April 17, 2023
Author: Reed McGinley-Stempel
Today, we’re excited to launch new pricing tiers that will provide customers with more self-serve options along with greater transparency, flexibility, and scalability.
These changes will take effect today for all new customers. For our existing contracted customers, you will continue to enjoy access to your full features and benefits at the same price. For our existing pay-as-you-go customers, you will be moved to our free self-serve tier while maintaining your full set of existing features. Specific details can be found on our website at https://stytch.com/pricing.
In particular, customers will see the following changes:
Our initial (and very basic) pricing philosophy was that simplicity > perfection. Based on our own frustrations with the incumbent solutions in the authentication market, we believed that presenting our pricing more simply than competitors’ complex, opaque tiers could absolve many of our yet-to-be-discovered pricing shortcomings. This philosophy scaled surprisingly well with us for most of the past 2 years as we brought thousands of developers, hundreds of paying customers, and millions of users onto our platform.
But as we’ve grown our product suite, we’ve found that simplicity can become a false idol if it’s your primary pricing objective. Simplicity matters a lot in purchasing decisions (and it remains one of our pricing values), but overly simplistic pricing can actually harm customers. With our legacy pricing, we took the approach of offering developers two options:
We’d seen this simpler two-option approach work well with some of our favorite developer tools (e.g. Stripe), but we’ve found it doesn’t translate well from the payments market to the authentication market for a number of reasons. For us, it created unintended consequences that required a new pricing philosophy to account for our maturing product and customer base.
Given Stripe’s value prop as the “gatekeeper” of their customers’ payments, Stripe has been able to maintain a consistent, single self-serve option for more than a decade. This fits Stripe’s business model well because payment acceptance products are always placed at the exact point of realized customer value – customers only pay Stripe when they make money. This allows Stripe to forgo a free offering and immediately start customers on a higher margin pay-as-you-go plan. And despite offering a high margin for Stripe, this is also amenable for customers because most internet businesses can easily absorb a ~3% cost of revenue for core infrastructure. For non-payments SaaS, there’s a much wider spectrum of value you’re providing to different customers, which makes a “one size fits all” self-serve tier untenable.
As our legacy pricing model started to strain in recent months, the primary culprit was the oversimplification of our self-serve tier. What started as a singular pay-as-you-go option when we had just one authentication product became a catch-all bucket for most new features. As new auth products launched, we’d roll these new features into the overall monthly active user (MAU) cost of 10 cents in our pay-as-you-go plan. Initially, we deemed this the most customer-friendly route (providing more features at the same cost meant customers didn’t have to worry about being nickel and dimed for each new feature).
However, this “one size fits all” approach became a “one size fits none” approach as customer segments were using markedly different products (and receiving disparate value) but all paying the same MAU cost, regardless of the underlying cost of serving each customer. In particular, the cost to serve each customer began to diverge significantly once we launched our phone-based authentication products (SMS and WhatsApp). SMS and WhatsApp are relatively expensive rails when compared to authentication methods like email (programmatic email is a commoditized product with small unit rate costs) and social logins or biometrics (e.g. offering FaceID and Sign in with Google/Apple/Facebook/etc involve significant upfront costs but are lower marginal cost to serve thereafter). Additionally, SMS/WhatsApp are even more expensive to serve internationally.
Our self-serve pricing tier first started to strain when we included these phone-based auth methods within our overall MAU rate. This decision stemmed from initially only supporting North America for these products – in these geographies, the costs were low enough to roll into the 10 cent MAU cost and maintain a healthy margin. But as we onboarded more global customers, we incurred significantly higher international SMS and WhatsApp costs.
While this is a particularly salient example, we found similar issues arise as we launched other new products like B2B authentication (SSO), fraud + risk tools, extensive customization, and enterprise admin controls – rolling so many disparate features into a single self-serve tier became increasingly untenable. As both our customer base and platform has expanded over the past couple years, we want to give customers enough options to choose what works best for their needs and budget. Here are the primary changes we’re incorporating:
While we made these changes with the intent of improving pricing for customers, we understand that change can sometimes be difficult, and we value the trust you’ve placed in us. To make this transition as smooth as possible, we are pleased to offer the following to existing customers:
As pricing is core to your experience using Stytch, we would love to hear your feedback. If you have suggestions or concerns, please reach out to our customer support team at email@example.com or send us a message in our #stytch-feedback channel in the Stytch community slack.
Thank you for your continued trust in Stytch. We look forward to providing you with exceptional products and services that help power your growth.