“The permutations of offerings become so varied that it creates a ton of tech debt, or commercial debt, which sucks for engineering, but also slows down the business.” - Bill Boulden, CTO, Favordrop

Customer Overview

Favordrop started as a pay-it-forward board at a bar or restaurant - an easy way to buy your friend a beer. It has developed into a platform to allow businesses to send QR code-based gift cards to show goodwill to their customers. It has quickly found its niche across various small business sectors, including car dealerships, restaurants, real estate agencies, and more. Favordrop’s success lies in its unique ability to adapt to multiple use cases, making it a valuable tool for businesses looking to improve customer engagement through creative gifting solutions.

Before Schematic

Favordrop has had a simple, flat-rate pricing model and a one-size fits all product offering. This approach worked initially but has proved insufficient as the company scaled and its customer base diversified. The company recognized the need for more flexible and nuanced packaging to capture more value and support its growth.

Challenges

• Overly Simplistic Pricing for Differing Customer Cohorts: Favordrop’s one-size-fits-all packaging model did not reflect the diverse needs of its different customers.

• Lack of Usage-Based Metering to Expand: The absence of a usage-based metering system meant that larger customers, who used the platform more than smaller customers, did not contribute proportionally to revenue (and vice-versa).

• Manual Adjustments and Inflexibility: Adjusting features and packaging manually was time-consuming and prone to errors, limiting Favordrop's ability to iterate and respond to market demands quickly.

A pattern for monetization that future proofed the business

Favordrop hit an inflection point where it was clear they needed to evolve pricing and packaging or risk losing existing customers and potential deals. Exceptions and integration glue in the codebase were getting more complex to maintain, and that was spilling over to fragmented manual processes that ate up human hours.

Having seen this problem at prior startups, Bill Boulden, Favordrop’s CTO, knew he preferred to buy a solution rather than build, and also that he badly wanted to avoid ending up in a situation with SKU or configuration sprawl. 

Schematic prevented them from needing to hard-code pricing & packaging in their application and allowed them to centralize much of their billing and entitlements logic in one place. This helped Bill and the team simplify application code with straightforward flag checks and give the business side, led by Lindsey Ziccardi, the ability to deliver customer-centric packaging & pricing across Favordrop’s varied customer types. 

With a pattern in place for monetization and a means to adapt quickly to customer demands, it kick started internal strategic conversations and rapid changes.

“Schematic reduced the burden on everyone involved.” - Lindsey Ziccardi, VP of Operations, Favordrop

Outcomes

• Tiered Packaging Model: Favordrop successfully transitioned to a tiered packaging model, catering to both small businesses and large enterprises. This change allowed them to better capture the value across their customer base.

• Usage-Based Metering: With Schematic, Favordrop was able to implement a hybrid billing model that includes both platform fees and usage-based charges. This ensured that customers who utilized more resources paid accordingly.

• Streamlined Operations: The integration of Schematic with Retool and Stripe reduced the need for manual processes like provisioning and adjustments, enabling Favordrop to be more responsive and efficient in managing customers.

Value Delivered

Schematic provided Favordrop with the flexibility and control needed to optimize their pricing and packaging model. The partnership enabled Favordrop to:

• Maximize Revenue: By aligning pricing and packaging with actual usage and value delivered, Favordrop increased its revenue potential with current and future customers.

• Improve Customer Satisfaction: Tailored tiers ensured that customers only paid for what they used, improving satisfaction and retention.

• Increase Operational Efficiency: Automation and real-time adjustments reduced the burden on Favordrop’s engineering and customer success teams, allowing them to focus on strategic growth initiatives.