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cloud service billing method

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Gold Contributor
Read Millionaire Fastlane
Speedway Pass
Mar 3, 2013
I'm trying to create a billing method for a web-service. I don't like taking people's money, and then provide a service. I would rather provide a service, and then receive the money. On the other hand, I don't want to give away a service that could cost me a lot of money, without charging for it. I would also like to trust people the more I do business with them. So this is what I have come up with.

The web-service has a $10 signup fee to filter out non-serious people, and give $10 credit to the users. The system also tracks the "Lifetime value" of the customer, which is how much money I have ever received from then. Users can overcharge their account equal to their Lifetime value. So if I have received $200 from them, they can borrow up to $200 in services. Accounts not brought to at least $0 are frozen at the end of the month.

The user pays the $10 signup fee, gets $10 credit. They use $20 of service. They have used up their $10 balance, and borrowed $10, so the final balance is -$10.

At the end of the month, they bring up their account to $0 by paying $10. They now have $20 credit available, and a balance of $0.

The next month, they use their $20 credit, and pay it off at the end of the month, etc.

Activity, Amount, Lifetime value, Balance

signup +$10 10, 10
they use -$20 10, -10
they pay +$10 20, 0

they use -$20 20, -20
they pay +$20 40, 0

they use -$40 40, -40
they pay +$40 80, 0

they use -$80 80, -80
they pay +$80 160, 0

they use -$160 160, -160
they pay +$160 160, 0

This way, the more money they have given me, the more they can borrow per month. This would protect me from someone repeatedly creating accounts and maxing out some free service, and just creating a new account, without ever paying me anything. It would allow the user to not be charged monthly, unless they actually used the service. The low dollar amounts in the beginning, would protect both me and them. No one would get a refund because they borrowed the money to use the system. If they did not pay at the end of the month because of poor service, the account would be locked, and we could part ways.

Perhaps instead of giving 100% borrowing power, maybe only give 50%, like stock brokers do. You pay $100, you get $150 credit.

If a new customer had an immediate need for heavily using the service, they could put in $200, and get $200 in services, and $200 in credit ($400 total). I expect most people would just bring their account $0 each month, but the ability to pay more in the beginning would be there.

Any ideas or suggestions? This would be for a CPU intensive cloud service, so I would have to charge some money up front.

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