[nkokonas]

well aware of that fact... but the scalability and margins are such that it's still a great business. If I charge flat $ 495 per month for a restaurant but save them $ 100k plus per year then I win all restaurants... incremental costs minimal on the dev side. Hosting is a pass through.

Our booze does not run 80% margins... more like 70% .... and labor crushes it beyond that. Restaurants are lucky to get 10% margins if you are smart. We do better, but we do tickets!

[netcan]

I'm taking a bit of a stab but flat pricing probably works well for you because the profile of a customer/restaurant doesn't vary that much. If a restaurant can't afford or justify $495 per month, they probably aren't a good fit for your product.

'3 full time employees answering phones' was your starting point. I assume that a restaurant with more than 5 is rare and a restaurant with less than 1 full time person on the phone is a bad fit.

You are not losing many potential customers under that size and you are not leaving too much on the table with huge customers.

If you were trying to sell a hotel booking software and wanted to target customers from BnB scale to resort scale, you would need some way of charging bigger customers more, even if the marginal cost to you was the same.

I think the point that Patrick is making with the margin on booze is that similarly to restaurant prices, software pricing (like restaurant pricing) is more "made up" than the price of manufactured goods where a 'rational' pricing model like cost plus can be employed. Most costs are fixed rather than marginal so pointing to the marginal cost is almost like saying software shouldn't cost money.

I think you demonstrate that by selling tickets. Instead of charging patrons by what they order, you charge them by when they come. The 'what' pricing was made up and you made up a different pricing that worked better.

[tb]

You do have a sliding scale, in the form of the hosting cost pass through. Your average restaurateur is entirely unqualified to estimate the AWS hosting costs of your software in relation to his/her restaurant, so these costs are completely opaque. (As patio11 puts it, "Metered pricing is none of predictable, transparent, or fair.") You, on the other hand, probably have a very good idea of the costs relative to e.g. size or popularity of establishment. In the interests of transparent pricing, you ought to consider factoring these costs into your price and charge your customer a fixed predictable amount, tiered according to the relevant parameter.