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Building Monetization Infrastructure in SaaS: Insights from Rob Truesdell, CPO of Pangea Cloud

Podcast·May 23, 2024
Schematic recently sat down with Rob Truesdell, Chief Product Officer at Pangea Cloud, to talk in depth about how he & his team built Pangea's pricing & packaging infrastructure.

The Complexity of Monetization in B2B SaaS

Monetizing a B2B SaaS product is increasingly complex. Rob highlights three core complexities that SaaS companies must address:
  1. Supporting Multiple Go-to-Market Motions: Companies need to cater to different sales approaches, including product-led, sales-led, and channel-led motions.
  2. Hybrid Billing Models: Businesses must be flexible in their billing, offering options such as usage-based, consumption-based, and seat-based billing.
  3. Managing Multiple Products: As companies scale, they often expand their product offerings, which adds another layer of complexity to monetization.

Building Pangea Cloud's Monetization Infrastructure

At Pangea Cloud, the team made a strategic decision upfront to build flexible and scalable monetization infrastructure. Here’s a detailed look at the components and processes they implemented:

1. Microservices Architecture

Pangea Cloud operates on a microservices architecture, which allows customers to interact with their services via APIs. This setup is crucial for the company's metering and billing system.

2. Custom Metering System

Rob and his team developed an in-house metering system that tracks API usage in real-time. This system logs tenant identification numbers and the frequency of API calls, storing the data in a Postgres database. This real-time tracking ensures accurate usage-based billing and also helps monitor product usage.

3. Integration with API Gateway

The metering system is tightly integrated with Pangea's API gateway. Before permitting an API call, the system checks if there is sufficient balance in the customer's account.

4. Flexible Billing with Stripe

For handling payments, Pangea Cloud leverages Stripe. Stripe handles credit card transactions, payment failures, and invoicing based on usage data from the Postgres database.

5. CRM and Marketing Automation

Pangea Cloud uses HubSpot for customer relationship management (CRM) and marketing automation. The integration between the usage data stored in the database and HubSpot enables the team to run automated follow-up playbooks based on customer behavior. This setup helps identify patterns such as load balance warnings, periods of inactivity, and spikes in usage, allowing for timely and relevant customer engagement.

6. Price List Management

An essential component of Pangea's monetization infrastructure is its price list management system. Each service has a price list stored in the database, allowing for flexible pricing models. For enterprise customers, Pangea can customize the price list to meet specific contract terms, while standard pricing applies to other users. This flexibility supports various billing arrangements and discounts as needed.

The Cost of Building over Buying

Developing pricing & packaging infrastructure is a serious & expensive investment. Rob estimates that it required a material investment of developer resources to both build, but also to maintain.
"At Pangea, at least a few engineers dedicated six to twelve months to build the core components of the company's pricing & packaging infrastructure, which involves continuous maintenance."

Conclusion

Pangea's approach to building monetization infrastructure offers valuable lessons for other B2B SaaS companies.
There's obviously a major choice to make: build vs. buy. But from an architectural perspective, Pangea's approach resembles the standard we think all companies should embrace so that they can ensure pricing is decoupled from code and that they retain the ability to control monetization flexibly their business grows and evolves.
For more information about Pangea Cloud and its innovative security solutions for developers, visit Pangea Cloud. You can also connect with Rob Truesdell on LinkedIn or reach out to him directly at rob@pangea.cloud.