src=”https://buffer.com/resources/content/images/2023/08/Xnapper-2023-08-16-09.58.52.png” alt=”Our New Transparent Pricing Dashboard: Where Your Money Goes When You Buy a Buffer Subscription”>
We’ve shared a number of parts of Buffer’s business transparently over the years — and one piece we’ve always wanted to expand on is where your money goes when you pay for a Buffer subscription.
We shared a post about where your money went when buying a $10 Buffer plan back in 2014 — but it was well time for an update.
A lot has changed over the last nine years, and we want to share some of the learnings and insights gained from looking back at our numbers.
We’re also happy to share a more sustainable way of providing this information — our new transparent pricing dashboard. You can refer to it anytime to see where your money goes when purchasing a Buffer subscription, and even look back at previous years to see how things have changed.
How our finances have evolved while staying true to our mission
Looking at our finances over the last nine years, you’ll notice fluctuations within the different categories. The biggest increase you’ll notice will be our employee expenses. Since 2014 our team has grown from 34 to 78 team members. These expenses have also increased as a result of:
- the evolution of our salary formula
- many of our teammates growing into more senior-level roles (and their pay reflecting this!), and
- our commitment to keep up with market rates when it comes to how we pay our team.
Another important detail to note is how Average Sales Price (ASP) and Expenses have changed over time. Our Average Sale Price (ASP) in 2014 was $13, while our total Operating Costs were $3,575,897. In 2022, our ASP was $20, and our Operating Costs hit $19,757,852. While our total Operating Expenses have increased by 452 percent in the last nine years, our ASP has only increased by 54 percent during the same timeframe.
For us, that’s a rewarding indication we’ve stayed true to our mission and strategy to support small businesses. We have intentionally chosen not to go up-market and serve enterprise customers, but rather we are committed to helping small businesses and ambitious individuals grow their brands on social media.
A look at our pricing history
Our ASP also reflects the changes we’ve made to our pricing model over the years. Here’s a look at how our pricing and plans have changed over time:
A closer look at where subscriptions go
Buffer operates as a software-as-a-service (SaaS) company. This means our software is hosted on the cloud and used over an internet connection via a web browser or mobile app. Our hosting costs include service providers like AWS, Cloudflare, MongoDb, Twitter, etc.
At Buffer, we rely on Stripe, Google, and Apple for our payment processing needs. Stripe payments make up 98.5 percent of our total revenue and 83 percent of our fees. Google and Apple payments make up 2.5% of our total revenue and 17 percent of our fees. These platforms are vital in simplifying our payment operations by providing a secure infrastructure to process credit card transactions, handle multiple currencies, and manage recurring payments without complex development. Security and compliance are crucial to us, and using payment processing tools ensures the protection of sensitive customer payment information and maintains regulatory compliance.
Salaries + Employee Expenses
Employee expenses are our largest budget category making up over 80 percent of our total operating expenses. This category includes the cost for our team salaries, payroll taxes, and benefits such as health insurance, employer contributions to 401k and pension plans, and continuing education (like conferences, free books, and coaching!).
Tools + Operations
We use a variety of software tools to support our team and customers. These include admin tools like Slack, Dropbox, Threads, Expensify, and Notion (to name a few!), plus additional tools like Chartmogul, Mixpanel, and Segment.
Each area within Buffer also has various tools to support their needs like our Advocacy team that uses Zendesk to serve our customers and Marketing that uses Customer.io and Pendo for customer communication and engagement.
Several categories of expenses help support Buffer’s overall operations. These include expenses like outside services such as accounting, legal, and consultants. This category also includes our office expenses like business insurance, bank charges, and internet and co-working costs to support our team to work wherever they are happiest.
This category also includes the cost of computers for our team. Each teammate is eligible for a new computer every three years.
Our travel budget includes all costs involved in team gatherings like retreats and meetups. We aim to have one company-wide retreat every year.
Travel is embedded into Buffer’s values—so much so that our entire remote team meets up every year at various spots worldwide. Up until 2016, we had retreats twice a year. But our team grew so large over time that it made a lot more sense to move the gatherings to just once a year. Even though we fully believe we don’t have to be in the same building (or even on the same continent!) to do great work together, it’s remarkable to see the impact a week in the same place has on our team.
Our Marketing budget includes costs for advertising (i.e., paid marketing on platforms like Google and Meta) and costs to support work with a content agency and other consultants like those that provide services for app store optimization.
This category supports the cost of sales taxes in US states where we have reached Nexus (i.e., a business presence in a particular state). We also pay VAT in the United Kingdom. In years where we are profitable, this category also includes income taxes to the US IRS.
Looking ahead at our future investments
When we look ahead to future years, we anticipate that employee expenses will continue to make up the majority of our Operating Costs. We remain committed to paying our team fairly and equitably (and transparently!). Buffer is what it is today because of the strong dedication of our talented team, and our operating costs reflect how much we value each team member who has dedicated their work life to building something special alongside us. We have plans to evolve our current salary formula continually, and we look forward to the day when we can remove the Cost of Living component of our salary formula.
Another item on our minds is that we have some exciting updates coming around equity at Buffer. We hope to introduce an employee buyback program in the next 12 to 18 months once we return to a place of profitability.
We also plan to continue to invest in paid marketing. Over the last 18 months, we’ve made an intentional effort to invest in paid marketing, which includes paid ads primarily through Google Ads. Our average Return On Ad Spend (ROAS) over the last five months is a significant 198 percent. We are also working with several outside marketing consultants to help with content for our blog and Search Engine Optimization (SEO) work. Our marketing budget has really grown in the last two years, but we are seeing this investment pay off.
Another area we anticipate we will continue to invest in is AI. At this point, we have built an AI assistant to generate content for our customers, and we are also using AI internally for areas such as Engineering and Marketing. There are still endless opportunities for AI-powered customer features, and we will continue to build upon what we’ve built. We also foresee that we will build more advanced internal AI tools to serve our customers better and continue exploring how we can utilize AI to expand and improve the in-app support experience.
Lastly, we will continue to invest in team retreats and we are excited that we have already kicked off initial planning for a full company retreat for 2024. In 2022, we kicked off smaller team gatherings as a way to ease back into meet-ups while being mindful of Covid exposure. Our 2024 retreat will be our first full company retreat since 2019, and we plan on budgeting $5,500 per person (roughly $440,000 total).
Over to You
What else would you like to know about our finances at Buffer? Leave a comment below to let us know!
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