banatie-strategy/execution/10-pricing-strategy.md

# Pricing Strategy: Banatie for AI Developers

**Date:** October 20, 2025
**Version:** 2.0 (Hybrid model - Credits + Subscription)
**Based on:** Oleg's personal feedback + Krea.ai model inspiration
**Status:** Draft for validation testing

---

## Pricing Philosophy

**Core insight from ICP research:**
> "Дискомфорт подписки в том, что я не регулярно пользуюсь сервисами и жалко денег когда не пользуюсь"

**Problem with traditional SaaS subscriptions:**
- Episodic usage patterns (site in a weekend, then 2 months idle)
- Guilt of paying for unused months
- Unpredictable usage (one project = 100 gens, another = 5 gens)
- Commitment anxiety (canceling is friction)

**Solution: Hybrid Model**
- **Credits** for episodic users (buy when needed, use over 90 days)
- **Subscription** for power users (regular usage, predictable cost)
- **Free tier** for evaluation (no credit card, instant access)

---

## Tier Structure

### Free Tier: "Playground"

**Purpose:**
- Evaluation, testing, demos
- NOT a long-term free option
- Deliberately limited to push conversion

**Limits:**
- 10 generations per month
- Resets on 1st of each month
- Watermark on images (SynthID by Google)
- All API/MCP features available
- Basic transformations only

**What's included:**
- ✅ REST API access
- ✅ MCP integration
- ✅ Prompt Enhancement
- ✅ CDN delivery
- ✅ @name references
- ✅ Basic transformations (resize, format)
- ✅ Generation history (30 days)

**What's NOT included:**
- ❌ No watermark removal
- ❌ Limited transformations (no custom presets)
- ❌ Priority queue (slower generation)
- ❌ Advanced features (when released)

**Revenue impact:** $0 (cost center)
**Goal:** Convert 10-20% to paid within 30 days

---

### Credit Packs: "Pay As You Go"

**Purpose:**
- Episodic builders (weekenders, hobbyists)
- One-time projects (landing pages, side projects)
- Users who value flexibility over commitment

**Packs:**

| Pack Size | Price | Per-Image Cost | Expiry | Best For |
|-----------|-------|----------------|--------|----------|
| **Starter** | $20 | $0.10 | 90 days | 1-2 small projects |
| 200 generations |  |  |  | Testing value |
| **Builder** | $50 | $0.083 | 90 days | 2-4 medium projects |
| 600 generations |  |  |  | Most popular |
| **Creator** | $100 | $0.067 | 90 days | Large projects |
| 1,500 generations |  |  |  | Bulk work |

**What's included:**
- ✅ All Free tier features
- ✅ No watermark (production-ready)
- ✅ All transformations
- ✅ Extended history (1 year)
- ✅ Priority support (email, 48hr response)

**What's NOT included:**
- ❌ Priority generation queue (Pro only)
- ❌ Advanced features (Pro only, when released)
- ❌ Monthly recurring generations

**Why 90-day expiry:**
- Based on Oleg's Krea.ai feedback: "90 дней достаточно чтобы потом потратить остальное"
- Long enough to not feel rushed
- Short enough to encourage purchase when needed
- Industry standard (Krea.ai, similar services)

**Purchase flow:**
- One-click Stripe Checkout
- No subscription created
- Credits added immediately
- Email receipt + usage reminder at 30 days left

---

### Pro Subscription: "$49/month"

**Purpose:**
- Power users (agencies, frequent builders)
- Predictable cost (easier budgeting)
- Premium features (when released)

**Pricing:**
- $49/month (billed monthly)
- OR $470/year (save $118 = 20% discount)

**What's included:**
- ✅ 500 generations per month (included)
- ✅ All Credit Pack features
- ✅ Priority generation queue (2x faster)
- ✅ Advanced features (exclusive):
  - Flow-based generation (when released)
  - Namespaces / project organization
  - On-demand URL generation
  - Custom style presets (future)
- ✅ Priority support (24hr response)
- ✅ Overage pricing: $0.10/gen (same as Starter pack)

**Why $49:**
- Below Cloudinary ($89/month)
- Above typical dev tools ($20-30)
- Justifiable for agencies (5-10 hrs/week saved = $500+ value)
- High enough to filter hobbyists
- Room for future Enterprise tier ($149+)

**Target customers:**
- Small agencies (3-10 people)
- Freelancers with regular clients
- Technical founders building MVPs full-time
- Developers creating content regularly (blogs, courses)

**Conversion incentive:**
- "If you use >500 generations/month, Pro is cheaper than credits"
- "Get exclusive features not available elsewhere"
- "Cancel anytime, no long-term commitment"

---

## Pricing Comparison Table (User-Facing)

| Feature | Free | Credits | Pro |
|---------|------|---------|-----|
| **Generations/month** | 10 | As purchased | 500 included |
| **Watermark** | Yes | No | No |
| **MCP Integration** | ✅ | ✅ | ✅ |
| **Prompt Enhancement** | ✅ | ✅ | ✅ |
| **@name References** | ✅ | ✅ | ✅ |
| **CDN Delivery** | ✅ | ✅ | ✅ |
| **Transformations** | Basic | All | All |
| **Priority Queue** | ❌ | ❌ | ✅ 2x faster |
| **Advanced Features** | ❌ | ❌ | ✅ Exclusive |
| **Support** | Community | Email (48h) | Email (24h) |
| **Price** | $0 | $20-100 | $49/mo |
| **Best For** | Testing | 1-4 projects | Regular use |

---

## Cost Analysis (Break-Even Math)

### Our Costs Per Generation:

**Gemini 2.5 Flash Image API:**
- $0.039 per image (1024x1024)
- Source: Google Cloud Pricing (Oct 2025)

**Prompt Enhancement (Gemini 2.0 Flash):**
- ~$0.001 per prompt (negligible)

**CDN Bandwidth (Cloudflare):**
- Free tier: 100GB/month
- Estimate: ~2MB per image = 50K images/month in free tier
- After free tier: $0.01/GB = ~$0.00002 per image (negligible)

**Infrastructure (Estimated):**
- VPS: $20/month (Contabo) = ~$0.001 per image at 20K gens/month
- MinIO storage: negligible (1TB = $5/month)
- Database: included in VPS

**Total Cost Per Generation:** ~$0.040

---

### Revenue Per Generation:

**Free Tier:** -$0.040 (loss per image)
**Starter Pack ($20 / 200):** $0.10 per gen → **$0.06 profit**
**Builder Pack ($50 / 600):** $0.083 per gen → **$0.043 profit**
**Creator Pack ($100 / 1500):** $0.067 per gen → **$0.027 profit**
**Pro Subscription ($49 / 500):** $0.098 per gen → **$0.058 profit**
**Pro Overage:** $0.10 per gen → **$0.06 profit**

---

### Break-Even Analysis:

**Fixed Costs (Monthly):**
- Infrastructure: $20 (VPS)
- Stripe fees: ~3% of revenue
- Oleg's time: N/A (sweat equity)

**Variable Costs:**
- Gemini API: $0.04 per generation

**Scenario 1: 100% Free Tier (Worst Case)**
- 100 users x 10 gens = 1,000 gens
- Cost: 1,000 x $0.04 = $40
- Revenue: $0
- **Loss: -$60/month**

**Scenario 2: 50% Free, 50% Paid (Realistic Early)**
- 50 free users x 10 gens = 500 gens (cost: $20)
- 50 paid users x 100 gens avg = 5,000 gens
  - 30 users buy $20 pack = $600 revenue, 6,000 gens, cost $240
  - 15 users buy $50 pack = $750 revenue, 9,000 gens, cost $360
  - 5 Pro subscribers = $245 revenue, 2,500 gens, cost $100
- **Total Revenue: $1,595**
- **Total Cost: $20 (infra) + $720 (API) = $740**
- **Profit: ~$855/month**

**Scenario 3: PMF (6 months in)**
- 200 free users = 2,000 gens (cost: $80)
- 80 Credit Pack users = $3,200 revenue, 30K gens, cost $1,200
- 20 Pro users = $980 revenue, 10K gens, cost $400
- **Total Revenue: $4,180**
- **Total Cost: $20 + $1,680 = $1,700**
- **Profit: ~$2,480/month**

**Break-even:** ~10-15 paying customers ($300-500 MRR)

---

## Pricing Psychology

### Why This Structure Works:

**1. Anchoring:**
- Free tier = "anchor low" (10 gens feels limited)
- Pro tier = "anchor high" ($49 feels premium)
- Credit packs = "middle option" (most choose Builder $50)

**2. Value Perception:**
- "No watermark" = tangible value (production-ready)
- "Priority queue" = time savings (valuable for agencies)
- "Exclusive features" = FOMO (Pro only)

**3. Decision Simplification:**
- Only 3 paid options (not 6-7 like some competitors)
- Clear use case per tier (testing → projects → regular use)
- Easy to upgrade (credits → Pro seamless)

**4. Commitment Gradient:**
- Free → try instantly (no credit card)
- Credits → low commitment (pay once, use when needed)
- Pro → higher commitment (monthly, but cancel anytime)

---

## Competitor Pricing (Benchmarking)

| Service | Model | Price | What You Get |
|---------|-------|-------|--------------|
| **Cloudinary** | Subscription | $89/mo | 25GB storage, 25GB bandwidth, transformations |
| **imgix** | Subscription | $62.50/mo | Image optimization, CDN, transformations |
| **Replicate** | Pay-as-you-go | $0.055/gen | Flux Pro generation only, no CDN |
| **Gemini Studio** | Free/Usage | $0.039/gen | Direct API, no infrastructure |
| **Midjourney** | Subscription | $30/mo | 200 fast gens, image generation only |
| **Krea.ai** | Hybrid | $10/mo + packs | Realtime gen, credits for video |

**Banatie positioning:**
- More expensive than pure gen APIs (we bundle CDN + automation)
- Cheaper than full image platforms (Cloudinary, imgix)
- Similar to Krea.ai (hybrid model resonates with creators)
- Higher value than Midjourney (programmatic, production-ready)

---

## MCP Access Strategy (Revised)

**Original plan:** MCP only for Pro tier
**Oleg's feedback:** "MCP должно быть бесплатно, это маркетинговая фича"

**New strategy: MCP on ALL tiers ✅**

**Why this is correct:**

1. **Viral adoption:** Developers try MCP → share with others → network effect
2. **Can't restrict:** If API is open, community will build MCP anyway
3. **Marketing asset:** "First AI image gen with native MCP support"
4. **Trust building:** No artificial feature paywalls (developer-friendly)

**How to monetize without MCP paywall:**
- Free tier: Limited generations (10/month) → forces upgrade
- Credits: Episodic users buy when needed → flexible revenue
- Pro: Heavy users subscribe → predictable MRR

**Features exclusive to Pro (after launch):**
- Priority queue (2x faster generation)
- Flow-based generation (complex workflows)
- Namespaces (project organization)
- On-demand URL generation
- Custom style presets

**These are legitimately advanced, not artificial restrictions.**

---

## Pricing Page Copy (Draft)

### Headline:
"Start free. Pay only when you need it. Or subscribe for heavy use."

### Subheadline:
"No credit card required to try. Production-ready images with MCP, API, or UI."

---

### Free Tier Card:

**Playground**
**$0/month**

Perfect for testing and small demos

- 10 generations/month
- MCP + API + UI access
- Prompt Enhancement
- CDN delivery
- Watermark on images

[Start Free →]

---

### Credit Packs Card:

**Pay As You Go**
**From $20**

Buy credits when you need them

- 200-1,500 generations
- No watermark (production-ready)
- All transformations
- Valid for 90 days
- No recurring charges

[View Packs →]

---

### Pro Subscription Card:

**Pro**
**$49/month**

For regular builders and agencies

- 500 generations/month included
- Priority generation queue (2x faster)
- Exclusive features (Flow, Namespaces)
- $0.10 per additional generation
- Cancel anytime

[Start Pro Trial →]

---

## FAQ (Pricing-Related)

**Q: Can I switch from credits to Pro subscription?**
A: Yes, anytime. Unused credits remain valid for 90 days.

**Q: What happens if I run out of credits?**
A: Generations pause until you purchase more credits or upgrade to Pro.

**Q: Can I use Pro subscription + buy extra credits?**
A: Pro includes 500 gens/month. After that, it's $0.10/gen automatically. No need to buy packs.

**Q: Do unused Pro generations roll over?**
A: No, but overage is only $0.10/gen (same as credit packs).

**Q: Can I cancel Pro anytime?**
A: Yes, cancel anytime. You keep access until end of billing period.

**Q: Is there a refund policy?**
A: Credit packs: No refunds (digital goods). Pro: 14-day money-back guarantee if <50 generations used.

**Q: Can I share credits with team members?**
A: Not in MVP. Team features coming soon for Pro+ tier.

**Q: Do credits expire?**
A: Yes, 90 days from purchase. You'll get email reminders at 30 days and 7 days before expiry.

**Q: Is there an Enterprise plan?**
A: Not yet. Contact us if you need >10K generations/month or custom features.

---

## Pricing Experiments (Post-Launch)

### Month 1-2: Validation
- Test current structure
- Track conversion rates (Free → Credits, Free → Pro)
- Identify most popular pack (likely Builder $50)

### Month 3: A/B Test
**Test A:** $20 / $50 / $100 packs (current)
**Test B:** $15 / $40 / $80 packs (10% cheaper)
- Measure: Revenue per user, conversion rate

### Month 4: Pro Tier Test
**Test A:** $49/month for 500 gens
**Test B:** $39/month for 400 gens
- Measure: Pro adoption rate, MRR growth

### Month 5: Annual Discount Test
**Test A:** 20% discount (current: $470/year)
**Test B:** 30% discount ($410/year)
- Measure: Annual vs. monthly ratio, LTV

---

## Pricing Flexibility (Dynamic Adjustments)

**When to increase prices:**
- If profit margins <30% (Gemini API costs rise)
- If demand significantly exceeds supply (resource constraints)
- After strong PMF signals (low churn, high NPS)

**When to decrease prices:**
- If conversion rate <5% (Free → Paid)
- If competitor undercuts significantly
- If usage patterns show lower value perception

**When to add tiers:**
- **Hobbyist tier ($10/mo for 100 gens):** If many users want smaller commitment than $49
- **Agency tier ($149/mo for 2,000 gens + team features):** After agencies start adopting
- **Enterprise tier (Custom):** After 50+ Pro users, inbound agency interest

---

## Revenue Projections

### Conservative (Months 1-6):
- Month 1: 10 paid users = $300 MRR
- Month 2: 20 paid users = $700 MRR
- Month 3: 35 paid users = $1,200 MRR
- Month 4: 50 paid users = $1,800 MRR
- Month 5: 70 paid users = $2,400 MRR
- Month 6: 90 paid users = $3,000 MRR

**Assumptions:**
- 70% credit packs ($30 avg), 30% Pro ($49)
- 10% monthly growth (conservative)
- 5% monthly churn

---

### Optimistic (Months 1-6):
- Month 1: 20 paid users = $600 MRR
- Month 2: 40 paid users = $1,400 MRR
- Month 3: 70 paid users = $2,200 MRR
- Month 4: 110 paid users = $3,500 MRR
- Month 5: 160 paid users = $5,200 MRR
- Month 6: 220 paid users = $7,000 MRR

**Assumptions:**
- Viral growth via Reddit, MCP adoption
- 60% credit packs, 40% Pro
- 20% monthly growth (strong PMF)
- 3% monthly churn

---

### Realistic (Split the Difference):
- Month 1: $450 MRR
- Month 2: $1,050 MRR
- Month 3: $1,700 MRR
- Month 4: $2,650 MRR
- Month 5: $3,800 MRR
- Month 6: $5,000 MRR (**TARGET**)

**Key milestone:** $5K MRR by Month 6 = Proof of viability

---

## Stripe Setup (Technical)

### Products to Create:

**1. Credit Packs (One-time payments):**
```
Product: Banatie Credits - Starter Pack
Price: $20.00 USD
Type: One-time
Metadata: { credits: 200, expiry_days: 90 }
```

```
Product: Banatie Credits - Builder Pack
Price: $50.00 USD
Type: One-time
Metadata: { credits: 600, expiry_days: 90 }
```

```
Product: Banatie Credits - Creator Pack
Price: $100.00 USD
Type: One-time
Metadata: { credits: 1500, expiry_days: 90 }
```

**2. Pro Subscription:**
```
Product: Banatie Pro
Price: $49.00 USD/month
Type: Recurring (monthly)
Metadata: { included_credits: 500, overage_rate: 0.10 }
```

```
Product: Banatie Pro (Annual)
Price: $470.00 USD/year
Type: Recurring (yearly)
Metadata: { included_credits: 500, overage_rate: 0.10 }
```

---

### Webhook Events to Handle:

**checkout.session.completed:**
- Add credits to user account
- Set expiry date (+90 days)
- Send confirmation email
- Log transaction

**customer.subscription.created:**
- Activate Pro tier for user
- Reset monthly generation counter
- Send welcome email

**customer.subscription.deleted:**
- Downgrade to Free or Credits
- Send cancellation confirmation

**invoice.payment_succeeded:**
- Reset monthly generation counter (for Pro)
- Charge overage if applicable
- Send invoice receipt

**invoice.payment_failed:**
- Suspend Pro tier
- Send payment failure notification
- Retry payment (Stripe handles)

---

## Pricing Strategy: Key Decisions

### ✅ CONFIRMED:

1. **Hybrid model (Credits + Subscription)** - accommodates episodic AND regular users
2. **MCP on all tiers** - marketing asset, can't be restricted
3. **90-day credit expiry** - based on Krea.ai feedback from Oleg
4. **Free tier with 10 gens/month** - enough to test, not enough to abuse
5. **Watermark on free tier** - clear upgrade incentive
6. **$49 Pro tier** - positioned between dev tools ($20) and platforms ($89+)
7. **No fake scarcity** - transparent, developer-friendly pricing

### â³ TO VALIDATE:

1. **Credit pack sizes** - are 200/600/1500 the right amounts?
2. **Pro inclusion (500 gens)** - is this the sweet spot or too low/high?
3. **Annual discount (20%)** - does this drive annual commitments?
4. **Overage pricing ($0.10)** - acceptable or feels like nickel-and-diming?

### ðŸ"® FUTURE:

1. **Hobbyist tier ($10-20)** - if demand shows for lower entry point
2. **Agency tier ($149+)** - when agencies start adopting
3. **Enterprise tier (Custom)** - SLA, SSO, white-label
4. **Volume discounts** - for high-usage customers (>10K gens/month)

---

---

## Alternative Approach: Single Tier Launch (For Consideration)

Before launch, it's worth considering an alternative strategy: start with **one paid tier only** instead of three (Free, Credits, Pro).

**Rationale for Banatie:**

1. **Faster willingness-to-pay validation:** With a single paid tier ($49/mo for 500 generations), we immediately learn whether people are willing to pay for the solution. A Free tier can create an illusion of demand from users who will never convert.

2. **Lower complexity in MVP:** One pricing tier means less code (no tier logic, no credit system, no watermark implementation), which is critical with limited time availability (15-20 hours per week).

3. **Focus on the right customers:** A $49/month price point automatically filters out freebie seekers and attracts those who genuinely value solving their problem. These are exactly the customers whose feedback matters most for PMF.

4. **Flexibility for evolution:** After 10-20 paying customers, we'll hear their real requests: "I need it cheaper" → add Credits tier, "I need more volume" → add Pro+ tier, "let me try for free" → add Free tier. Building based on actual demand is more reliable than building on hypotheses.

5. **Reduced operational risk:** With a constrained budget ($6K/month sole income), every free user = Gemini API cost with no return. A single paid plan minimizes losses during the validation phase.

**When to expand tiers:** After observing patterns in requests from the first 10-20 customers. If they ask for "cheaper for one-off projects" → add Credits. If they ask for "trial without commitment" → add Free tier. This is a data-driven approach instead of guesswork.

**Decision:** Discuss after ICP validation completion. If the killer use case turns out to be "professional assets for client projects" → single paid tier is optimal. If the killer use case is "quick experiments for A/B testing" → Free tier might be justified for virality.

---

**Document owner:** @men (based on Oleg's feedback)
**Next review:** After beta testing (Month 2-3)
**Related docs:** `strategy/07-validated-icp-ai-developers.md`, `execution/09-mvp-scope.md`