Dispatch Software Pricing Broken

There's a thing that bothers me about how dispatch software is priced and I want to write it down.

Almost every dispatch software vendor uses the same pricing structure. There's a monthly base fee. Then there's a per-booking charge on top of it. Sometimes there's a percentage cut of credit card payments. Sometimes there's a driver license fee.

The structure has a problem. It punishes you for getting bigger.

Here's the math. Let's say a vendor charges $99 base plus $1 per booking. In month one, you do 200 bookings. Your bill is $299. In month two, you have a better month and do 500 bookings. Your bill jumps to $599. Three months in, you hit 1,000 bookings. Your bill is now $1,099. You're paying eleven times more for software because you got better at your business. The software didn't get eleven times better. It's the same software. Read that again. Same software. Eleven times the bill. This is the core thing that's wrong with dispatch software pricing.

Why vendors do this

I don't think most software vendors are evil. I think they're following a playbook that worked great for somebody else. The playbook is borrowed from payment processors and ride-share companies. Stripe charges 2.9% + $0.30 per transaction. Uber takes 25% of every fare. The logic is: customer's success is our success. But there's a difference. Stripe is actually doing more work for you when you process more transactions — handling fraud, managing risk, dealing with chargebacks at scale. Uber is generating the demand for you. They earn the percentage by actually adding value as you grow. Dispatch software vendors aren't doing more work for you when you book more. The software runs the same. The servers cost them the same. They're not generating demand for you — you're generating it yourself. So when they take a per-booking fee, they're charging you for value they aren't creating. They're just inserting themselves into your transactions and skimming.

What it should cost

Software is a fixed-cost business. Once the code is written and the servers are running, the marginal cost of one more booking is essentially zero. Adding your 1,001st booking to the system costs the vendor maybe a tenth of a penny in actual computing resources. So why are they charging you a dollar for it? Because they can. Because operators have been trained to expect this pricing model. If software pricing followed actual cost, it would be flat. A monthly fee that covers the cost of running the platform, plus enough margin for the vendor to make a living. Maybe $25 a month. Maybe $50. Maybe $100. Pick a number, but the number doesn't scale with how busy you are. That's how it should work. That's what we built.

What flat pricing means in practice

A flat $25 a month means I'm betting on something specific. I'm betting that I can run a profitable software company by serving a lot of small operators well, instead of squeezing a few big operators for every dollar. That bet has tradeoffs. It means I can't compete on services that require lots of human time per customer. I can't offer dedicated account managers. I can't do custom integrations on a one-off basis. I can't fly to your office for in-person training. But I can offer everything most small operators actually need. The product. The migration. The support via email, phone, chat, and video. The relationship. What I'm doing is making the math work by serving a lot of customers efficiently, not by extracting maximum value from each one.

Why other vendors haven't done this

I get this question a lot. If flat pricing is so much better for operators, why don't more vendors offer it?

A few honest reasons.

First, once you're trained operators to expect per-booking pricing, switching them to flat pricing is hard. You'd have to convince your existing customers their bill is going to a smaller number. They wouldn't believe it. They'd think there's a catch.

Second, venture capital math doesn't like flat pricing. If you raise $20 million from investors, those investors want to see revenue per customer grow over time. Flat pricing means revenue per customer is, well, flat. Investors hate flat. They want growth curves.

Third, sales teams don't like flat pricing. Salespeople make commissions on bigger deals. A salesperson selling a $25/month subscription makes basically nothing. A salesperson selling a $500/month plan with add-ons makes real money. So sales-led companies naturally drift toward more expensive plans.

We're not venture-backed. We don't have a commissioned sales team. We're a small company that's been around since 2006 and we'd rather build a long-term business with operators who stick around than chase quarterly revenue targets. That's the real reason we can price this way.

What this means for you

If you're an operator and you're paying per-booking fees, here's the math problem I want you to do this week. Open your last 12 monthly bills. Add up every line item. Divide by 12. That number is what you're paying for software. Now multiply that number by 12 for the annual cost. That's a lot of money, right? Now compare it to $300 a year. That's our annual cost. The difference between those two numbers is real money. Money you earned through your work. Money that should be in your bank account, not your software vendor's. Fourteen days. No card. Just to see what the math looks like on the other side. That's all I have to say about this.