Credits vs. subscription pricing thoughts?

Credits always seem like a shitty way for the operator to get a couple of extra bucks out of me. Envato went to a credit system and of course an item would be 45 credits, I have 40, requiring me to purchase more. And of course I have to purchase in bulk, so I'll have credits I'll never use, or credits that are useless unless I buy more. Never fails.

Credits just "feel" cheap / scummy to me.

To me credits make sense when usage is very low, or very spiky. It's also very much not an either or decision. You can have credits for customers who don't feel the value of a monthly subscription, have an intermittent need for the product, or, as a top up for people who sometimes need to go above the limits of their subscription tier.

There may be another drawback to credits that I didn't even realize myself until I read this edition of Patrick McKenzie's newsletter: https://bam.kalzumeus.com/archive/accounting-for-saas-and-swords/

TLDR: Accounting is different if you sell people credits for later use.

Of course you're unlikely to get in trouble for this if you're small scale, but once you're larger or you happen to get audited or something, it can become a headache.
Now, as Patrick writes, there are recognized and tested methods for this, but they can be hard to wrap your head around as a smaller scale entrepreneur. And there'll be a disconnect between the stuff you see happening in your payments dashboard, and your P&L statement.

So it doesn't just add a layer of abstraction between money and use for the user, it also adds a layer of abstraction and complexity for your bookkeeping.

I have set up a credits approach with twift.xyz, a tool that helps Twitter influencers run those "reply with an emoji to get <something>" giveaways. My tool helps them send a ton of DMs in a few clicks.

And I recommend against the credits approach. The best part about subscriptions is that people who pay once keep paying. You don't have to make them realise they should use your product again. Aka marketing costs are one time. A customer is (close to) forever.

If all you want to do is lower the barrier of commitment that comes with a subscription add a paid trial. Ahrefs (ahrefs.com) has a $7 a week paid trial for their $99/month plan. That worked great. (https://www.youtube.com/watch?v=09avD7Y4xpc)

Why not both?

I think a lot of people prefer the simplicity of subscriptions, but at the same time, you're right to want to lower the financial hurdle.

Without making it too complicated, having a lot of options for billing could definitely work well.

How are you going to sell credits ?

• In Package
• Individual

Do credits have validity period ?

Answer these questions. I will tell you how I am using credit based system.

Time and cost of implementing a rates system is a con.

Increase customer support is another. Say their data going in had a misplaced punctuation mark and requires a costly rerun, or a process of yours is flakey, they'll either be asking for refunds or feeling ripped off.

Lastly, a variable expense can be harder to get approval for than a standard one. This also means companies can be left unsatisfied if they blow through their budget, with unfinished work left, and the internal corporate approval process for more spends takes a long time.

Heard from a friend about their company going from subscription to credits and then back to subscription.