Credits Over Subscription
SmartBoxes uses a prepaid credits model (PAYG) rather than a traditional SaaS subscription.
Context
SmartBoxes needs a pricing model. The choice affects revenue predictability, user behaviour, churn dynamics, and competitive positioning. Three main options:
- Monthly subscription: Predictable revenue, traditional SaaS model
- Pure usage-based: Pay exactly for what you use, risk of bill shock
- Prepaid credits: Top up credits, consume as you go, no surprises
Alternatives Considered
| Option | Why Not Chosen |
|---|---|
| Monthly subscription | Misaligned with variable value delivery—some months users run 100 sandboxes, some months 2. Subscription feels unfair for power tool with spiky usage |
| Pure usage-based | Risk of bill shock scares users, harder to predict revenue, may attract only heavy users |
| Freemium + subscription | Complex to implement, unclear where free ends, may attract non-converting users |
The Decision
Prepaid credits model where users top up credits that are consumed by usage.
How it works:
- Users purchase credit packs ($10, $50, $200, etc.)
- Each sandbox session consumes credits based on time + resources
- Credits don’t expire (or expire after 12 months)
- Low balance triggers reminder to top up
Why credits:
- Aligns payment with value delivered — you pay for what you use
- Avoids bill shock — users can’t overspend since credits are prepaid
- Provides revenue predictability — prepayments give visibility
- Creates natural pause points — users reassess value when topping up rather than churning silently
- Feels fairer — PAYG model matches expectations for infrastructure
Tradeoffs Accepted
What we’re giving up:
- Less predictable MRR than subscription (harder to forecast)
- Need to manage credit balances and top-up UX (additional complexity)
- May attract lower-commitment users (no monthly commitment)
- Harder to compare to subscription competitors (different mental model)
What we’re accepting:
- Revenue will be lumpier (big top-ups, then quiet periods)
- Need clear communication on credit consumption rates
- May need to add subscription tier later for enterprise
Reversal Triggers
Revisit this decision if:
- Credit fatigue: users complain about top-up friction, want “just charge me monthly”
- Revenue unpredictability makes planning impossible
- Competitors win on subscription simplicity
- Unit economics require minimum commitment (credit amounts too small)
- Enterprise customers demand subscription for procurement reasons
Early warning signs:
- Low credit amounts dominating ($10 packs only)
- Users churning at top-up moment rather than continuing
- Feature requests for subscription option
- Sales conversations stalling on pricing model
Review Schedule
Next review: 2025-04-01 (or after 100 paying users)
Review questions:
- What’s the average credit purchase amount?
- What’s the top-up cadence?
- Are users complaining about the model?
- How does churn compare to subscription competitors?
Related
Depends on assumption:
Affects product:
Affects milestones:
Context
SmartBoxes needs a pricing model. Options are traditional SaaS subscription, usage-based (pay-as-you-go), or prepaid credits.
Decision
Prepaid credits model where users top up credits that are consumed by usage.
Rationale
Credits (1) align payment with value delivered, (2) avoid bill shock since users can’t overspend, (3) provide revenue predictability via prepayments, (4) create natural pause points rather than churn. PAYG feels fairer for a power tool with variable usage.
Alternatives Considered
| Option | Why Rejected |
|---|---|
| Monthly subscription | Predictable revenue but misaligned with variable value delivery |
| Pure usage-based | Risk of bill shock, harder to predict revenue |
Tradeoffs
- Less predictable MRR than subscription
- Need to manage credit balances and top-up UX
- May attract lower-commitment users
- Harder to compare to subscription competitors
Reversal Triggers
Revisit this decision if:
- Credit fatigue: users complain about top-up friction
- Revenue unpredictability makes planning impossible
- Competitors win on subscription simplicity
- Unit economics require minimum commitment