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0 pointssystemvoltage3y ago0 comments

Why is invoicing a percentage and not a flat fee? Does it cost more to transact it?

0 comments

Pricing works best when aligning with value instead of costs. In general you should also try to align your pricing with value for better margins (especially if you are have a monopoly condition).

The rationale is that Stripe believe that a small percentage will align better with customer acceptance of pricing than a flat fee per invoice, which allows them to capture more dollars from the relationship.

systemvoltageOP3y ago

I firmly believe that transaction fees (incl invoices, etc) should be fundamentally a constant flat fee. Whoever builds a competitor to Stripe will blow everyone away.

The cost of transaction is the same. Customers are being robbed in day light with % based transaction fees since the dawn of time.

This entire industry is begging for disruption.

kasey_junk3y ago

Transaction costs are not the same price per transaction. The major costs for most transactions are the risks (credit, irr, fx etc) associated with it not the fixed costs of infrastructure.

Those costs go up with the value of the transaction.

1 more reply

lmeyerov3y ago

Until you want value-based fraud prevention layers like insurance. Keeping fixed fee would knock that out of alignment. But perhaps your point would be that should be some sort of opt-in higher SLA tier so the transaction layer fee is low but the insurance etc. add-on layers are variable.

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