People Matter . . . So, We Count
Mark Waltz - Granger Community Church
If you have never started a business, to do so requires that many decisions be made. A subset of these are: what to call the product (Fellowship Church referred to the internal project as ‘Switch’), who to hire and when, what the overall business model should be and then what to charge for the product. In this blog entry I’ll explain the history and reasoning behind our pricing model.
Fellowship Technologies is an Application Service Provider (ASP). This means we store the data and provide the processing of the application on our servers (our customers need only a computer with a browser and connection to the Internet). The primary on-going costs that affect a customer’s monthly fees include: transaction processing costs; salaries for development of new functionality; testing and maintenance of production code; salaries and infrastructure for customer support; operating environment including hardware, software, security and backups; and sales and overhead costs. Clearly, the customer variable in this equation is affected by the number of transactions we process for any given church; all other costs are fixed as a percentage of the customer fee or are considered operational overhead and are spread across all of our customers.
However, when it comes to pricing, it is really not practical to price a church “by transaction.” For many churches, the overall concept of transaction-based pricing would be foreign and overly complex. In my conversations with many churches, the typical church does not want to be “nickeled and dimed”. If they want to run another set of reports or add a certain number of transactions, they do not want to have to ask themselves, “Wonder what this will cost me?” or “Can I afford to run check-in for this special mid-week service?”
So for simplicity’s sake, we chose to base our pricing on “Typical Worship Attendance” (“TWA”) for all age groups across all services. We believe that the number of transactions and amount of support is directly related to the size of the church’s staff, the number of check-in transactions, the number of reports run, etc., and is thus a function of the total number of people who show up on any given weekend, whether they are the same people or totally different people.
Additionally, because computer storage is so inexpensive (physical storage is now less than $1 per gigabyte), that variable is immaterial to the overall monthly cost for any given church. In our mind, an Application Service Provider should not charge more to churches based purely on record count, because the incremental cost for the additional disk storage required for another 1,000 or even 10,000 records is relatively insignificant.
So early on we decided to come up with a pricing strategy that would reflect a customer’s usage of the system, yet not be so complex that it is hard for the customer to understand or be overly difficult to bill and administer from our side. We believe TWA continues to be the best approach. So much so that a couple of our competitors have switched to a similar pricing model – we must be on to something.
Grace to you as you go out and COUNT!
Jeff Hook