How Jonathan Suter built a company by letting customers pay what they want

Keeping costs super-low allows online tax-filing service SimpleTax to charge customers nothing—unless they feel like paying.

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Jonathan Suter, founder, SimpleTax

By keeping expenses low, Jonathan Suter was able to make his tax-filing service donation-only. (Pooya Nabei)

Jonathan suter founded SimpleTax three years ago with his wife Allison (a former tax attorney) and his childhood friend and coder Justin Reynen. The software earned plaudits for its intuitive interface and pay-what-you can pricing model.

“It was tax season at the time, and I was working on my taxes with a product that no longer exists. I asked Allison, my wife, ‘Why isn’t this getting better?’ For something that needs to get done every year by tens of millions of Canadians, why are we not seeing more innovation in this industry? Surely there must be a better way of doing your taxes than software that was designed 10 or 15 years ago.

Design is very important for us, and I think there’s been a renewed focus on well-designed products over the past few years. It’s very easy for entrepreneurs to continuously add features and new things to their product. But I think it’s important to think about what your product is not going to do. What is it not going to have? So, in our case, we don’t have ads. We don’t have upsells. We got rid of a bunch of unnecessary cruft on the outside of the screen. And we don’t have a price.

Are we going to maximize our profit with the ‘pay-what-you-want’ model? Probably not. But if we get lots and lots of people using our product, a certain percentage will support us. That just has to be larger than our costs, and our costs are very low. The cost for us to process a return for somebody is fractions of a fraction of a penny. We have people who e-mail us begging us to charge money, because they’re petrified we’re going to disappear. But the fact that we’re still here means the model is working.”

READ: Why are some Canadian companies paying almost no tax? »

3 comments on “How Jonathan Suter built a company by letting customers pay what they want

  1. I tried offering that to guests at our Resort over a couple of months a couple of years back and it didn’t work. Guests paid on average way lower than operating costs of the Resort. Many decided to pay nothing. I think guests saw the nice buildings and assumed we were rich or something and felt like we should accept less. I guess if one can hide parts of ones business model it might work, ours was all out in the open. Guests seem happier now that they can see the rate and they know what to pay.

    Reply

    • I agree with you here John, consumers need to have a price or a price range. It is much easier that way.

      Reply

  2. While I agree with the comments about people appreciating price structure and can see how it applies in an industry with high fixed cost and overhead, I don’t think that is necessarily relevant to this model. As the article points out, the costs of processing a return are very low – very different from costs of running a resort. Having used SimpleTax I can say that it is a superior product to other similar products I have paid for in the past. I was more than happy to make a “donation” after completing my return and I was offered a sliding scale of possible options so I did have a framework for deciding how much to pay. Interestingly (and wisely), the suggested amounts were different for my return than they were for my husband’s, presumably because our refunds/income are very different. Seems like a great model for the market they are in!

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