There are three basic ways people make money on the internet:
Ads: Content or a service is provided for free, an audience is attracted, and then advertisers are charged for access to that audience. Example: Google
E-commerce: Physical things (or digital goods such as software, stock photography, etc.) are purchased in a one-time transaction and shipped to the customer. Example: The Apple Store
Subscriptions: A service is provided and customers are charged for time-based access to that service. Example: Basecamp
If you’re wanting to use one of the first two models – ads or e-commerce – there are some pretty clear ways to get set up to start collecting payments. In ads, you have massive services like Google AdWords and smaller boutique setups like The Deck. If you’re selling stuff, there are a bunch of great options, such as Shopify or Ebay. And if you want to sell subscriptions, well then you can use something fantastic like… like… wait, what can you use?
When we looked around almost two years ago now, we found the options for collecting and tracking subscription payments to be extremely discouraging. The options were to either implement your own, or to use the services that some of the payment gateways provide. Lets talk about the problems with using the gateway services first. Some of us on the Spreedly team have direct experience with implementing PayPal’s subscription API, and our experience was that the documentation was awful, and even worse, the service basically required us to serve it, which just seemed backwards. We had to listen to the service and keep track of everything it said, because there was no way to get the data back out if we didn’t track it. It was, to put it succinctly, a nightmare.
“But that’s just PayPal,” you might say (though it isn’t – I’ve heard similar stories about other well-known gateway subscription add-ons), “what about the gateways with good subscription support?” Well, while we’ve heard decent things about some others, such as TrustCommerce and Braintree, there’s another insidious problem with going with a gateway service: vendor lock-in. Say your gateway jacks up your rates, or their customer service goes downhill, or you decide to switch to a merchant account that doesn’t support it? Well, you’re stuck – you’ve coded against that particular gateway’s API, and it’s going to be painful to switch.
So there are serious issues with the gateway subscription add-ons, but what about just rolling your own and only using the gateway for charging cards? Well, that’s what it seems the majority of subscription-based businesses do at present, but it’s a path that has serious costs. On the time front, it takes a lot of time to build solid subscription code. Spreedly has hundreds of hours in it, and we’re just getting started. It’s awfully hard to afford that time when you’re trying to get a business off the ground. Add to that that even if you can get solid subscription code, there’s so much insight that a good backend subscription system can give you that you definitely won’t have time to extract until far in the future.
Perhaps even more concerning is the risk cost: security is of paramount importance if you’re collecting credit card data, and even moreso for automatically renewing subscriptions where you need to store the credit card data for long periods of time. Do you want to be responsible for that? Is it worth it being on the hook for that data when all you want to do is sell access to your cool project management tool? Also note that these risk issues apply to using someone else’s subscription code (for money or for free) since you’re still on the hook for making sure that code is secure and solid, and for keeping it in tip-top shape in to the future.
At this point it should be pretty obvious why we started Spreedly: we considered all these options, and found them wanting. Spreedly exists to make it so that those who want to start subscription-based businesses (or are already running subscription-based businesses) can get on with their business while Spreedly takes care of making sure everybody gets charged the right amount at the right time and has the right access to the product, whatever it may be. We think it should be just as easy to start a subscription-based business as it is to start an ad-based business, and we’ve already come a long way in making that a reality.
What does Spreedly already give you “out of the box” so to speak? How about:
- Super-simple integration – think hours instead of weeks
- Outsourced Risk – it’s our problem, not yours
- Pro-rating – what happens when customers change plans?
- Grandfathering – what happens if you change the plans?
- Free trials – yes, this is special code you’d have to write yourself
- Complimentary Subscriptions – it’s as easy to give time away as to charge for it
- Gift Plans – Weewar makes great use of this feature
And we’re just getting rolling – there are so many additional things we have planned to add to Spreedly, all of them focused on helping you run your business better. Our focus is on empowering subscription businesses to rock, and if you’re on the platform you get to benefit from our focus as we roll out new backend features that will help you make your business successful.
So – why Spreedly? Because we want all our fellow web entrepreneurs focused on making something amazing, not on how to collect payment. And because, honestly, now that we know how much work it’s been to make Spreedly the solid service that it is, we get a little chill every time we hand out our credit card to yet another one-off subscription implementation somebody had to hack together over a few weeks so they could keep the lights on! We’d much rather entrust our bank account to someone who specializes in it – wouldn’t you? And, more importantly, wouldn’t your customers?