Premium, not freemium
Early on, Johnson decided to stay away from the freemium model so popular among tech companies. “My experience in the payments industry told me it wasn’t for Braintree,” he explains. “We offer exceptional service during the sales and application process that continues after a merchant is set up with us. This level of service is too costly for a free account.”
So Braintree went the opposite route and charged a premium. It started with a $200 monthly minimum, which it’s since lowered to $75. “At $200, our minimum was 4 to 8 times higher than our competitors,” says Johnson. “Applying a floor helps the right kinds of customers self-select our services. After all, we’re as interested in having the right customers as they are in having the right provider.”
Pricing and positioning are probably the most difficult decisions for an entrepreneur. You need to try different models to see what works. Once in a while it is nice to see an example of someone who has conviction to implement something they think is right.