Spreedly began life as a digital subscription service before selling the service to Pin Payments

That allowed us to focus full time on the "new" Spreedly; helping companies that have to work with more than one payment gateway obtain all the benefits that someone working with a modern payment gateway's receives. One of the unexpected outcomes of selling the subscription business and focusing in our new offering was we changed camps overnight. 

When I recently ran into the CEO of one of the better known subscription services at Money2020 he said "What gives? I thought you exited the subscription business yet we still occasionally hear someone is comparing us to Spreedly." 

I had to explain that while people may still compare our two companies it's now with a completely different view in terms of Spreedly. We've gone from offering a digital subscription service (out of the box) to a simple, powerful credit card vault and set of API's. From buy to build if you will.

To make matters more confusing we have subscription services like ChargeBee and Fusebill who have integrated/layered on top of Spreedly to offer a large range of payment gateways. 

So based on i) previously running a digital subscription service, ii) having digital subscription services run on Spreedly today and iii) having "roll your own" recurring services on Spreedly here's the advice I give when asked "what's better, build vs buy?" 

The first important question is do you need recurring functionality or subscription management? Recurring charges are simple repeat charges. For example, on the 28th of each month your rent is due for $500. Or your utility bill is due for variable X amount. Your total number of services (or sku's/plans if you will) is never greater than 1. The date is fixed. At most the amount might vary month to month but it too is often fixed. Subscription's are more complicated than recurring. 

Customer's might subscribe to more than one plan that you offer. They may downgrade and upgrade frequently and thus need prorating. You may have one time sales along with subscriptions. Some plans might be a fixed monthly fee and then you add "overage" fees based on usage data. Some plans might be all based on usage and thus are "metered" plans. How do you handle failed renewals and access to your service? What about discounts and coupons? Do you have affiliates that sell your plans? The list goes on. Generally I see services fall into 3 camps where category two is by far the largest group:

  1. Simple recurring only needs with no real possibility of getting more complex
  2. Relatively simple subscription plans today with the probability of more complexity over time
  3. A high degree of complexity today and going forward. How you get paid is deeply tied into how your service is offered.

Category 1: Go with a payment gateway only. (assuming you have access to a good modern one). Category 3: Also go with a payment gateway only. Category 2: Start out with a subscription based service while maintaining the ability to bring it in house with the least amount of effort. 

The reasoning behind category one should be self explanatory. There is an extra cost and management layer when using a third party subscription billing service. That's tough to justify if your needs are super simple. For category 3, our experience is you'll spend as much time trying to modify a third party service to fit your needs as you will building your own. If you have a high degree of complexity you're probably going to need to create in-house expertise so the value of a third party is diminished. Now for category 2. If your needs are relatively modest today but could/will become more complicated over time then start with a third party service and leave your options open to bring it in house in the future. Why do it this way?

  1. Time to market. Don't spend effort building out basic subscription functionality when you can quickly and easily get it from a service like ChargeBee, Chargify, Recurly, Pin Payments etc.
  2. There's a chance that the service you select will continue to make enhancements that match your more sophisticated requirements as you grow. Naturally if you can avoid the headache of bringing the project in-house that's nearly always the best outcome.
  3. When you are ready to build your own you're likely to build a much better solution based on your time spent using a third party service. Not because you're "stealing" ideas from them (although maybe you do that too!) but because you know what elements are really unique to your business and focus in on solving those.

Some of you in category 2 are probably wondering why not just go with a payment gateway with solid recurring/subscription API's rather than a third party service. If you have access to something like Stripe or Braintree you may want to rely on their subscription functionality. 

The only real downside is that they aren't dedicated subscription services so there's only so far they'll go to support a subsection of their customer base. To put it another way, you have a greatly diminished chance of having the benefit of the second bullet point above. Here are some key questions to maximize the ease of bringing it in-house if/when you need to. How easy is it to leave your subscription service? Do they return credit card data for you? Are they storing it independently of the payment gateway or passing it into the payment gateway to be stored there? 

PayPal's acquisition of Braintree and Google Checkout closing down are just two recent examples of why payment gateway independence is worth considering. Will either the subscription service or the payment gateway help you migrate your credit card data to a new provider? Ask them to spell out that process and cost. Do they support third party reporting tools? If you can continue to have your reporting reside in one location post moving it in-house it'll dramatically reduce the impact of the change. In addition, assume you'll likely want to change payment gateway's if you are bringing it in-house. 

There's a couple of reasons for that. Firstly, if you're using a third party subscription service initially it reduces the importance of a payment gateway with great API's and documentation (because you're not coding against it) That won't be the case if you bring it in-house. Secondly, if you're brining it in-house you're probably now doing some really nice volumes. This opens up a range of more sophisticated merchant account options (rates/currency support/fraud/foreign exchange rates etc) than are typically offered to smaller startups. P.S Note that I'm not focused here on the "enterprise" third party services like Zuora/Aria etc. 

By all accounts they are at substantially different price points and expect a fair degree of professional services/customization to get you launched.  

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