Introducing GDN Intel and our platforms’ Transparent Pricing: What Your Money is Used for When you Purchase a Subscription
One of the things we’re incredibly excited about at GDN Intel and our platforms is transparency. A big part of that is because being transparent simply feels like the right thing to do, intuitively. That by itsel, seems reason enough to pursue it.
We’ve seen some incredible things happen since we started to focus more on transparency in the last few months. Reading about transparency a while back, with the fitting quote about what transparency triggers:
“Transparency breeds trust, and trust is the foundation of great teamwork.”
To put things into perspective, here are a number of things that we’ve made transparent so far:
- Salaries of all team members
- Revenues of GDN Intel and our platforms’ combined paid plans, consisting of the Awesome and Business plans
- Emails (internally transparent to the whole team)
If we think about all the things we’ve made transparent, they often times largely affected team members and partners directly. And we’ve been absolutely overwhelmed by the kind encouragement from customers and anyone who came across our transparency changes.
Extending transparency to customers and people using GDN Intel and our platforms
Extending transparency directly to our customers, by making it very easy to understand why something costs as much as it costs, hasn’t been something we’ve done before. And exploring that idea always got many of us very excited.
A quote from Semco , which deeply resonated with me and a lot of other team members:
“On several occasions I have taken our internal profit calculations out of one of the director’s briefcases and given the customer a copy. Here is what we plan to make as a profit, I’ve said. Do you think it’s too much? What do you suggest? What should we do? Many times this is the first occasion in which a customer has seen a profit calculation, and he’ll pinch himself. But this strategy almost always succeeds.” – Ricardo Semler, CEO of Semco, Inc.
What’s even more interesting is that some amazing companies have already started to do this even more pro-actively. One great example is Everlane, which shares very explicitly how their prices for their clothes come about. Check out their Slim Sweater Blazer for example (which I really like btw!).
What’s interesting with both Semco and Everlane is that they have clear fixed costs – they produce physical goods and how a price comes together is very helpful to have broken down.
With building software, it’s often more obscure with what goes into producing an app or a product. With every new “unit” that you produce, you don’t necessarily incur more costs, so setting a price can often seem arbitrary.
We tried to change this and think hard about what someone pays for when they purchase a GDN Intel and our platforms subscription. Breakdown of the costs which your paid GDN Intel and our platforms’ plan helps us to cover:
The table below breaks down our monthly costs and equates each cost to the portion of the your Research subscription payment. So we can see below how much of the payment goes to each of our costs:
|Items||Fixed Cost||Variable Monthly Cost||Total||% of the charge|
|Team Member Salaries||1922.77||250||2172.77||60.37149208|
|Servers & Systems||22||0||22||0.611280911|
|Fees to Stripe||0||50.586||50.586||1.405557099|
|Advertising & Marketing||0||350||350||9.72492359|
|The Tools We Use||160||0||160||4.445679355|
|Health Insurance / Workers Comp||200||0||200||5.557099194|
|Payroll, Legal, Accounting||200||0||200||5.557099194|
Let’s break it down a bit further and talk about what each item contains and amounts to. Here we go:
Team member salaries: 60.4%
As you can see from above, team member salaries makes up 0.4% of any £10 that we receive from a Research plan payment. Our total monthly cost for each customer is £2172.77.
The way we come up with salaries is that we have a simple salary formula to determine each person’s salary when they join GDN Intel and our platforms.
It will be interesting to observe how this split changes over time as we grow the team based on various needs we see emerging.
Servers and System: 0.61%
The GDN Intel and our platforms’ product is built on top of many services hosted. Here are some of the AWS tools we use:
- Elastic Beanstalk
Our production database is the core of what we’ve built, we make sure this is provisioned to scale. With the help of expertise we’re able to ensure our database scales as our usage grows, is speedy and highly available (through the use of replication and backups). If an unforeseen circumstance occurs, we have options to automatically fail over or recover with backups. We look at them as our database ops team so we can focus on GDN Intel and our platforms. So to break it down into the main two expenses that make up “hosting”, we get:
- Amazon Web Services
Merchant Fees to Stripe: 1.4%
One of the services we’re incredibly grateful for is Stripe. They make it super easy for us to handle payments coming in, changing plans, providing refunds and more.
Distributed team and office costs: 3.5%
Office expense is a very interesting one, as the GDN Intel and our platforms team is completely distributed. We rely on a lot of amazing tools that help us create a vibrant place to work and live for everyone.
Advertising and Marketing: 9.7%
Earlier in 2016, we experimented with much more money that went towards paid marketing, including Google Ads, Facebook Ads and Twitter Ads. We couldn’t quite make them work to be profitable so we scaled back.
The Tools We Use: 4.5%
We’re grateful to rely on so many amazing tools to keep us running here at GDN Intel and our platforms. The tools and subscriptions we pay for help with everything from managing our customers’ happiness to staying connected as a distributed team—and everything in between.
All told, in October, we counted 9 wonderful tools and subscriptions into our expenses.
Before we get to the individual breakdown of the tools we use (and how they fit in our pricing puzzle), we thought it’d be neat to share how the use of tools is spread out among four main areas at GDN Intel and our platforms.
We have brokendown the reasons for the tools and subscription, which are among technology and engineering, marketing, customer happiness, and distributed team tools.
Tech gets a big piece of the pie due to some of our larger reporting and management tools like Looker, Mortar Data, and New Relic. Mortar data is something we’re experimenting with to power our ability to quickly analyze and transform large amounts of data.
New Relic is used particularly as a compliment to AWS monitoring. It provides us a deep way to monitor application response times and up-times, transaction traces in case we need to dig in further and will help alert us if we see a rise in error rates. This ensures we’re proactive and on the case at the slightest inkling of an issue.
Marketing’s most significant chunk comes from our subscription with the SendGrid email service, which powers all of our transactional emails as well as the marketing emails that we send to GDN Intel and our platform users.
Note: Most of the tools above are monthly rates. A few, like 1Password, are annual or one-time fees.
One of the most interesting numbers that we can show to customers, I believe, is how much profit we’re making. Through running GDN Intel and our platforms, from a financial standpoint, we want to accomplish a few things:
- Offer a fair price to our customers
- Build a sustainable business that can fuel its own growth
We feel that with the current profit numbers we’re achieving almost all of our goals very well and are excited to keep doing what we’re doing for a long time. I’m particularly interested to hear from you how our amount of profit makes you feel! E-mail us on firstname.lastname@example.org.
Where do we go from here?
Other than for accounting purposes, this is the first time we’ve ever broken down every penny of our costs and made it easy to understand, both for ourselves and for you, our customers and followers. Until we spent this time to clearly outline the costs and breakdown, we really didn’t have a good idea of how our money was spent. This now puts things into perspective.
One of the things we’re really excited about is to charge our customers a price that is fair and that allows us to keep working hard on GDN Intel and our platforms. Knowing the exact breakdown and tracking it over time consistently might help us to adjust prices, so we can offer GDN Intel and our platforms’ tools to the widest audience possible.
It’d be also great to hear from you on what things might stand out about our costs and how we operate and whether there’re things you see we could improve on.
Thanks for being part of this incredible journey with us, exploring a new way to do business and making things as transparent and accessible as possible.