May 2022 Summaries

Lago has chosen the AGPLv3 license for its "Modern Pricing Stack" project, emphasizing open-source principles to create a flexible and community-driven pricing system. This choice reflects their mission to build a system that adapts to business needs rather than forcing businesses to conform to existing structures, promoting open architecture, developer-centric approaches, fair pricing, and community participation. By adopting the AGPLv3 license, Lago aims to incentivize community contributions while preventing large companies from exploiting open-source work without giving back. The license requires those who modify the software and use it as a cloud service to make their changes publicly available, thus fostering a sustainable open-source ecosystem. Lago's decision is guided by the need for financial sustainability, allowing them to continue improving their product with community support, while also encouraging corporations to obtain commercial licenses if they wish to bypass copyleft restrictions.

CPQ (Configure, Price, Quote) software is designed to streamline the sales process by automating the creation of accurate, customer-specific quotes, which is essential for converting leads into customers. This type of software enhances efficiency by customizing offers based on customer preferences, calculating optimal pricing according to the company's strategy, and facilitating the swift delivery of quotes. CPQ tools integrate with CRM and ERP systems to create a comprehensive sales system that manages customer relationships, processes, and data across departments. Key considerations when selecting a CPQ solution include its ability to integrate with existing software, automate processes, and offer customization and versatility in handling product catalogs and billing. The guide highlights that combining CPQs with CRMs and ERPs can optimize sales operations by ensuring seamless data flow and informed decision-making, supported by real-time visibility into inventory and fulfillment.

Choosing the right payment gateway for your business involves considering several criteria such as price, device compatibility, currency and payment method coverage, and security compliance like PCI DSS. Businesses often start with a gateway that is easy to implement and later upgrade or add options like PayPal or cryptocurrencies based on user needs. Stripe, though popular for its robust API, locks users into its ecosystem, limiting integration with other payment methods like PayPal. Alternatives such as Paddle, Mollie, and Adyen offer different advantages, including ease of administrative tasks and broader payment method integration, particularly in Europe. Cryptocurrencies are also an option, providing benefits like faster cross-border transactions and lower fees. Lago's open-source, API-first architecture allows for flexibility in choosing and integrating multiple payment gateways, enabling businesses to manage billing and payment processing efficiently.

Lago was founded to revolutionize the billing process by addressing long-standing inefficiencies and limitations associated with traditional billing SaaS, which often fail to integrate seamlessly with other business tools and primarily cater to finance teams rather than engineers. The company emphasizes a programmable, open-source approach to billing, making it more accessible and customizable for developers and software companies, thus enabling them to create unique, hybrid pricing models without extensive engineering resources. By rejecting the conventional 'rent seeker' pricing model, Lago offers its solution for free, with an optional cloud version for those seeking a managed infrastructure, aiming to create a fair and transparent billing system. Furthermore, Lago seeks to foster a community-driven knowledge hub to address billing complexities and edge cases, inviting collaboration and feedback from developers to continuously enhance the platform.

The challenges of automating billing systems for growing companies are highlighted through experiences from firms like Qonto, Pleo, and Algolia, which underscore the complexity that arises as pricing models evolve from simple subscription plans to intricate hybrid models incorporating both subscription and usage-based charges. Key issues include handling billing cycles, managing upgrades and downgrades, calculating usage-based fees, ensuring idempotency to prevent double charges, navigating cash collection intricacies, and dealing with diverse tax regulations. These complexities necessitate significant engineering investment and often lead firms to consider whether to build in-house systems or rely on specialized third-party billing platforms. The text advocates for an open-source billing API approach to offer flexibility and customization in addressing these challenges.

Pricing plans often combine feature gating and usage-based models, requiring careful management of user authorization to control access to specific features or information. While Lago facilitates billing for various pricing structures, it does not directly address authorization, which is distinct from authentication; the former controls user permissions, while the latter verifies identity. Authorization can be complex due to its evolving nature, affecting multiple stakeholders and potentially leading to technical and business challenges. Several services have productized best practices for authorization: Oso offers an open-source approach with a declarative policy language called Polar, Warrant provides APIs for authorization and access control with a self-service dashboard, and Permit.io is a SaaS built on the open-source project Opal. Lago, being an open-source, API-first application, supports integration with these tools and aims to develop native integrations with popular third-party applications.