Most companies aren't in the billing space, yet

they need to deal with pricing and billing as a core piece of

technology. Whether they want to or not. Stiggs is an easy to

implement headless pricing and packaging platform that takes a

lot of the hassle out of pricing and billing for your SaaS

application.

This is the modern digital business podcast, the

technical Leaders Guide to modernizing your applications

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Digital Business Revolution is a must here to help make it easier

with actionable insights and recommendations. As well as

thoughtful interviews with industry experts, Lee Atchison

Stiggs is an easy to implement headless pricing

and packaging platform that takes a lot of the hassle out of

pricing and billing for your SaaS application.

Their API's help developers launch new pricing plans faster,

that lead to better customer buying experiences. Doris Hassan

is the co founder and CEO of stake and he's my guest today,

dar Welcome to modern digital business podcast.

Hey, Lee, great to be here. Thank you for having me.

Of course, I'm so glad you're here. And I have to

tell you, I'm I'm envious. Okay, and the reason why is, I often

thought that what the SAS world needed was a platform that

handled the standardized pricing and billing logic that every

application has to build, you know, I'm talking about

something more involved than just a simple stripe

integration, that includes all of the, you know, the pricing

strategies, and all that sort of stuff. And now you've gone ahead

and created it, you've taken my idea. Now, if you take any run

with it, I'm just I think it's great. And so tell me, like you

to create steak.

Hey, Lee , that was a really good way to get started

the conversation, by the way, we're still hiring. So we should

talk after the show. You want to opt in? I'm already excited. So

how do we begin? So so a lot of folks that we we've talked to

early on and still chat with today and work with today,

whether their customers are part of our community, or folks that

we can help think through their pricing and packaging

strategies, they share the same emotion that you just described

that it doesn't and it didn't made sense that there wasn't any

off the shelf SAS infrastructure to solve this problem. Many,

we're still used to think about pricing and packaging is a

problem that comes in from the billing fraud from the

financial, front of the company, where billing, and you know, and

collection and payments and reporting. And all of that is,

is something that financial teams should or revenue teams

should be concerned about, or think about, and find ways to to

solve that efficiently. And I think, with many interesting

trends that are happening nowadays in SAS, it's becoming

more and more evident that pricing and packaging is an

experience. And so because it's an experience, it becomes more

and more a product and r&d problem. And as such as

developers and as product, people, we need a new point of

view and new refreshed way to approach pricing and packaging

that fits the way we think about this problem. And that includes

flexibility and nimbleness agility, and many, many ways

that developers are now nowadays developers, engineers, product

managers have nowadays standardized how we build

software, and we want to bring a lot of that way of thinking and

way of being into pricing and packaging.

So that's great. That's that's a good description

of what you're doing. But why did you start this? What Why

What was your motivation to get into this space?

Yes, so So I used to be a product person at New Relic I've

joined in after New Relic acquired my previous startup

signify we used to build AI ml models for the observability and

production environment space. We basically helped SRE teams and

development teams deal better with the alert fatigue and noise

reduction and we've put the work different practices of machine

learning in AI to help deal with immense load of alerts. And it

was after that New Relic acquired signify that I became

more and more aware to the concerns and the and way of

thinking related to pricing and packaging and SAS more more

specific we were how Having a lot of major organizational

change at the time that I was part of the company, and we had

new leadership basically coming in and wanting to go in all the

way on product, led motion, user led motion. And as part of that,

scrutinizing and honing our pricing and packaging strategy

towards the usage based and pay as you go motion. And as an

organization, you know, cutting edge technology, and you really

are some of the best engineers, best architects, you know, GTM,

teams technologist, you know, at the forefront of building

software, you know, as a new, you know, freshman product

person didn't just join the team, I expected this, oh, this

is going to be like an easy peasy, right? Like, it's gonna

be a walk in the park to do this, to this overhaul. Little

did I know that it's going to be almost a year until we are in a

in a position where we're able to launch. And it touched upon

every single function and department in the organization,

everyone had to figure out how their things or their products

or their features are going to live in the new world. And I

think my very first moment that I said, this should be software

like this should not you know, what we're doing this there

gotta be another way was when I got an email with a spreadsheet

that said, entitlements. And under this spreadsheet, I was

supposed to list the features that I was responsible on the

NDAA group, and I was supposed to identify them as

entitlements, so that we can go to market and sell them in an

appropriate way that fits the organization strategy. And when

I saw this huge spreadsheet with all the information with all the

different entitlements, I was like, this cannot be managed in

spreadsheet. What if we want to change? Like, I started to ask

all these questions, what happens if we're wrong? Like

what? What happens if the way I'm, you know, I'm configuring

our entitlements right now for our group is going to be wrong

next quarter, and we're going to need to change it. Where are we

changing? Like, I started to have, like, so many questions.

But this was one of my early moments, like very early

moments, though, it came aware to the concept of entitlements.

And I began to be more and more convinced that this should be an

infrastructure, and this is a big problem across the entire

industry.

Yeah, it's, it's funny is, so I was involved with

new relics. Back end pricing engine for a while too before, I

think before you joined the company, I was back when we were

still, you know, virtually 100% appeal G driven company, give us

your credit card, we'll go from there, you'd have to do the free

trial, right? Or the free free tier. And, and we just started

moving into an SL G's model for enterprise customers, and added

all that complexity, and then started the process of going

public. And everything was up in the air and changed and the

pricing model was just in horrible shape at the time, I

mean, I'm not talking anything bad that was customer facing or

anything, but the system itself was just a hard mess, to try and

deal with. And we were doing, trying to do simple things. And

trying to, to, to turn it into a system that could easily add new

capabilities and features as we went along. And quite frankly, I

think we failed at that. I mean, we it just it was such a complex

system, we just couldn't make anything happen. And so your

whole mindset that say it took a year for you to launch because

of pricing. I buy that I absolutely see that. And you're

right, you know, then, you know, I've that was probably the first

time I saw it a little bit, I guess at Amazon, but you were

dealing with customers at Amazon, but not that much. But I

saw it in spades and New Relic. And then after that when I

started talking to customers, and you know, when I after my

book and all that sort of stuff, when I started going out and

talking to customers, then I started hearing that issue was

really common and really prevalent. And so I absolutely

understand and can hear where you're coming from here. This is

a huge issue. But but let's let's get into a little bit more

of the specifics here. Let's, let's make sure that people you

know, we level set exactly what we're talking about here. And so

let's talk you know, ask the basic question that some people

listen to this are going to be asking now and that is why can't

I just integrate with stripe? What's wrong with that and what

am I missing from stakes by if I just integrate with stripe? What

else is there?

Okay, so first For most stripe is by far one of the

most, you know, advanced and complete solutions out there.

When it comes to Billing payments and whatnot, I think I

have plenty to say about how pioneering their way both in the

way they went to market as well as the way they structured their

product and their infrastructure and etc. I think what is change

is not necessarily tied to just stripe, I think there's a couple

of other things that may help shine some light into why this

is so important. And what becomes so difficult. So, stripe

is became almost a synonym for developers to we need to charge

for this thing. Whenever you know, whether you are an early

stage or even you know, as your grow, if you you know, if

somebody from the business side, or the leadership comes in and

say, Hey, we need to be able to charge and they would come with

this, you know, let's call it like problem statement, do r&d,

the almost immediate response will be okay, let's, you know,

let's enter stripe. And the main reason is because stripe did an

amazing work in making themselves almost synonym to

charging an ends in internet. The problem is, or the problem

begins, where you don't need to just charge. So if you were an E

commerce, business or company and you're selling something on

a shop, or you know in Shopify, or on the internet somewhere,

yeah, you probably just need to charge. But SAS is SAS really

about just charging? The answer is almost never know. Because

value adoption and pricing in SAS and the customer journey,

it's not just about the checkout, it's not just about

the elements in the code, the stripe elements that allow you

to safely and securely insert credit card details and close

the transaction. There's so many before that in between and

afterwards, that is not covered by the stripes of the world,

that it's just literally scratching the surface. And now

it plg motion and user led motion. It's even becoming more

and more evident. How far are we from software that solves this

the right way. Stripe gives you powerful solutions all across

the board on all those fronts billing, you know, subscription

management quotes, ability to charge payments, Dunning and

etc. But when you think about pricing and packaging, a lot of

these things actually fall between the cracks of how the

founders of stripe, thought of stripe, when stripe begin, it

was all about the ability to monetize in charge and the

Internet and they solve payment gateways really well. And they

solve checkout really well. And they solve, you know with

collecting payments and doing subscription. But they they had

mostly retailers and commerce in mind when they started, they did

shifted and invested later downstream in SAS, but some of

it is still very much behind to what the industry require. And

this is where companies like Stig are developing into solving

these set of problems that are becoming more and more and more,

you know, painful. So just by by a few examples. So implementing

trials, how do you implement trials in the right way?

Nowadays, people think about reverse trials, quota based

trials, not just time based trials, do you insert credit

card before the trial? Or you don't have to, you know that to

begin the trial? So all these things are just trial, right?

The the banner inside your web application, the email

automation around the trial behavior, automation? And how do

you let GTM teams know about the trial progress is the customer

in the right direction within the lenses of the trial. So all

those things are just trials in stripe, many of the things I

just listed, they don't they don't really, you know, support

or solve all of them out of the box. And, and this is just you

know, a small, typical use case that comes to mind. But even

more so like if you take it even to a more simple use cases,

right? So when you think about pricing and packaging in

general, the conversation doesn't begin with the ability

to charge you first need to understand what are you charging

for? What is your strategy, what is the value prop? What are the

benefits of using your software versus the alternative? And all

these questions are not, you know, payment questions or

necessarily billing questions. These are strategy questions

product Questions experience questions? Do we go cell

service? Or do we do SL G? You know, do we allow in app

upgrades and downgrades? Are you? Do you have to contact

sales for that? Will we monetize over seats? Or over a platform

for you and add ons? You know, how will we basically package

our software? All these conversations are much, you

know, ahead of thinking of how will how, let's let's go in and

integrate stripe, typically integrating stripe and what

comes after we made those decisions that we made some

bets. I don't know if that was helpful, by the way, leave and

I'm happy to kind of elaborate more into that.

It absolutely does. And, you know, if I could

maybe try and put a, you know, just a 10 or 20 or 100. word

summary, on, on on what you're saying is, you provide a layer

on top of stripe, that handles things like entitlements,

resources, but also the the different motions for how you

convert people into real customers. You know, Stripe does

simple trial models, but there's 100 different ways to do trial

models, 100 different ways to do things like free tiers and

resource allocation limits and soft limits versus hard limits.

And, and you know, when do you call the customer? When do you

email the customer? When do you stop the customer cold? Those

sorts of decisions are all part of a layer that's well above

stripe, and it's in this area of entitlement management layer. So

you provide that so that a application just has to do

things like, Well, I just use 10 megabytes of the user space. I

don't know if he's, if he's got it or not you take care of it.

Oh, does he have it? Yes, he does fine. No problem. You know,

and that sort of thing is all the application has to deal

with. And what that means is, are all things that you deal

with?

Yeah, I think you you've nailed it. Even piggyback on

that. And I know, and I'll say there are two basic main ways to

think about steak one way is the engineering standpoint, and the

other is the business standpoint, from the engineering

and architectural standpoint. Yes, it's by its score, and

entitlement. We like to think about ourselves as like an API

for pricing and packaging includes endpoint for

entitlements the SDK is the widgets library includes a lot

of things that are helping you basically launch faster and you

know, build without writing a lot of code to build that pieces

of your software. The, if you were not using something like

steak, and you were going all the way just directly

integrating with stripe, you would have to build this piece

of your software yourself. So it's important to call out that

it's not like we are like, sprinkle on top right? If you

want to integrate stripe in 2023, and you want to go to

market in the SAS world, whether you're doing self service

trials, usage based pricing, subscription model platform fee,

no matter the way you're going to market. It's either you're

building it yourself, or you're taking an off the shelf

solution. But it's not being solved by stripe in any way. You

don't have entitlement management, in stripe,

everything that it is related to usage based ingestion, real time

event, streaming, everything that is related to aggregations,

and you know, basically reporting usage for billing

purposes. All these things are not being solved today by the

stripes of the world. And so stick is essentially an API that

sits between your web application and the business

application. And it helps you manage all that. And by the way,

it's thing is not just working, integrating once, right, like we

do either billing solutions as well. When it comes to going to

market, you want to have more options, your customers wants

want more options. And so if you're locked to what the

current billing setup allows you that it's going to be extremely

painful to be nimble and move. For instance, if if you're going

to market in a subscription model, and you have a really

strong competition coming into the market with a usage based

and you're locked to a billing solution that doesn't allow

usage based model. Now you have a real problem in your end,

because you might be losing and bleeding out customers to

competition based on a GTM model. So that's that's a big

deal. And yeah, and so stick basically allows you that

nimbleness and speed in that in that regard.

And I think that's actually you hit the nail on the

head of the problem that you and I were both facing at New Relic

is that the nimbleness wasn't there in the system, this system

worked fine, but when we wanted to change the model, to in my

case to add new sales motions and to get ready for going

public and in your case, when you're a new product Offering

was added into the mix. It just wasn't designed to be extended.

And so it was built for what it was designed to do, and nothing

more. And it wasn't designed to be extended. Now something like

steaks. You know, it's I don't want to oversimplify it. But

it's, it's a configuration change to change price.

No, no oversimplify actually.

What it is, yeah,

that's what it is. That's, that's what it isn't

actually like oversimplifying because I like to be very, you

know, very specific about what we do. But the end of the day

entitlements is, is a configuration we want. There are

ways and faster ways to control that configuration. We want

observability we want auditing tools, we want the ability to

control safely how we enable more, we want to be flexible.

And we want to remove a lot of this work from our engineering

teams, so they can focus on creating high value. So so so

yes, 100%. Exactly that.

I imagine there are hundreds of different

pricing models. Certainly, I've seen hundreds of different

pricing models across the internet, I'm sure you have to

there's there's a lot of different ways to do pricing and

packaging for SaaS applications that you just boggles the mind

the number of variations and creativity that people have. I

think everybody, but I get your point there. Yeah. But what do

you find is, in the world of the customers, you've talked to you

what's the most common or the most used? What's the most

prevalent types of pricing models in the industry today?

And how do you think that's changed?

Okay, cool. So, by the way, as a side sidebar

conversation, we actually released two completely free

completely open data applications that you can opt

into to actually learn more about the exact question, one we

call pricing dot quest. So if you hit pricing dot quest, we

basically captured all the pricing changes and pricing

pages that some of the top Sass companies out there has done

including the actual historical pricing pages. And we've

analyzed that in in comparison to ARL and, and the speed of

changes. And basically, like we've took all the ones that

made the most changes, the faster cadence like faster is

faster intervals. So check it out, it's very helpful. And the

secondary source is GTM. We call it GTM. Explorer. Honestly, it's

an air table. But that airtable is pretty neat. Because early

days in when we started to build stick, we basically research, I

think it was like 137, or something like that. pricing

pages all across the industry of all of all stages, SAS companies

at various stages. And it's like a summarized aggregated

information on what did we learn on pricing, among others? How do

people go to market and etc. Now,

I'll put those links into the show notes too.

So if you Yeah, listen to this podcast, check out the show

notes. And you can click the links there.

So now to your question. So it depending if you ask the

founders, so you ask the VCs, and I'll explain. So VCs will

tell you that usage based model is the most prominent nowadays

and everyone are all about usage base and like subscription

minute you know, subscription model is dead, long live the new

king Long live, you know, usage based not. If you ask founders,

I think you will hear something a little bit different. And if

you ask bias, you're able to hear something completely

different. What I mean by that is the industry is definitely

making a push towards usage based model. The problem is that

if you ask folks what is usage based model to them, you will

you will hear folks saying that slack is usage based model AWS

is usage based model Algolia is usage based model and data dog

is usage based model. And the problem is each one of the

companies I just described are completely something different.

And so the thing is, you know, if you go back into the theory

into the academy books, right, go back into the pricing

conversation. When you build packaging, and you build

pricing, one of the early things to think about is what is the

value metric? What is the thing that I'm trying charging for it

has to be like, like a variable that I can monetize on. And so

almost every pricing, even in the subscription world, even in

the Zuora world, there was always some variable. It could

be seats, it could be storage units, it could be something

else but there was always a valuable and so calling these

things usage based is less saying everything is usage

based. So it's like saying everything and nothing all at

the same time. And so I would say this Do you definitely see

the developer tools and infrastructure solutions or

paths or Yes, they will incline towards the Pay As You Go model,

which is what I would call, you know, usage based model like pay

as you go where AWS being a typical, exactly, exactly. And

it makes sense why because there is tied directly to the cost. So

there is a certain margin that you want to keep on top of the

cost at all times. And this is why the Databricks is and the

snowflakes and the AWS is of the world, you know, this model

makes sense. And also for the customer, there is some logic

that, you know, I'm paying from what I'm using, right? It's,

it's an infrastructure, and even if you go early 2021, this model

was sold to founders is like the silver bullet, it's always

everything, you just do pay as you go, it's always everything.

And you know, as everything in life, you know, it all matters

of you know, you know, when you choose a framework, you need to

you need to employ the framework in the right context in the

right, you know, setup. And so, you know, you can just skip or

short circuit, thinking about the basics, what is my business?

What is the value? What is the willingness to pay? Have my ICP

my ideal client profile? Who are the personas that you know, who

is buying my software? Who is using my software? And so all

these questions, all

those are independent variables from Yes,

yeah, yeah. Yeah. And you know, who is pulling, you know,

but whose budget is this coming from? And all these questions

will help, you know, will help you think about your pricing

more so then, you know, one model over the other, and then

you can start thinking about, Okay, this model fits more to

what I'm trying to do. You know, my persona is not used to, you

know, to buy software in a pay as you go model. So this will

not work. So, what you end up with people saying they're going

to market based on your usage base, but ultimately, when they

close the deal, they give a regular subscription. So

you look at the largest AWS enterprise deals,

and the vast majority of the costs are prepaid expenses,

prepaid commitments,

even stripe, are doing pre, you know, I mean, they have

their regular you know, pay as you go model where it's like

part of the transaction, they'd have show model. With big deals,

they don't do that they do. Pre commitments, they do SAS, they

do other things. You need to be able to think about your pricing

in a way that fits, who are you're selling to.

That's great, I was actually a much better

answer than I was expecting.

Giving you a heads up, my team knows that that I can speak

until it until eternity. So

end up being a little bit longer episode, but I

think it's definitely going to be worth it. Because that was a

great answer. And I love that. So what a parallel question to

you know, what's the most popular model is what's the most

asked for change? What what do you hear the most from your

customers? And this could be, you know, trends to the future.

It could be just things you haven't done yet. That's fine.

But But what do you hear from your customers the most as far

as what they want to hear from you?

Okay. So it varies between the different segments

or split it into early stage, growth stage. And then, you

know, let's call them like, later stage, which is like, pre

post IPO. So, so you see different things. So. And also,

by the way, it's very much tied to macro dynamics, like

macroeconomics. So I'll give an example right after the

downturn, right after the downturn, we've saw a wave, you

know, folks knocking on our doors and say, Hey, door, we

need to monetize tomorrow, especially like early stage

companies. There was a lot of like a round sometimes even be

around companies that they're still not monetizing yet, at the

time. And they basically realize that revenue efficiencies King

is the new king, and they need to monetize right away. So we

saw a huge trend, away from plg motion, and away from freemium

into the realm of sales, sales lead concepts. And that was

interesting. 21 2000 that was, that was like June of two, I

guess. Yeah. June to June 22. Yeah. Okay. Yeah. June 22. And

their main reason was, like people went away from from some

of those big motions is, they take they take, they require a

lot of time and cost to build the right way. In terms of

internal teams processes, how do you nail down your freemium

strategy? How do you nail down you know, usage based models and

so people just literally just went away from that because they

needed to show revenue yesterday. So one of the major

changes we saw in the early stages like, hey, we need to

launch pricing, you need to be super simple needs to be

tomorrow. And it needs to be all about revenue, like cells like

ASBs, high ESPYS. We're dropping our plg is like something I've

heard, like so many times in the last six months. The second

thing I saw on the growth stages,

you think it was all economy? Or do you think

there was also the reengagement of the Salesforce post pandemic,

there's now suddenly a Salesforce that's available that

wasn't available during the pandemic. So

it's interesting, you know, it's a good call out,

maybe that's also related, I felt merely from my humble point

of view, you know, based on the deals that I'm doing with steak,

that we suddenly saw a car customers that were planning to

do plg, they decided to drop it or deprioritize it, and

customers that were already doing plg decided to move into

sales, that motion book a demo, you know, hire sales team, and

whatnot. And that was interesting, because I felt

like, definitely we see how being agile and being nimble

matters. Because you don't know what will happen. You need to be

able to respond to buyers traits. And, you know, companies

wanting more, you know, go to market with more options. So for

us for Stig, it wasn't, it was a good surprise, in a sense,

right? Because it proves your value statement. Yeah, that we

always insisted that it's not about one size fits all, we

always said that from the get go. It's all about flexibility,

speed. And nimbleness always was the way we saw the market. So

that was one thing. On the later stages, we were seeing a lot of

will nowadays for international expansion. We also seeing like

repackaging either existing products or new, new offers. So

I'll give an example. Let's say you acquired a new company, and

a company, or you you've been building some in new

functionalities or capabilities in a certain space. So sometimes

it makes sense to repackage the way you go to market with that

new offer to introduce cross sell or upsell opportunities,

and that's something that you see a lot on the ground and the

growth stage. So we've seen a lot of that. What else? Yeah,

there's always like the most common use case for us is like,

hey, we want to do self service, or hey, we want to do freemium,

and help us introduce that.

There's Hassan is the co founder and CEO stake, an

easy to implement headless pricing and packaging platform.

Dora, thank you so much for joining me today on modern

digital business.

Thank you, Lee.

Thank you for tuning in to modern digital

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