Whenever I come across a pricing page on a site I immediately think “Oh, OK, that’s how they make money and where they fit in the market.” Well, recently, I came across a company that I knew how many employees they had, how many customers they had, and saw their published pricing. After some simple mental calculations, and knowing they hadn’t raised money, I quickly realized the math didn’t make sense. They couldn’t support that many employees with that little revenue, even in Atlanta (great Fast Company interview of Alan Taetle).
After asking around I found the answer. The monthly fee for the web service is what everyone pays, and it is very competitive for what they offer, but if you choose to use their “free” payment processing option, they charge an additional 1% of the transaction fee as an additional commission. Yep, that’s right, they generate more annual revenue on that 1% transaction fee than from the monthly service for their product. Only, you wouldn’t know it from browsing their site.
My recommendation is to think through ways to generate multiple revenue streams, and consider ones that aren’t always as obvious as a monthly subscription fees (yes, recurring revenue is the best form of revenue).
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