Practical steps to determine your price

Here are a few basic steps to determine what your users currently pay for payments: 

  1. Determine what kind of pricing your users had with their previous provider, if any. Typically this will be either Interchange ++ or Blend pricing.

  2. Capture the average monthly payment volumes the user processes. You can also calculate this with the number of average monthly transactions multiplied by the average transaction value of the user.

  3. Make an analysis.

Breakdown costs that the user currently pays to determine payments costs:

→ Recurring costs: Separate any recurring costs (e.g. monthly subscriptions to software, terminals, and service fees).

→ One-off costs: Separate any non-payment related one-off costs (e.g. management fees).

→ You should only be left with user payment costs. If the user is on IC++ pricing, you should see a clear distinction between transaction costs, acquirer markup, and scheme fees. 

Getting to the price

Now that you have understood what the user's current payment costs are, you can start looking at how to price payments for value against the user’s current offer. 

It’s important to emphasize (and even quantify) the added value your users will gain with your platform that they don’t currently receive. To paint a clearer picture, you can also look at:

  • Historical deals within your sales teams: Assuming you already sell embedded payments, look at the sell rates that your sales teams have previously offered to users of similar sizes (payment volumes) and/ or industry types in the past.

  • Market rates: What are similar or advanced SaaS platforms in the same country/ region and industry offering?

Based on the above, you should be able to clearly benchmark the markup you’d like to charge for payments. 

Please note that this is not a one time assessment. It is important to have a person or team of people to continually monitor your margin with your user base.