Payment Architecture

1 Revenue Model Summary

Groundwork monetizes in two distinct layers. The primary revenue driver at launch is a contractor SaaS subscription — contractors pay monthly to access the platform's project management, contract scoring, and homeowner transparency tools. Homeowners are free or lightly monetized, keeping the consumer side of the network frictionless and growing.

Revenue Model Principles

• Contractors pay, homeowners don't have to. The contractor's value proposition — winning trust, getting paid faster, reducing disputes — justifies a real SaaS price. Homeowners experiencing frictionless transparency is the network effect that makes the contractor subscription valuable.
• Annual discounts drive cash efficiency. Two months free on annual plans (roughly 17% discount) improves upfront cash collection and reduces churn risk.
• Usage-based hooks, not usage-based billing at launch. Contract scoring and analytics are quantity-limited by tier, not metered by consumption. Simplicity reduces billing complexity during early growth.
• Premium features are bundled, not nickel-and-dimed. Avoid per-feature charges that create hesitation. Tier jumps should feel like obvious value unlocks.

Revenue Projections (Illustrative)

Projections assume no marketplace revenue. Mix shift to Pro tiers and annual billing materially improves margins at scale.

2 Payment Flow Diagram

The following diagram shows Groundwork's two-stage payment architecture. Stage A (SaaS only) is active at MVP. Stage B (marketplace) represents a future capability requiring substantial infrastructure changes.

Stage A — SaaS Subscription Flow (Current)

Stage B — Marketplace Payment Flow (Future)

3 Pricing Tiers

Groundwork operates four subscription tiers across two personas. Pricing is designed to keep the homeowner acquisition funnel wide while capturing meaningful revenue from contractors who derive direct business value from the platform.

Tier Design Rationale

Upgrade Triggers

In-app prompts should fire at natural moments of friction against tier limits, not on a calendar schedule:

• Homeowner Free: "You have 1 project slot remaining" when creating project #1 — seeds urgency before they hit the wall at project #2.
• Contractor Basic: Contract scoring limit reached (soft block with upgrade CTA, not a hard error).
• Contractor Basic: Team invite attempt when at 2-member limit.
• Contractor Basic to Pro: Advanced analytics page is visible but blurred with an upgrade prompt.

4 Billing Lifecycle

Every subscription passes through a defined sequence of states. Groundwork must handle each transition gracefully — both in the Stripe configuration and in the application layer's access-control logic.

Primary Lifecycle

State Transitions

Lifecycle Detail by Event

5 Checkout Experience

The checkout flow is the highest-stakes UX moment in the subscription lifecycle. Every unnecessary step or unclear message at this point costs a conversion. The design should be frictionless for the contractor persona — typically a skilled tradesperson or small business owner, not a tech-native SaaS buyer.

Checkout Flow Steps

Stripe Checkout vs. Stripe Elements

Payment Methods to Support

• Launch: Credit card, debit card (Visa, Mastercard, Amex, Discover)
• Near-term: ACH bank transfer — relevant for contractors invoicing through business accounts; lower transaction fees for high-ticket annual plans
• Future consideration: Buy Now Pay Later (Affirm/Klarna) not recommended for SaaS subscriptions

6 Refund Policy

A clear, fair refund policy reduces support burden and customer friction. For a SaaS product at early stage, erring toward generosity protects reputation and reduces chargebacks — chargebacks are significantly more expensive in time and Stripe standing than a refund.

Policy Summary

Chargeback Prevention

• Stripe's Radar rules enabled by default — blocks high-risk card patterns before charges occur.
• Clear billing descriptor: GROUNDWORK.APP — matches what users will see on bank statements. Avoid generic corporate entity names that trigger "I don't recognize this charge" disputes.
• Receipt emails sent immediately on every successful charge, with a support link prominently displayed.
• Self-serve cancellation must be easy to find. Hiding the cancel button is a primary cause of chargebacks in SaaS.

7 Tax & Compliance

Sales Tax on SaaS (US)

SaaS is taxable in an increasing number of US states. The rules are inconsistent: some states treat SaaS as a taxable service, others as non-taxable software, and a few distinguish by use case. Managing this manually is impractical beyond a handful of states.

Compliance Posture by Area

GDPR / Privacy (Payment Data)

• Groundwork stores: customer ID, subscription status, plan, and billing period. No card numbers, no bank account numbers.
• Stripe's Data Processing Agreement (DPA) covers Stripe's handling of EU personal data. Groundwork must execute Stripe's DPA if serving EU users.
• Billing data is subject to GDPR right-to-erasure requests, but financial records may be retained for statutory periods (typically 7 years in the US) even after account deletion.

8 Financial Reporting

Groundwork needs a small set of key SaaS metrics tracked from day one. These metrics drive fundraising conversations, pricing decisions, and product prioritization. They should be computed from Stripe data (supplemented by app-level cohort data) and surfaced in an internal dashboard.

Core SaaS Metrics

MRR Movement Categories

Reporting Infrastructure

At MVP, reporting is sourced from Stripe's built-in dashboard and periodic exports. As the business scales, a dedicated data pipeline becomes necessary:

• MVP: Stripe Dashboard + manual monthly export to a spreadsheet. Sufficient for the first 6–12 months.
• Growth: Stripe webhook events → application database → query layer (e.g., Metabase on top of Postgres). Enables cohort analysis and custom segmentation.
• Scale: Stripe → data warehouse (BigQuery/Snowflake) → BI tool (Looker/Metabase). Required before Series A due diligence.

9 Implementation Approach

The following describes the capabilities required to run Groundwork's billing system, followed by a recommendation on which vendor delivers them. Framing this way ensures the capability requirements remain stable even if the vendor changes.

Required Billing Capabilities

Vendor Comparison

Integration Architecture (Stripe)

// Groundwork billing data model (simplified)

User
  stripe_customer_id   // Stripe Customer object
  subscription_status  // active | trialing | past_due | canceled
  plan_id              // contractor_basic | contractor_pro | homeowner_pro
  current_period_end   // Unix timestamp from Stripe
  trial_end            // Unix timestamp, null if no trial
  cancel_at_period_end // boolean

// Webhook handler pattern
POST /webhooks/stripe
  verify signature (Stripe-Signature header)
  route by event.type:
    "invoice.paid"             → provision_or_renew_access(customer_id)
    "invoice.payment_failed"   → flag_payment_issue(customer_id)
    "customer.subscription.deleted" → downgrade_to_free(customer_id)
    "customer.subscription.updated" → sync_plan(customer_id, new_plan)
    "customer.subscription.trial_will_end" → send_trial_reminder(customer_id)

10 Pricing Page Specifications

The pricing page serves two audiences simultaneously: homeowners evaluating whether to invite their contractor, and contractors evaluating whether to subscribe. The page design must address both without confusing either.

Page Structure

CTA Copy Guidelines

Trust Signals

• SSL / Stripe security badge near the CTA buttons
• "Cancel anytime" explicit callout — not buried in fine print
• Short testimonial from a contractor (trade, city, and one result metric e.g. "disputes down 60%")
• Money-back guarantee badge for annual plans (30-day refund window per policy in Section 6)

11 Future: Marketplace Payment Processing

What Changes and Why It Matters

The SaaS model described in this document has Groundwork as a principal — it sells a service, collects subscription fees, and keeps the money. When Groundwork begins holding and disbursing renovation funds between homeowners and contractors, it becomes a payment intermediary. This is a fundamentally different legal and operational position.

Prerequisites Before Enabling Marketplace Payments

1. Legal opinion on money transmission licensing. Some states (e.g., California, New York) have broad definitions of money transmission that may capture renovation payment facilitation. An attorney familiar with payments regulation must review before launch.
2. Stripe Connect onboarding for contractors. Each contractor must complete Stripe's KYC process to receive payouts. This is a UX friction point — plan for drop-off and an onboarding funnel.
3. Escrow / milestone release logic. The core product decision: who triggers release of funds? Homeowner approval, automatic on schedule, or Groundwork arbitration? Each choice has different liability implications.
4. Dispute resolution process. What happens when a homeowner refuses to release a milestone payment? Groundwork needs a documented, fair process before the first payment is processed.
5. 1099-K compliance tooling. Tax year end requires 1099-K issuance to contractors who received $600+. Stripe provides data; Groundwork must have a process to collect contractor tax IDs (SSN/EIN) and file.
6. Insurance and liability review. Does Groundwork have any liability exposure if a renovation payment is processed and the work is not completed? Legal and product must align on the scope of Groundwork's role.

Stripe Connect Implementation Notes (When Ready)

Stripe Connect Express is the recommended starting point for marketplace payouts. It provides:

• Stripe-hosted onboarding for contractors (KYC handled by Stripe)
• Automatic 1099-K generation for contractors crossing IRS thresholds
• Instant or scheduled payouts to contractor bank accounts
• Fee collection via application fees at transfer time
• Dispute handling with clear liability rules

The transition from Billing-only to Billing + Connect on Stripe does not require a processor migration — it is additive. This is a key advantage of selecting Stripe at the SaaS stage.