Building in Public: Pricing is our scariest decision - Terrateam

Building in Public: Pricing is our scariest decision

By Malcolm Matalka on Jul 31, 2023
BIP Pricing and Competition

Building in Public is a blog series where we transparently describe what we are doing and why. As a bootstrapped company that has struggled to find advice for those of us that do not want to make the next unicorn, we hope our successes and failures will be helpful for others.

While building Terrateam, pricing have been some of the scariest decisions we’ve made. We have a lot of pride in what we’ve built. It doesn’t matter how many people say they like your product when you show it to them, the rubber meets the road when they have to give you their credit card.

At first, we just tried to copy the pricing of companies that we thought were our competitors. We didn’t know what we were doing but they probably did. Take what they have and make a slight tweak to showcase what we think makes us special. We also asked for advice from a lot of people but it was hard to get an answer to “why” they recommended a price to us. A lot of the advice just seemed like “sounds like something that should cost $X”.

To get our first paying customers, we went low. We looked at the cheapest non-free plan of our competitors and undercut it by 30%. And it worked! We started getting paying customers. But defining the value of your product purely based on the value of another product leaves an uneasy feeling. We didn’t want our product to just be a cheap copy of another. We had our own vision.

We knew that we didn’t want to create a billion dollar company. We just wanted to solve our customers’ problems and make enough money to enjoy life. Early in our formation we read Company of One by Paul Jarvis. Company of One is for entrepreneurs that are happy creating a small, steadily growing, company. In other words: us. One of the biggest take-aways for us was about finding your market. A large company needs to appeal to a lot of people but a small company has more freedom to have a personality. We can be really appealing to a smaller group of people at the expense of being a turn off to others.

We believe there are users that want a really good experience planning and applying their Terraform changes and will pay for support and SLAs. Our vision for Terrateam is a product for people who are happy never leaving GitHub for Terraform changes. We want very few touch-points with the product. Once it is setup, it should become invisible. In their day-to-day usage our customers see almost no branding. All Terrateam configuration and operations are done inside the repository or through pull requests. We don’t have a UI. Users create a pull request and see their Terraform plan in the comments and then they apply it in the pull request. There is no reason to leave. And we have a ton of features! So how much should that cost?

We aren’t flashy. But we are feature rich. We are focused on a specific use case: Terraform plan and apply on GitHub. Being bootstrapped, we are very lean. We’ve implemented 70%-80% of the enterprise features of the competition but on a shoestring budget. We’re a small company that doesn’t have investors to repay. We want to stay small while maintaining our high quality of support, so we can’t have too many customers. Finally, we don’t even need to make a million dollars in revenue per year to be a success.

That’s when we realized that we didn’t know who our competition was. There are the popular names in Terraform CI/CDs and we just assumed they were our competition. But they are rocket ships. They are after those enterprise contracts that are thousands of dollars per month. We don’t think your Terraform CI/CD should be so sophisticated that it should cost that much.

With all that, the latest iteration on pricing is: $496/mo. We provide most of the enterprise features our users want at 1/10th the cost of the other options. With no GUI, the experience is more utilitarian, but you get the information you need in the place where you already are. We’ve only recently rolled out this change so we are still evaluating it. If history is any indicator of the future, we’ll be iterating on pricing again.

Terraform automation
for GitHub