant who helped drive this point home. Prior to our discussions with Patrick we'd planned on 5 tiers, and limiting things like coupons, subscriptions, downloadables, and other functionality. We’re much happier with the simplified tiers and unlimited functionality. Patrick may be guest blogging in the future, so subscribe to our RSS feed.)
Don't Make Me Think (About Which Tier Is Right For Me)
With a 'normal' pricing matrix it forces you, the customer, to think hard about what plan fits your needs. Usually you can't find one that matches exactly what you're looking for. Do you need 1GB or 2GB of storage space? Is 1 admin account ok or will you need 3? Can you limit the number of products to 50 in order to save $15/mo, when you really need 60? Etc., etc., etc.
With our new approach, our hope is that it's immediately clear to you, the visitor, which tier you fit in. If $250/mo sounds like a lot of money to run your ecommerce business, then clearly you’d be better served by the Standard plan. If, on the other hand, you’re doing thousands of dollars a day in sales, the Advanced or Enterprise plans probably are more in line with what you can afford (and in some cases, expect and want) to pay.
But the important thing is that you don't lose anything by choosing the $15/mo plan instead (except perhaps live support options if you really need them). Every plan gets full FoxyCart functionality. And our hope is that every merchant gets that full power at a price that makes sense according to their usage.
(Btw, if you haven't read Steve Krug's Don't Make Me Think, go buy it now. We'll wait :)
Though we haven't written it off entirely, having a free offering isn't something in the current plans. We may blog more about that down the road, as it's a very interesting topic, but for now it's not something we could confidently roll out.
In case you're thinking, "Yeah, sure, you just want to lock people into FoxyCart before they can change their mind," it's worth noting that we'll continue our unlimited “free during development” approach (you don’t have to pay until you’re ready to turn on a live payment gateway and collect real money from real customers), so nobody should feel pressured to pay for their FoxyCart before they're absolutely sure it's the best fit for them.
Annual Pricing Discounts
This is something that people have asked us about for years, and we've done occasionally when people have been persistent, but we're making it official. We're not sure how many people will take advantage of the steep discount on the annual billing, but we consider ourselves to be a long-term partner with every FoxyCart user we have, and annual pricing makes this long-term expectation more tangible.
The Future of FoxyCart's Pricing
Please let us know your thoughts here. We've spent years getting to this point, and we're very hopeful that this approach will allow us to provide better value to more users than ever before. We'll blog about the impact of this change whether positive or negative, but we're optimistic, and thankful to have the community we do to give us honest feedback about our successes and failures.