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refactor(pricing): implement hybrid fee model (€0.50 + 1.5%) deducted from promoter payout

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- Remove 1€ fixed fee from orders and Stripe invoices
- Add platform_fee_cents, promoter_payout_cents methods to Order model
- Update views to show clean ticket totals without added fees
- Update tests for new fee calculation logic
- Update pricing docs with implemented model
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kbe
2025-09-15 20:07:51 +02:00
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commit 049e5505ef
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134
docs/pricing-model-recommendations.md
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@@ -3,28 +3,32 @@
## Current Problem Analysis
### Current Model: €1 Fixed Fee Per Order
- **Revenue**: €1.00 per order (regardless of ticket price)
- **Stripe Costs**: 1.15% + €0.25 per transaction
- **Result**: Losing money on higher-priced tickets
### Financial Impact Examples
| Ticket Price | Current Revenue | Stripe Fees | Net Profit/Loss |
|--------------|----------------|-------------|-----------------|
| €20 | €1.00 | €0.48 | **+€0.52** ✅ |
| €50 | €1.00 | €0.83 | **+€0.17** ⚠️ |
| €100 | €1.00 | €1.40 | **-€0.40** ❌ |
| €200 | €1.00 | €2.55 | **-€1.55** ❌ |
| ------------ | --------------- | ----------- | --------------- |
| €20 | €1.00 | €0.48 | **+€0.52** ✅ |
| €50 | €1.00 | €0.83 | **+€0.17** ⚠️ |
| €100 | €1.00 | €1.40 | **-€0.40** ❌ |
| €200 | €1.00 | €2.55 | **-€1.55** ❌ |
**Critical Issue**: We lose money on any ticket above €65 (€1.00 - (€65 × 1.15% + €0.25) = -€0.00)
## Recommended Pricing Models
### Model 1: Percentage-Based (Recommended)
```
Platform Fee = 3-5% of ticket price
```
**Advantages:**
- Always profitable regardless of ticket price
- Scales naturally with event value
- Simple for promoters to understand
@@ -33,17 +37,19 @@ Platform Fee = 3-5% of ticket price
**Financial Impact:**
| Ticket Price | 3.5% Fee | Stripe Costs | Net Profit |
|--------------|----------|--------------|------------|
| €20 | €0.70 | €0.48 | €0.22 |
| €50 | €1.75 | €0.83 | €0.92 |
| €100 | €3.50 | €1.40 | €2.10 |
| €200 | €7.00 | €2.55 | €4.45 |
| €20 | €0.70 | €0.48 | €0.22 |
| €50 | €1.75 | €0.83 | €0.92 |
| €100 | €3.50 | €1.40 | €2.10 |
| €200 | €7.00 | €2.55 | €4.45 |
### Model 2: Hybrid Model (Best)
```
Platform Fee = €1.50 + 2% of ticket price
```
**Advantages:**
- Higher base fee covers Stripe fixed costs
- Percentage component scales with value
- Better margins on low-priced tickets
@@ -52,12 +58,13 @@ Platform Fee = €1.50 + 2% of ticket price
**Financial Impact:**
| Ticket Price | Hybrid Fee | Stripe Costs | Net Profit |
|--------------|------------|--------------|------------|
| €20 | €1.90 | €0.48 | €1.42 |
| €50 | €2.50 | €0.83 | €1.67 |
| €100 | €3.50 | €1.40 | €2.10 |
| €200 | €5.50 | €2.55 | €2.95 |
| €20 | €1.90 | €0.48 | €1.42 |
| €50 | €2.50 | €0.83 | €1.67 |
| €100 | €3.50 | €1.40 | €2.10 |
| €200 | €5.50 | €2.55 | €2.95 |
### Model 3: Tiered Flat Fees
```
€0-25: €1.50 fee
€26-75: €2.50 fee
@@ -66,32 +73,36 @@ Platform Fee = €1.50 + 2% of ticket price
```
**Advantages:**
- Predictable fees for promoters
- Simple pricing tiers
- Better than current model
**Disadvantages:**
- Less scalable than percentage
- Requires tier management
## Industry Benchmarks
| Platform | Fee Structure | Effective Rate (€50 ticket) |
|-------------|----------------------------|------------------------------|
| Eventbrite | 3.7% + €0.59 | €2.44 |
| Universe | 2.5% + €0.49 | €1.74 |
| Ticketfly | 4% + €0.99 | €2.99 |
| **Recommended** | **3.5%** | **€1.75** |
| Platform | Fee Structure | Effective Rate (€50 ticket) |
| --------------- | ------------- | --------------------------- |
| Eventbrite | 3.7% + €0.59 | €2.44 |
| Universe | 2.5% + €0.49 | €1.74 |
| Ticketfly | 4% + €0.99 | €2.99 |
| **Recommended** | **3.5%** | **€1.75** |
## Implementation Strategy
### Phase 1: Immediate Implementation (Week 1-2)
1. **Switch to 3.5% percentage model** for new events
2. **Grandfathering**: Existing published events keep €1 pricing
3. **Communication**: Notify promoters 1 week before change
4. **Update pricing display** on event creation and checkout pages
### Phase 2: Optimization (Month 2-3)
1. **A/B Test different rates**: 3%, 3.5%, 4%
2. **Monitor metrics**:
- Promoter signup rate
@@ -101,6 +112,7 @@ Platform Fee = €1.50 + 2% of ticket price
3. **Adjust based on data**
### Phase 3: Premium Tiers (Month 4-6)
1. **Volume discounts** for high-performing promoters:
- Standard: 3.5%
- Bronze (€5K+ monthly): 3%
@@ -112,6 +124,7 @@ Platform Fee = €1.50 + 2% of ticket price
## Revenue Projections
### Current State (€1 fixed)
- Average ticket price: €35
- Monthly orders: 1,000
- Monthly revenue: €1,000
@@ -119,11 +132,13 @@ Platform Fee = €1.50 + 2% of ticket price
- **Net monthly profit: €372**
### With 3.5% Model
- Monthly revenue: €1,225 (3.5% × €35 × 1,000)
- Monthly Stripe costs: €628
- **Net monthly profit: €597** (+60% increase)
### With Growth (3.5% model + 20% more events)
- Monthly orders: 1,200 (20% growth from competitive pricing)
- Monthly revenue: €1,470
- **Net monthly profit: €842** (+126% increase)
@@ -131,6 +146,7 @@ Platform Fee = €1.50 + 2% of ticket price
## Technical Implementation
### Database Changes
```ruby
# Add to events table
add_column :events, :commission_rate, :decimal, precision: 5, scale: 4, default: 0.035
@@ -140,6 +156,7 @@ add_column :users, :commission_tier, :string, default: 'standard'
```
### Fee Calculation Logic
```ruby
class Order < ApplicationRecord
def calculate_platform_fee
@@ -148,7 +165,7 @@ class Order < ApplicationRecord
base_amount = total_amount_cents / 100.0
(base_amount * commission_rate * 100).to_i # return in cents
end
def platform_fee_euros
calculate_platform_fee / 100.0
end
@@ -156,6 +173,7 @@ end
```
### Promoter Dashboard Updates
- Show fee breakdown on event creation
- Display projected fees during ticket setup
- Add revenue vs. fees analytics
@@ -164,9 +182,11 @@ end
## Communication Plan
### Email to Existing Promoters
**Subject**: "Important Pricing Update - New Fair Fee Structure"
**Key Points**:
- Current model loses money on higher-priced tickets
- New model ensures platform sustainability
- Better features and support with improved revenue
@@ -174,6 +194,7 @@ end
- Competitive with industry standards
### Website Updates
- Update pricing page with clear fee calculator
- Add FAQ about fee structure
- Transparency about what fees cover (development, support, payment processing)
@@ -181,11 +202,13 @@ end
## Risk Mitigation
### Potential Issues
1. **Promoter backlash**: Higher fees on expensive tickets
2. **Competitor advantage**: Other platforms with lower fees
3. **Reduced event creation**: Promoters may create fewer events
### Mitigation Strategies
1. **Value communication**: Emphasize platform improvements and reliability
2. **Competitive analysis**: Position as "fair and sustainable" vs. competitors
3. **Volume incentives**: Quick path to reduced rates for active promoters
@@ -194,12 +217,14 @@ end
## Success Metrics
### Financial KPIs
- Monthly recurring revenue growth
- Average revenue per transaction
- Profit margin improvement
- Customer acquisition cost vs. lifetime value
### Product KPIs
- Promoter retention rate
- New event creation volume
- Average ticket prices
@@ -221,6 +246,7 @@ The current €1 fixed fee model is financially unsustainable and actually costs
### Current Approach vs Industry Standard
**Current Model (Not Recommended)**:
```
Customer pays: €50 + €1 fee = €51
Promoter receives: €50
@@ -228,6 +254,7 @@ Platform keeps: €1
```
**Industry Standard (Recommended)**:
```
Customer pays: €50 (clean price)
Platform keeps: €1.75 (3.5% of €50)
@@ -237,18 +264,21 @@ Promoter receives: €48.25
### How Major Platforms Handle Fees
**Eventbrite:**
- Promoter sets: €50 ticket
- Customer pays: €50
- Customer pays: €50
- Eventbrite keeps: €1.85 (3.7%)
- Promoter receives: €48.15
**Ticketmaster:**
- Promoter sets: €50 ticket
- Promoter sets: €50 ticket
- Customer pays: €50
- Ticketmaster keeps: €5-7.50 (10-15%)
- Promoter receives: €42.50-45
**Universe (by Ticketmaster):**
- Promoter sets: €50 ticket
- Customer pays: €50
- Universe keeps: €1.74 (2.5% + €0.49)
@@ -257,16 +287,19 @@ Promoter receives: €48.25
### Why Deducting from Payout is Better
#### 1. Customer Experience
- **Price transparency**: Customer sees exactly what they expect to pay
- **No surprise fees**: Reduces cart abandonment
- **Competitive pricing**: Easier to compare with other events
#### 2. Promoter Benefits
- **Marketing simplicity**: Can advertise clean prices
- **Psychological pricing**: €50 sounds better than €51.75
- **Competitive advantage**: Not adding extra fees to customer
#### 3. Platform Benefits
- **Higher conversion rates**: No fee-shock at checkout
- **Better promoter adoption**: Easier to sell to event organizers
- **Industry standard**: Follows established practices
@@ -274,14 +307,17 @@ Promoter receives: €48.25
### Psychological Impact
**Adding Fees to Customer (Current)**:
- Customer thinks: "€50 ticket... oh wait, €51.75 total" 😤
- Cart abandonment risk
**Deducting from Payout (Recommended)**:
**Deducting from Payout (Recommended)**:
- Customer thinks: "€50 ticket, €50 total" 😊
- Smooth purchase experience
### Promoter Dashboard Display
```
Ticket Price: €50.00
Platform Fee (3.5%): -€1.75
@@ -289,10 +325,12 @@ Your Earnings per Ticket: €48.25
```
### Communication to Promoters
**Before:** "Platform charges €1 per order to customers"
**After:** "Set your desired revenue per ticket, we handle the rest"
**Example:**
- Promoter wants €48.25 net per ticket
- They should set ticket price at €50
- Customer pays €50, promoter gets €48.25
@@ -306,52 +344,56 @@ Our main competitor charges a simple €1 flat fee per order. Here's how our mod
### Hybrid Model vs Competitor Analysis
**Hybrid Model**: €1.50 + 2% of ticket price
**Hybrid Model**: €1.50 + 2% of ticket price
**Competitor**: €1.00 flat fee
| Ticket Price | Competitor Fee | Hybrid Fee | Difference | Competitive Position |
|--------------|----------------|------------|------------|---------------------|
| €10 | €1.00 | €1.70 | +€0.70 | More expensive |
| €25 | €1.00 | €2.00 | +€1.00 | More expensive |
| €50 | €1.00 | €2.50 | +€1.50 | More expensive |
| ------------ | -------------- | ---------- | ---------- | -------------------- |
| €10 | €1.00 | €1.70 | +€0.70 | More expensive |
| €25 | €1.00 | €2.00 | +€1.00 | More expensive |
| €50 | €1.00 | €2.50 | +€1.50 | More expensive |
| **€75** | **€1.00** | **€3.00** | **+€2.00** | **Break-even point** |
| €100 | €1.00 | €3.50 | +€2.50 | Much more expensive |
| €100 | €1.00 | €3.50 | +€2.50 | Much more expensive |
### Alternative Competitive Models
#### Option 1: Low-End Competitive Model
```
Platform Fee = €0.50 + 1.5% of ticket price
Platform Fee = €0.50 + 1.5% of ticket price
```
| Ticket Price | Competitor Fee | Our Fee | Difference | Position |
|--------------|----------------|---------|------------|----------|
| €10 | €1.00 | €0.65 | **-€0.35** | ✅ **Cheaper** |
| €25 | €1.00 | €0.88 | **-€0.12** | ✅ **Cheaper** |
| Ticket Price | Competitor Fee | Our Fee | Difference | Position |
| ------------ | -------------- | ------- | ---------- | ------------------ |
| €10 | €1.00 | €0.65 | **-€0.35** | ✅ **Cheaper** |
| €25 | €1.00 | €0.88 | **-€0.12** | ✅ **Cheaper** |
| €50 | €1.00 | €1.25 | +€0.25 | ⚠️ Slightly higher |
| €100 | €1.00 | €2.00 | +€1.00 | More expensive |
| €100 | €1.00 | €2.00 | +€1.00 | More expensive |
#### Option 2: Modified Hybrid Model
```
Platform Fee = €0.75 + 2.5% of ticket price
```
| Ticket Price | Competitor Fee | Our Fee | Difference | Position |
|--------------|----------------|---------|------------|----------|
| €10 | €1.00 | €1.00 | **Equal** | ✅ Competitive |
| €25 | €1.00 | €1.38 | +€0.38 | ⚠️ Slightly higher |
| €40 | €1.00 | €1.75 | +€0.75 | **Break-even** |
| Ticket Price | Competitor Fee | Our Fee | Difference | Position |
| ------------ | -------------- | ------- | ---------- | ------------------- |
| €10 | €1.00 | €1.00 | **Equal** | ✅ Competitive |
| €25 | €1.00 | €1.38 | +€0.38 | ⚠️ Slightly higher |
| €40 | €1.00 | €1.75 | +€0.75 | **Break-even** |
| €75 | €1.00 | €2.63 | +€1.63 | Much more expensive |
### Competitive Strategy Recommendations
#### 1. Value Differentiation Approach
Since we'll be more expensive on higher-priced tickets, focus on premium positioning:
**Value Proposition:**
- "We're not the cheapest, we're the most complete"
- Advanced analytics dashboard
- Real-time sales tracking
- Real-time sales tracking
- Professional promoter tools
- Superior customer support
- Platform reliability and sustainability
@@ -359,12 +401,14 @@ Since we'll be more expensive on higher-priced tickets, focus on premium positio
#### 2. Market Segmentation Strategy
**Target Market Positioning:**
- **Competitor**: Best for small, simple events (€10-30 tickets)
- **Us**: Best for professional events (€40+ tickets) with serious promoters
#### 3. Hybrid Competitive Approach
**Tiered Offering:**
- **Basic Plan**: Match competitor at €1 flat fee (limited features)
- **Professional Plan**: Hybrid model with premium features
- **Enterprise Plan**: Custom pricing with full feature set
@@ -372,6 +416,7 @@ Since we'll be more expensive on higher-priced tickets, focus on premium positio
#### 4. Volume-Based Competitive Response
**Free Tier Strategy:**
- First 3 events per month at competitor's €1 rate
- Volume discounts for high-activity promoters
- Loyalty rewards for long-term customers
@@ -381,15 +426,18 @@ Since we'll be more expensive on higher-priced tickets, focus on premium positio
#### "Choose Your Business Model" Campaign
**For Simple Events (Under €40):**
- "Need basic ticketing? Our competitor works fine"
- "Pay €1 flat fee for simple events"
**For Professional Events (€40+):**
- "Serious about your business? You need serious tools"
- "Fair percentage-based pricing"
- "Advanced analytics, marketing tools, priority support"
#### Brand Positioning Statement
**"We're the Shopify of Events - Built for Growth"**
This positions us as the premium option for serious promoters while acknowledging the competitor's advantage on small events.
@@ -399,12 +447,14 @@ This positions us as the premium option for serious promoters while acknowledgin
Given the competitive landscape, we recommend **Option 1** (€0.50 + 1.5%):
**Advantages:**
- Competitive on low-priced tickets
- Still profitable at all price points
- Better positioning against main competitor
- Appeals to both small and large event organizers
**Financial Impact:**
- Lower fees on tickets under €33
- Competitive fees on tickets €33-66
- Premium pricing on high-value tickets justified by features
- Premium pricing on high-value tickets justified by features