Early Stage
November 8, 2022

How should we price Kosmo?

How should we price Kosmo?

At Kosmo we are constantly discussing about how to price our products. So far we have been charging per order. The per order fee has been between $0.20 and $0.50 (USD).

In the last weeks some customers have asked us to introduce a monthly fee instead of paying per order. Their reason is that they want predictability in their costs and a reduction of the risks associated to rapid growth in orders that end up affecting their delivery costs.

We took that feedback and we started to explore what’s the best way to serve our customers with a fair price, and we write this blog to share our thoughts while asking for feedback to the community.

The reason why we started charging per order was based on the idea of reducing friction. We think that charging a fixed monthly fee adds friction to the purchasing decision. It requires commitment. Instead, when you pay per order (usage) you just pay when you use it. If you don’t use Kosmo you don’t pay. This theory has seemed to work with small and medium businesses where there is no big management layers. The people in charge cared about having a product that solves their problem while ensuring that the price paid for it was worth it on a unit economics basis.

But as we started to sell to bigger companies we have seen that this per order model might be less interesting. Our per order costs impacts their delivery costs, and those companies have pressure to not harm their gross profits. CFOs want to reduce risks and keep margins in control, so the per order pricing model becomes less attractive. And on top of that, it seems to make the sales cycle longer. The vertical that will benefit from Kosmo will be the tech team most of the times. While the cost impact will be beared by gross profit. That requires multiple people to align before signing the contract.

The summary is that it seems like enterprises prefer to buy monthly packages with a certain amount of processed orders included. For example, pay $1,000 for 5000 orders. Based on that customer feedback we are considering to offer those kind of packages, but we are still exploring.

To give some examples, in the payment industry Stripe charges a % + per order fee. Instead, most software companines in the logistics industry charge a monthly fee with an amount of processed orders included. See below the screenshot from Stripe (first image) and Onfleet (second image).

Stripe pricing

Onfleet pricing

Based on those thoughts we are considering doing the following, but we’d like to hear feedback from customers and non-customers so we can charge a fair price.

For businesses that want a simple pricing, our platform pricing solves that. Simple, pay as you go. Pay $0.40 per delivery. No orders, no cost.

For businesses that want to design a specific package we can serve that. From volume discounts to monthly packages, including multi-country strategies.

Our next steps is to discuss with our customers to understand how they'd prefer to be charged and slowly iterate. Happy to receive feedback from folks that want to contribute to this!

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