Cloudy DevOps company GitLab has removed its $4.00 user/month Bronze/Starter tier, giving users the choice between paying for Premium at $19.00 or downgrading to the free tier and losing some features.
GitLab CEO and co-founder Sid Sijbrandij said yesterday: "The Bronze/Starter tier does not meet the hurdle rate that GitLab expects from a tier and is limiting us from investing to improve GitLab for all customers."
Hurdle rate? This is investment jargon. Sijbrandij linked to a definition which describes it as "the minimum rate of return on a project or investment required by a manager or investor." In other words, GitLab decided it was not making enough money on the $4.00 user/month subscription.
The company's pricing handbook states reassuringly that "when in doubt, we will default to moving features to a lower tier" but the effect of the change is that any features in Bronze that are not in the free tier have been moved up.
How many features? "Each PM went through the buyer based pricing model referenced above for each feature in Starter to determine whether they should be part of Core or Premium going forward. The issue is not public right now, but the output was that all but one feature will be in Premium," said GitLab in response to a question.
Sijbrandij said the price hoist will be mitigated by a transition offer. Existing customers with up to 25 users can renew for one more year at the existing $4.00 rate, or get a free upgrade to Premium along with a staggered discount at the next renewal: $6.00 on year 1, $9.00 year 2 and $15.00 for year 3. Larger customers get the mystery "contact your sales rep" treatment.
Some may manage with the free tier. Sijbrandij said that it has 89 per cent of the features in Starter. GitLab offers the free tier "for a single developer" and as an alternative to GitHub's free tier.
Starter, in the now-deleted description, was for single team usage. Features in Bronze that are in free include requiring approvals on merge requests, pipeline code coverage rates, iterations, assigning multiple people to issues, iterations, assigning weights to issues, repository mirroring, code quality reports, code review analytics and more.
The discussion on GitLab's forum is as you would expect. "There is little explanation as to why a 5x increase in costs to maintain starter features on-prem is justified, beyond gaining additional premium features. It feels like a bit of a kick in the teeth" said one customer.
We will definitely change to Github because there is no reason to pay 19$ for the few features we really need. Maybe [we] will hit the hurdle rate there
Another added: "We will definitely change to Github because there is no reason to pay 19$ for the few features we really need. Maybe will hit the hurdle rate there."
Others were more constructive. "Wouldn't it make more sense to have a base user pricing (dunno 4€/month) and add feature bundles?" said a user.
One complication is that GitLab requires that all users in a group are on the same plan. "My department of 40 does the vast majority (90 per cent plus of all commits/MRs) of the coding in the company, but we enrolled everyone within operations as well so that they could contribute on occasion. The rest of those users are never going to be worth spending $19 a month on, but it really sucks having to put up barriers from people who do like to contribute on occasion," said a user on Hacker News - though the company said it is looking at this use case and may "iterate the pricing".
GitLab is in part an open source product, but the open source version is the same as the free tier, so it is not a way to add features unless developers fancy forking the code.
The company does have a generous free tier, but the disturbing aspect of this is the uncertainty it introduces: price increases are expected but not fivefold increases. Source code is easy to migrate from GitLab to an alternative, but migrating all the other parts of a service that presents itself as a complete DevOps platform is difficult, so there is an element of lock-in.
GitLab is second only to Microsoft-owned GitHub in this market. GitHub is tough to compete with in part because of Microsoft's financial clout and the fact that GitHub is more a strategic asset to win developers than a profit centre.
GitLab intends to become a public company and states in its handbook that "the strength of our business model enables us latitude in selecting a favorable public offering environment and not be beholden to a specific date" – though there was a proposed date of November 2020, which it missed.
It is therefore possible that the company is endeavouring to improve its business model ahead of a public offering. In that light, forcing unprofitable customers either to go elsewhere or to pay more may make perfect sense, though it is not so good for the way it is perceived by the developer community. ®