The following chart compares three recurring payment options I am considering for jMockups:
1) Paypal Website Payments Pro with Recurly or Spreedly
2) Authorize.net with a merchant account with Chargify
The calculations assume a recurring $8/mo payment from customers:
Click to view full size
You can download the Excel sheet here.
Recurly & Paypal Website Payments Pro Calculations:
- Paypal is $30/month plus $0.30 + 2.9%/transaction for sales of $0 to $3,000; $0.30 + 2.5% for sales of $3,000 to $10,000; and $0.30 + $2.2% for sales of $10,000+ (source). For example, if I have 100 customers who are paying $8/mo, my monthly Paypal expenses are $30 + ($0.30 + 0.029 * $8) * 100 = $83.20.
- Recurly is $29/month plus $0.20/transaction for up to 200 transactions/mo; $69 + $0.10/transaction for up to 500 transactions; and $199 + $0.09/transaction for up to 2,250 transactions/mo (source). (Note that if you’re not billing monthly, it becomes a bit more complicated because they also look at how many users you have in addition to the number of transactions — see their pricing page for more info.) So for 100 customers–assuming 1 transaction/mo/customer–Recurly expenses are $29 + $0.20 * 100 = $49.
- Total monthly expenses for Paypal Pro + Recurly = $132.20. Total monthly revenue for 100 customers at $8/customer = $800. Total profit = $800 – $132.20 = $667.80. In this example, 16.5% of the revenue would go towards payment processing.
Spreedly & Paypal Website Payments Pro:
- Speedly is a flat $19/mo + $0.20/transaction. For 100 customer, that works out to be $39/mo.
- For Paypal Website Payments Pro and Spreedly the total is $83.20 + $39, or $122.20, or 15.2% of the revenue.
Chargify with Authorize.net and a Merchant Account Calculations:
These numbers will vary a bit based on the rates you get on your merchant account. These calculations assume a $0.25/transaction fee, a $9.95/mo monthly statement fee, a 2.19% Vista/Mastercard discount rate, and a $25 monthly minimum.
- Authorize.net is $20 + $0.10/transaction (source). For 100 customers, the monthly cost would be $20 + $0.10 * 100 = $30.
- For the merchant account, the fees would total $9.95 + $0.25 * 100 + 2.19% * $8 * 100 = $52.47.
- Chargify is free for up to 50 customers; $49/mo for up to 500 customers, $249 for up to 5,000 customers and upward from there (source). For 100 customers, it would cost $49/mo.
- Total monthly expenses for Chargify, Authorize.net, and this merchant account is $49 + $30 + $52.47 = $131.47, or 16.43% of the revenue. About the same as Paypal + Recurly or Paypal + Spreedly.
Final Thoughts
For an $8/mo subscription, you’re going to be paying 20% or more of your revenue to the payment processors until you reach 50-70 customers. That’s amazing to me.
For this comparison, Chargify wins hands down when you don’t have many customers because their service is free up to 50 customers. The more customers you have, the closer the options become. Also, remember that you don’t have to use Recurly or Spreedly with just Paypal Website Payments Pro — that’s just what I’m looking it; do you own calculations before making a decision.
It’s also important to note that the difference isn’t that much when you work it out. For 2,000 customers, the difference is less than $150/mo, but when you consider that you’re making $16K/mo at that point, things like customer service, how easy their API is to use, and what features they offer become a lot more important than the price difference.
Finally, if you notice any errors in these calculations, please let me know.
Matt Mazur 
Just wanted to say “thanks” for including Chargify. You’re spot-on!
What matters most, long-term, is customer service, financial stability, the quality of our suppliers, etc… all the stuff that goes into a solid business.
I get questions about these issues every day and I’m happy to say that every caller feels good about our answers :-).
Thanks, again.
— Lance
People worry way too much about processor fees. The difference between any two reliable merchants is so small that your best bet, financially speaking, is to just choose whichever one is easiest to get up and running. When you’ve got the kind of volume that an extra .1% recoups the extra development time, then you should haggle with them. By that point you’re rich anyway.
Matt,
Great price comparison. Thanks for including Recurly in the mix. I just wanted to point out a few things to the readers to improve the accuracy of your analysis:
In order to use Chargify with Authorize.NET, you are required to purchase Authorize.NET’s Customer Information Manager (CIM) in order to store credit cards. It’s true Chargify is still free at < 50 customers, but you're paying Authorize an extra $20/mo. After reviewing your spreadsheet, I believe you left out the cost of the CIM add-on. With Recurly, you do not need Authorize.NET's CIM. Plus, we'll let you switch gateways at any time you like, even after you are live. And if you're still not satisfied, we'll return all your customer data and card numbers to you if you'd like to switch to a different billing service.
Second, you briefly mentioned this in your post but I just wanted to make it clear to the readers that you can use Recurly with Authorize.NET, Intuit, Braintree, and several others. In this post, Chargify is configured with Authorize.NET simply because Chargify does not support PayPal Website Payments Pro.
In the end, I agree with your conclusion that the difference isn't much. You should really choose your provider, gateway, and merchant account based on more factors than just cost. Thanks again for sharing your comparison.
Cheers,
Isaac
I have a client who tells me that auth.net has a recurring billing service. He’s asking my why I would put him on Chargify since he already has an auth.net account?
Can you help me answer this?
Thanks
Brian
My daily readings 12/01/2010 « Strange Kite
Chargify no longer offers a flat fee.
Chargify are hitting the startups with a whopping $39 / mo for the first 10 customers, this article needs revising
We just launched pintpay.com, which is probably the leanest way to start accepting payments for any website. You can get started with no fees whatsoever, and get it setup in 5 minutes (with no coding, to boot!)
Also: NO merchant account and gateway is required! This is a huge win.
Thought people who find this thread might be interested in it. We’re currently working with a few private beta partners. Use the beta code “LEAN” to get started immediately.
Chargify vs. Recurly — Choosing a Recurring Billing Platform | Locomotion
Hey Matt,
Thanks so much for your preliminary research on Chargify and Recurly. I found the read uber useful and went on to write a more in depth piece on Recurly vs. Chargify here:
http://simplestation.com/locomotion/chargify-vs-recurly-choosing-a-recurring-billing-platform/
Thanks again!
Matt,
Excellent, thorough analysis. However, I feel there is one point to consider:
Chargify charges per month for the total number of customers.
Recurly on the other hand charges per transaction monthly fee.
In the longer run the latter approach comes out to be much cheaper because of the cumulative vs. incremental billing.
Thanks
A great tool for comparison between recurring payment services: http://www.billingsavvy.com/
Thanks to @shaunchapman
Hi,
Any interest in rerunning this article with the latest pricing models? Things have changed a lot – all of the vendors here now price their services differently. It’d be interesting to see this analysis again with the updated numbers.