Source: @gokulr on X
The Problem
Consumption pricing models hit limits as you move upmarket. Mid-market and enterprise customers won't allow fat margins — their legacy provider gives them a low rate. You'll hit natural caps ($10M, $25M annual spend) where CFOs get involved in price negotiation.
If you have a single pricing dimension (e.g., X% per payment), there's only one direction: down. And you have nowhere to hide.
The Solution: Multiple Pricing Levers
Create multiple pricing vectors across models and products, giving you flexibility to negotiate.
Lever 1: A New Model
Add a second pricing structure alongside the first:
- Flat per-transaction fee (e.g., $0.10/transaction)
- Tiered flat SaaS fee based on volume (e.g., $10K/month for up to 100K monthly transactions)
When the customer pushes down on %, increase the flat fee as a counter.
Lever 2: A New Product
A second product (e.g., checkout, risk offering) mitigates solo-product pricing risk.
When customer pushes down on price: "Sure, we'll cut you a break, but you'll also buy this other product from us."
Bonus: second product also increases retention and stickiness.
The Bottom Line
- More pricing levers = more flexibility = prevent margin erosion.
- "Your margin is my opportunity" (Bezos) — what matters is not per-transaction margin but total gross profit per customer.
- $0.10/txn × 100K txns = $10K. Going to $0.08/txn × 200K txns = $16K. That's fine.
- Just don't end up at $0.01/txn × 1M txns.