Well, to be embarrassingly honest... We suck at pricing. We were offering "unlimited" plans to everyone until recently. And the "impressive names" like you mention, well, they mostly pay us around $250 a month - which used to be our "Enterprise" pricing plan with unlimited everything (users, storage, agents etc.)
So I guess the real answer is - we suck at positioning and we suck at marketing. As the result - profits were REALLY low (Lesson learned - don't compete on pricing).
P.S. Couple of years ago I met Thomas from "FE International" at some conference, really experienced guy, who told me "dude, this is crazy, dump the unlimited plan like right now" so we did. So I guess technically we can afford a PaaS now...
Unless you can invest those revenues at some very high rate of return, the annual return on the money you put aside to support future support costs won't pay for much.
e.g. if you put $1699 in the bank and earn 2% interest, that $40 in annual interest might buy you an hour of someone's time to provide support to that client.
Of course, I might be wrong, but I reckon you could offer free support for the first year only, and charge ~20% per year for upgrades and support.
And my point might be totally irrelevant if all your clients go with the SaaS option.
1st of all - thanks for being a customer. Just so you know - we are terrified to lose you since we're not VC-backed.
2nd of all - you're totally right. Pricing has to be A/B-tested like crazy. But it's much more exciting to play with a Postfix server in your backyard, aye? Evading the businessy/salesy part for as long as you can #sarcasm
Cost aside, all that time hacking your own ESP takes away from investing in your core business.
+1 on pricing - you provide an awesome service and you should charge what your product is worth. I think it’s natural to start out cheaper to establish yourself but when your margins are so tight you need to hack your own ESP, time to examine pricing :)
They can probably afford it, but if every piece of your stack needs that kind of money you run out of money fairly quickly.
> Developer costs in USA run about ~$5-10k/month
They are based in the UK.
> Would be curious to hear about the number of dev-weeks they have spent learning all the stuff they mentioned, building it, troubleshooting any issues, and keeping the system running and up-to-date.
It's just an SMTP server, not rocket science.
I'm a little curious about their reasoning for buy-vs-build. They say they "can't afford several thousand a month", but their list of clients includes Adobe, VMWare, GE and many other impressive names. I find it hard to believe that with a list of major enterprise clients, they can't afford several thousand dollars a month?
It seems more plausible that they can indeed afford it, but figured building it in-house would be cheaper and produce more profits. Developer costs in USA run about ~$5-10k/month, and that's assuming you're not trying to compete with companies like Google. Would be curious to hear about the number of dev-weeks they have spent learning all the stuff they mentioned, building it, troubleshooting any issues, and keeping the system running and up-to-date. I'm also curious about the effect building this project has had on their bus factor.