“On my first day, I was told: ‘Payment will come later, shouldn’t be hard right?’ I was worried. We were not selling and delivering goods, but SSDs and CPU cores, petabytes and milliseconds, space and time. Instantly, via API. Fungible, at the smallest unit. On all continents. That was the vision. After a week, I felt like I was the only one really concerned about the long road ahead. In ambitious enterprise projects, complexity compounds quickly: multi-tenancy, multi-users, multi-roles, multi-currency, multi-tax codes, multi-everything. These systems were no fun, some were ancient, and often ‘spaghetti-like’. What should have been a one-year R&D project ended up taking seven years of my professional life, in which I grew the billing team from 0 to 12 people. So yes, if you ask me, billing is hard. Harder than you think. It’s time to solve that once and for all.” Kevin Deldycke, former VP Engineering at ScalewayThis is a typical conversation we have with engineers on a daily basis. After my last post about my ‘pricing hack’, some of you asked me why billing was that complex. My co-founder Raffi took up the challenge of explaining why it’s still an unsolved problem for engineers. We also gathered insights from other friends who went through the same painful journey, including Algolia, Segment, Pleo… don’t miss them! Passing the mic to Raffi. When you’re thinking about automating billing, this means your company is getting traction. That’s good news! You might then wonder: should we build it in-house? It does not look complex, and the logic seems specific to your business. Also, you might want to preserve your precious margins and therefore avoid existing billing solutions like Stripe Billing or Chargebee, that take a cut of your revenue. Honestly, who likes this ‘rent-seeker’ approach? Our team at Lago still has some painful memories of Qonto’s internal billing system, that we had to build and maintain. Why was it so painful? In this article, I will provide a high-level view of the technical challenges we faced while implementing hybrid pricing (based on subscription and usage) and what we learned during this journey.
“I’ve learned to appreciate that billing systems are hard to build, hard to design, and hard to get working for you if you deviate from ‘the standard’ even by a tiny bit.” Arnon Shimoni, Product Billing Infrastructure Lead at PleoThis is not even specific to fintechs. The Algolia team ended up creating a whole pricing department, now led by Djay, a pricing and monetization veteran from Twilio, VMWare, Service Now. They switched to a ‘pay-as-you-go’ pricing model based on the number of monthly API searches.
“It looks easy on paper — however, it’s a challenge to bring automation and transparency to a customer, so they can easily understand. There is a lot of behind-the-scenes work that goes into this, and it takes a lot of engineering and investment to do it the right way.” Bernardette Nixon, CEO at Venture Beat
“Sending quality and personalized reminders took us a lot of time and, as Lattice was growing fast, it was essential for us to scale our cash collection processes. We use Upflow to personalize how we ask our customers for money, repeatedly, while keeping a good relationship. We now collect 99% of our invoices, effortlessly.” Jason Lopez, Controller at Lattice