The second most popular device plugged into iPhone headphone jacks is also my favorite public company on the market: Square. When Jack Dorsey released their first product back in 2009, it revolutionized how small businesses take payments. From there, they branched out boldly and now offer everything from point of sale hardware to business analytics.
But there's a dark side that creeps up alongside Square's impressive growth. It led to a huge user base of disparate customer types and a pricing page that tries, and fails, to address everyone's needs. In today's episode of Pricing Page Teardown, Peter and I dig into the data to see just what Square can do to solve this problem and move forward as one of the foremost credit card processors on the market.
How much does Square cost?
Square's pricing varies significantly based on which tools you use. The Square Reader hardware is free for magstripe cards, $35 for chip cards, and $49 for chip + contactless cards. The transaction fee to use this hardware is a flat 2.75%.
Square's pricing page is confusing
With so many different types of products, Square has a lot of ground to cover on their pricing page. As a result, the page itself, while well-designed, is an overwhelming experience. If they want to make that page more valuable to potential customers, Square has to make it a lot more targeted.
“I would presume that someone coming to the page is asking 'What does Square offer?' but it is featured in their top-level navigation, which scares the crap out of me.”
At the moment, Square breaks the page up into three separate categories.
- Payments - Breaks down the transaction fees for their different types of products, including Point of Sale, Terminal, Register, as well as industry-specific fees like Square for Restaurants or Square for Retail.
The first section of Square's long-form pricing page.
- Hardware - Gives the prices for their various different devices, including Square Reader for magstripe, Square Reader for chip cards, Square Reader for contactless and chip, Square Terminal, and more
The second section of Square's long-form pricing page.
- Software - Provides information on the various different software options they have, including Analytics and sales reporting, Invoices, Gift Cards, and more.
The third section of Square's long-form pricing page.
Each section includes at least six and as many as fifteen options to choose from and links out to landing pages with even more options. While this is a great way to differentiate their products, any customer coming to their pricing page without a clear understanding of exactly what they need is going to be lost.
It's not surprising that they use Payments as the first section. Their flat percentage transaction fee was one of the key differentiators of their product and a big part of what made them so revolutionary when the product was first released. That's why we looked at what 1,377 current and prospective customers thought was an acceptable transaction fee based on their annual sale volume.
Transaction fee ranges based on annual merchant volume.
Square's transaction fees, which range from 2.5% to 3.5% based on what type of payments are being processed, are right in line for anyone making up to $500K per year. Above that, Square is seemingly overpriced, but they offset it by offering custom pricing for any businesses over $250K. It's this type of dynamic pricing that helps them succeed in capturing those larger volume customers.
What's interesting is that Square, like Braintree, Stripe, and others, still doesn't make a whole lot on these fees. Payments are a highly commoditized market and Square needed to expand into the different hardware and software markets to maintain their growth. As a result, they ended up with a huge userbase with a bunch of different needs and a pricing page that tries too hard to solve everyone's problems all at once.
Square should focus on their personas
“Square has a problem that very few companies actually have, which is that they have major fragmentation across a number of different types of buyers, and that's what causes this problem with their pricing page.”
The beauty of Square is that they've built this enormous base of vendors to support their product growth. Those vendors, however, have drastically different needs from one another. That led to Square introducing more functionality to fit those needs, which translated into more necessary fields on their already complex pricing page. To solve this problem, they really have to go deep with their personas and quantify every different type of buyer they have.
Was it made so complex because Stripe just added stuff to the page as they added vendors? Did Patrick take a guess?
The best way to make their pricing page more valuable is by restructuring it based on what their customers want the most. By surveying current and prospective customers about what they actually needed in Square's wide range of products, we were able to find out how much value Square's customers put on each different need.
Relative preference in certain features based on overall business size.
The clear winner, shown in pink, is More customers, followed by Run business more efficiently and Nurture existing customers. This is great information for Square because it helps them figure out what to put first on their pricing page, and what they should talk about in their value proposition. Right now, you have to scroll almost 20% down the page to get to the first mention of how Square's product helps in customer acquisition.
Instead, they focus more on Run business more efficiently as a unique selling point for their Payments and Hardware, which is definitely not the best choice.
Value matrix showing perceived value of certain features of Square and their corresponding willingness to pay.
Look at the Add-Ons quadrant, where features like Employee Management, Analytics and Reporting, and Payroll all end up. This means that while some people are willing to pay for those features, the large majority of Square's customers are not. From a pricing strategy standpoint, that's okay, they still do a great job of offering these features as upsells, but have still prioritized them too high on the pricing page itself.
The Differentiable Features quadrant is where we see all the customer acquisition tools like Loyalty Module and Marketing Module. Square really needs to start thinking about how they can not only provide these tools to the customer, but feature them more effectively on their pricing page. That's why it's so important that they understand their customer personas better.
With the right, qualified, and deeply researched personas, Square can easily make their current page more targeted. Whether it's creating new pages based on different personas, or helping the customer self-identify as a certain type of potential customer, anything Square can do to showcase the features and products their customers need is a win.
Square's pricing model still needs work
With such a mass of engaged users to nurture and the products to help those customers be successful in their own businesses, Square is in a place where it will be hard for them to lose.
That's why I've given them one of the highest scores I've ever given, an 8.1. All they have to do is focus more on targeting specific buyer personas with the features they know will be appealing, and they'll continue to dominate.