Chargify, a subscription billing startup taking on companies like Zuora and others?

The various nuances associated with recurring billing can be challenging for businesses to handle. Chargify seeks to solve the problems like billing customers’, emailing them, managing coupon and discount codes, sending statements out etc.

What we do is allow people who want to try a recurring revenue business, which seems to be the future here, to do it easily and quickly, to do it in hours or days and see if their idea works. And not spend any money until they have at least 50 Customers, said Co-Founder Lance Walley.

Chargify was found in 2009 by David Hauser and Siamak Taghaddos, founders of the Grasshopper virtual phone system, along with Lance Walley of Engine Yard. The only external funding they accepted was from Mark Cuban, owner of NBA team Dallas Mavericks in 2011. Chargify is a recurring billing system which helps Web 2.0 and software-as-a-service (SaaS) companies grow. Chargify supports, Beanstream, PaymentExpress, QuickPay and TrustCommerce.

While competitors like Zuora claim that they have 100 customers at selling point, Chargify boasts of supporting over 1000 businesses with their system. The bigger competitors like Zuora, Vindica and Aria Systems are all large. The minimums for Zuora are $10 to $15 a month in fees and $50,000 in startup fees which is more than most startups can make in their first year with a web app. Chargify has a Small business plan $129/mo which allows you to manage 500 customers and a New Idea plan $65/mo which includes 20 customers. The ease of implementation of their API, combined with an excellent interface makes it a good choice as per the reviews from their existing customers.

So, how does their business model work? Customers start out on a merchant’s website that’s integrated with Chargify. They enter their credit card data to purchase an item. The merchant passes that data to Chargify over SSL (Secure Sockets Layer). Chargify verifies the details and runs it against the merchant’s own payment gateway. If successful, they then set up a subscription and with a pass/fail type of response. If there are any problems, Chargify passes along the errors so the merchant can display them on their own site. From that point, Chargify takes over charging the credit card on a recurring basis.

LTP View: Chargify’s exclusive model wherein you get started for free, with no set-up or transaction fees, and no contracts to sign makes it easy for upcoming companies and startups. Of all the major players like Recurly and Zuora; Chargify is the only one that does not take a percentage for billing which is an advantage for business with higher ARPU (Average Revenue Per User).They charge a flat rate for a given number of customers.