Build a Prepaid Credits Billing System with Lago (Open-Source)
Lago (S21) founder here.
There's been a litany of content around 'usage-based pricing' being the new thing. It might be another VCs’ pendulum symptom, or might not.
Our point is: full usage-based pricing (like Snowflake) has some limits: * For the merchant: - Cash collection challenges: it might be hard to collect revenue after the consumption: the client may dispute the bill, or never pay it - Revenue predictability: full usage-based pricing means revenue is less predictable, all the notions or MRR/ARR and corresponding SaaS metrics are obsolete * For the customer: they have no peace of mind around cost, and may be anxious around an upcoming bill
That’s why an increasing number of companies are using pre-paid credits for their pricing: * For the merchant: cash is collected beforehand, credits create a layer of abstraction that enables them to iterate on pricing * For the customer: they have more peace of mind on how much money is going to be spent (-> budget), and they can ‘lock’ a specific pricing by prepaying an amount of credits.
Such system has 2 major limits though : 1/ For customers: buying credits can seem a bit ‘obscure’/less understandable 2/ For merchants: a credit system implies building a wallet and managing its balance as part of the billing system.
Regarding 2/ We’ve open sourced our API (which also has a UI for non-tech users) and it now enables you to build a ‘prepaid billing system’: a/ Create wallets for your customers Set the credit value, the number of free credits, the expiration dateetc. b/ Manage credit purchases and top-ups c/ Invoice your users
Doc here: https://doc.getlago.com/docs/guide/prepaid_credits#credit-purchases-and-top-ups Github: https://github.com/getlago/lago
OSS license : AGPLv3 Back-end: Ruby Front-end: ReactJS, GraphQL -> no need to be technical to use Lago API clients: Curl, Python, Ruby, Node.js, Go
— PS: another use case of credits is to incentivize users to perform an action. E.g., it can be used as a reward if your user refers a new user. Notion uses it to incentivize their users to try out new features and use their app across devices. Read more here: https://www.getlago.com/resources/templates/notion