Why Stripe is great

Stripe is the market leader in payments

Stripe, in our opinion, is the most iconic B2B company built in the last 20 years. Their mission is simple; make it easier to collect payments, and in turn, increase the GDP of the internet. Few can credibly argue that they haven’t been successful in this pursuit.

The Sequence GTM team speaks to dozens of B2B companies from Seed to IPO stage every week, and Stripe remains the most used payment processing platform, especially in the tech sector. It remains our most active payment gateway integration across our customer base today.

Given that businesses need to collect payments from day 1, Stripe is often one of the first tools in the stack. From our experience, their payment links + self-hosted checkout page are particularly popular with startups who don’t want to devote time or engineering resources towards payment collection.

Stripe is also the gold standard when it comes to developer products and API documentation. Developers can leverage Stripe’s APIs to embed payments into their product, famously with as little as 8 lines of code, enabling teams to stay focused on building their core product, with minimal ‘back office’ distraction.

Stripe Billing is best in class for PLG, but is too expensive and inflexible for sales-led teams

Let’s remind ourselves about why teams choose Stripe in the first place; early-stage teams need to quickly launch payment capabilities without building this inhouse. The first GTM decision faced by founders is whether to go with PLG pricing (where you benefit from a frictionless sign up flow and a reduced need for sales capacity), or build a hand held sales process from day 1 to retain full control of the buying cycle and potentially close higher value deals.

As one of the first pieces of revenue infrastructure inserted into the stack, Stripe has the benefit of being able to upsell various additional products that become more relevant as a company grows. The primary selling point for these products is often convenience > depth of functionality. In practice, this means choosing add-ons from your existing tech stack, rather than launching a new procurement process for a point solution. For example, are there more developed solutions for identity verification (IDV) products than Stripe’s Radar? Sure. Do you care if this isn’t a major issue and you don’t have time for a lengthy evaluation of IDV vendors? Probably not.

When most teams scale beyond their first 10 customers, they not only need to think about pricing, but also how to collect revenue for their chosen pricing models. With Stripe already embedded as the core payments solution, many teams decide that the most frictionless option is Stripe Billing; a simple, easy way to manage subscriptions and invoicing.

At Sequence, we work exclusively with companies that have at least some sales-led (negotiated) pricing. In this world, every contract is unique as sales reps have the remit to configure bespoke terms in order to meet the buyer’s needs. The best B2B businesses win on sales execution, which inevitably involves creative pricing and contracting terms that AEs can weaponise in order to close the biggest deals.

This requires a billing engine and revenue infrastructure that can handle the flexibility that sales teams need to close custom deals with nuanced pricing terms. The surface area required to build a highly flexible billing engine is well documented (this article by Arnon Shimoni is our personal favorite), and as a result, the Stripe Billing add-on is not purpose built to handle the depth and breadth required to service a sales-led pricing approach.

Here are some scenarios that companies often struggle to model in Stripe billing:

• Multi-year, ramped pricing agreements (often indexed to CPI)
• Backdating billing subscriptions to invoice customers for historical contract terms
• Percentage based pricing
• Usage roll-ups across multiple accounts
• Attaching contracts to billing subscriptions to ensure correct deal terms are captured
• Flexible minimums for usage-based products
• Making edits or customizations to existing invoices
• Adding different products that need to co-term mid-contract
• Handling change orders during active subscriptions
• Managing multiple price IDs for similar products/SKUs
• Implementing cascading (volume-based) pricing structures
• Handling multiple product types with different pricing models in one contract

Interestingly, the natural move upmarket that many startups make results in a gradual shift away from pure-PLG pricing and more into the custom pricing segment. This has been the catalyst for many companies that have moved from Stripe Billing to Sequence, including Incident.io, Bridge.xyz, Attention.tech and many others.

Sequence is a better path for sales led or hybrid companies

The goal of this post is to highlight the trade-offs that we’re seeing as teams grow beyond the lightweight toolkit provided by Stripe on the billing and invoicing side. In short, Stripe is a best-in-class payments product which we hugely admire as a team here at Sequence. They have earned their place as a core piece of infra for modern, B2B startups and have amassed an impressive product suite over the past 10 years. Their continued development speed has set the bar for pre-IPO companies who still seek to emulate the speed and intensity that got them up and running as a <10 person startup.

With that said, the 0.7% revenue fee, coupled with limitations in modeling custom contract terms, leads many teams to look for more flexible billing solutions, where pricing scales more favorably with revenue growth. This has been the catalyst for many teams migrating to Sequence, where Stripe Billing remains our most frequently requested, and completed, migration case.

Why have teams decided to make the switch from Stripe Billing to Sequence?

• More flexible billing module, capable of supporting complex use cases include custom minimums, discounts, price ramps
• Streamlined sales to finance handover with our native quote builder
• Customized dunning workflows, allowing teams to adjust the copy and frequency of payment reminders at scale
• Priority support during the onboarding process (we handle the migration end to end, enabling most customers to go-live in <4 weeks) and ongoing guidance from our Solutions Engineering team post-implementation
• More favorable pricing at scale, especially as companies reach $10-$20m+ in annual revenue
• Product velocity, Sequence is shipping new features every week, winning awards and building customer love, resulting in sustained demand for our white glove migration service from Stripe.

If you’re on Stripe Billing and want to explore your options, feel free to book a demo with the Sequence team here.