What are the various monetization methods available to vertical ERPs?

Core SaaS fees, revenue share from processing payments, interchange on card issuing, floats—although it’s getting more attractive with interest rates being what they are—for an early stage company I wouldn't want to hang my hat on that. There's lending, I think different companies are doing interesting things on lending, whether it's, again, variations on merchant cash advances and invoice factoring and lines of credit, or doing it in-house, working with embedded providers to offer that. There's a lot of interesting stuff going on there.

I don't think there's a one size fits all approach to pricing those products, for some sense of the market, and some of those products you may, as a platform, have relatively more or less pricing power. Again, this is the benefit of vertical SaaS is like you get to do the economic sense of the word, like price discrimination against your specific vertical. O

ftentimes, you're not going to be competing against PayPal for the payment process, whatever it is, or accepting payments online, because they're super horizontal. The vertical SaaS or VERP will be serving a very specific type of customer that maybe needs something specific in payments that you can build and then charge more for.

Tipping is an example. I'm just throwing out ideas that may or may not exist, but connecting your payment processing to your balance and then to your payroll and being able to advance funds or move funds faster or whatever it is, that's something that’s offered. Coming back to that, maybe it's so strategic for you to have payments processed on your platform, but maybe for this particular market they can use almost anything, any other product to process their payments, so you want to price at, or even potentially below market for that. 

As an example, I think Square and Shopify both do this, where they have tiered pricing and they know if I'm an eCommerce merchant or whatever it is driving on volume, I'm probably going to get pretty compelling rates on my processing. They want you in the Square or the Shopify ecosystem because they want to upsell you lending products. They want to sell you their payroll products or software products, whatever it is. 

Getting users in through payments is so strategic that they'll often discount that. I don't know to what extent they’re losing money on that, or if it's break-even. That's just to say you should do your own calculation, and understand where, for your particular market, if somebody's willing to or might need to pay above market for a financial product, or you might need a discount because that product category is competitive and, or pretty necessary for your product strategy.