Setting Markup: What ISOs Actually Charge for Software

Quick answer: ISOs reselling white-label invoicing typically charge merchants $39 to $129 per merchant per month, with the mode around $49-$59. Retail merchants sit lower ($39-$49), B2B sits higher ($69-$129). With $25 wholesale, that's $14 to $104 of software residual per merchant. The portfolio that segments pricing into 2-3 tiers outperforms the one-price portfolio in both revenue and retention.

The first question every ISO asks me when they start exploring software is "what do I charge for it?" The honest answer is "it depends," but that's not useful — so this post is the longer answer, with benchmarks, segment-by-segment math, and the specific pricing mistakes that have killed software programs I've watched.

The unit-economics frame

Invoisure's wholesale price for early-access partners is $25 per merchant per month. That's the floor. The ISO sets the merchant-facing price above that. The difference is recurring software residual on top of processing residual.

Three variables actually matter for pricing decisions:

What other invoicing software costs the merchant. Square's mid-tier is $35-$59/mo. QuickBooks Online is $35-$200/mo depending on tier. FreshBooks is $19-$60/mo. The merchant's reference point is whatever they're paying today.
How much the merchant actually uses invoicing. A merchant who sends 5 invoices a month has different willingness to pay than one who sends 200. Usage maps to willingness to pay almost linearly.
What you're earning on processing residual already. ISOs with stronger processing economics can afford to price software lower and use it primarily as retention; ISOs with thinner processing margins should price software higher because it's where the marginal revenue lives.

What the field actually looks like

Based on early-access partner pricing across the cohort and on conversations with operators considering software programs, the distribution looks roughly like this:

Merchant segment	Typical markup over $25 wholesale	Merchant-facing price	Monthly residual per merchant
Card-present retail (cafes, salons, small shops)	$14-$24	$39-$49	$14-$24
Card-not-present retail (e-commerce, online services)	$24-$34	$49-$59	$24-$34
B2B services (consulting, agencies, professional services)	$44-$64	$69-$89	$44-$64
Higher-AOV B2B (wholesale, trade, complex service contracts)	$74-$104	$99-$129	$74-$104
Multi-location / franchise (per-location)	varies	$49-$79/location	$24-$54/location

The mode is around $49-$59 because most portfolios skew toward retail and card-not-present. But the dollar mass — total monthly residual on the portfolio — is heavily weighted by the B2B segments because the per-merchant numbers are 2-4x higher.

The math, worked

A 200-merchant portfolio with realistic segment distribution:

Segment	Count	Avg merchant price	Avg residual	Monthly residual
Card-present retail	80	$45	$20	$1,600
CNP retail	60	$55	$30	$1,800
B2B services	40	$79	$54	$2,160
Higher-AOV B2B	20	$109	$84	$1,680
Total	200	—	—	$7,240

That's $86,880/year on 200 merchants with realistic segment-based pricing. Compare to the same 200 merchants priced flat at $49 ($24 markup): $4,800/month = $57,600/year. The segmented-pricing approach generates 50% more annual software residual on the same portfolio.

This is why I keep telling ISOs not to set a single price. The one-price-fits-all decision feels simple — it's actually $29,000/year of lost revenue at the 200-merchant mark, and the gap widens at scale.

The three pricing mistakes that destroy software programs

These are the ones I see most often. Each one looks reasonable on day one and looks expensive at month six.

Mistake 1: Pricing below $39 to chase signups

ISOs new to software sometimes try to "make it easy to say yes" by pricing aggressively low — $29, $19, sometimes $9 with the thought that they'll raise prices later. This kills the program in three ways:

Per-merchant economics: at $29 merchant-facing with $25 wholesale, you're netting $4/merchant/month. That's not enough to cover the time you spent pitching them. The unit economics are negative on labor.
Anchoring: the price you launch at is the price the merchant believes the software is worth. Raising from $29 to $59 a year later is a 100% increase — merchants churn rather than absorb that.
Signal: $29 is below what merchants pay for any other invoicing software. They read that as "this isn't valuable" or "this is a side project that won't last."

The right starting price for almost every segment is $39+. Below that, you're worth less than your wholesale supplier.

Mistake 2: Pricing at parity with consumer tools

The other version of this — trying to undercut Square or FreshBooks exactly. "We'll match QuickBooks's $35/month and the merchant will switch."

Two problems:

No reason to switch. Same price, same features (roughly), more friction (the merchant has to learn a new portal). They stay with QuickBooks.
You've left money on the table. The merchant was willing to pay $35. They're often willing to pay $49 because the value proposition isn't "cheaper invoicing" — it's "your processor's brand + integrated support + one bill."

The price doesn't have to be the lowest. It has to be the most coherent for the merchant's situation. "$49, branded to your ISO, with consolidated support, integrated with the processor account you already have" is a more coherent offer than "$35, generic, separate vendor, your bookkeeper handles the integration."

Mistake 3: Bundling software into processing pricing

ISOs sometimes try to simplify by quoting the merchant a slightly higher processing rate that "includes" the software. Common framing: "I'll add a quarter of a percent to your processing, and the software is free."

This is the worst version of the three, and the most tempting to do because it sounds elegant. The problems:

The software residual disappears from the P&L. You can't tell what the software is worth, what the merchant's actually paying for it, or whether to invest more in the platform.
It's harder to upsell. When you offer the merchant a higher software tier later, they have no reference point because they were never paying for software as a line item.
Renewal becomes harder. When the processing rate is bundled, every renegotiation forces both pricing decisions to happen at once. You can never upsell the software without re-opening processing.
The math is worse for the ISO at scale. 0.25% on a merchant doing $50K/month in volume is $125/month from the merchant's perspective. That same merchant might have happily paid $59/month for software separately — but now you're collecting $125 only at the high-volume end of the portfolio, and the low-volume merchants get the software essentially free.

Keep the software as a separate line. Always.

For an ISO running their first software program, here's the framework that consistently performs:

Tier 1: Retail / Starter. $49/mo. For card-present and basic CNP merchants. $24 markup. Lower-touch sales motion, faster close.

Tier 2: Pro / Services. $79/mo. For B2B services merchants, professional services, anyone sending 30+ invoices/month or using recurring billing heavily. $54 markup.

Tier 3: Enterprise / High-AOV. $129/mo. For larger B2B operators, multi-location, wholesale, complex AR workflows. $104 markup.

Three tiers. Clear segment fit. Each tier has the same software underneath — what differs is the merchant's expected usage and willingness to pay, not the feature set.

This isn't optimization. It's just a pattern that works in the field. Once a portfolio crosses 100 merchants on the program, you'll have enough data to refine tier boundaries to match your actual customer base.

When to discount

The honest answer: rarely.

Software pricing tends to set the merchant's perception of what the software is worth. Discounting frequently erodes that perception. There are three legitimate cases:

Pilot/founding customers. Discount the first 5-10 merchants who join, in exchange for testimonials and feedback. This is investment in product feedback, not a pricing decision.
Multi-year commits. Discounted annual or multi-year prepay. Make sure the commit is actually multi-year contractually, not just preferential treatment.
Bundling with major processing volume. If a merchant is bringing significant new processing volume, a software discount can be the closing move. Even here, prefer free months over discounted monthly rates — temporary discounts don't anchor the long-term price.

How to start

If you're an ISO setting prices for the first time:

Run the segment math on your specific portfolio. Pull your active merchants. Bucket them: retail vs. CNP vs. B2B services vs. higher-AOV B2B. Apply the tier prices. The dollar number you see is your steady-state software residual at full adoption.
For the pilot cohort, start at $49 across all tiers. Don't try to set perfect prices day one. The pilot's purpose is to validate the motion, not maximize revenue.
After 60 days of pilot data, tier appropriately for the broader rollout. You'll have evidence by then — what merchants asked about, where they pushed back, which segments converted fastest.

Use the revenue calculator to model what different tier mixes look like. It's the same math from this post in interactive form.

If you want to talk through pricing for your specific portfolio, book 20 minutes with me. I'll go through your merchant mix and tell you what's working in the channel right now at similar portfolio sizes.

FAQ

What do ISOs typically charge merchants for white-label invoicing software?

ISOs reselling Invoisure typically charge merchants between $39 and $129 per merchant per month. The mode is around $49-$59. Retail merchants sit lower ($39-$49); B2B sits higher ($69-$129). With Invoisure's $25 wholesale, that creates $14 to $104 of software residual per merchant.

Should ISOs price the software per-merchant or as part of a processing bundle?

Separate the line items. Pricing the software as a distinct charge keeps it visible on both sides of the relationship, makes it easier to upsell, and isolates the software P&L. Bundling into processing rates obscures both and creates renegotiation problems later.

Should the markup be the same for every merchant?

No. The mistake most ISOs make is one price across the whole portfolio. Different merchant segments have dramatically different willingness to pay. A portfolio segmented into 2-3 tiers consistently outperforms a one-price portfolio in revenue and retention.

What's a good starting price for an ISO's first 10 software pilot merchants?

Start at $49 per merchant per month. That's $24 markup over the $25 wholesale — enough to validate the model without overpricing into resistance. After 60 days, refine to segmented tiers ($49 / $79 / $129).

Are there pricing mistakes that destroy software programs?

Three recur: pricing below $39, pricing at parity with consumer tools (no reason for the merchant to switch), and bundling software into processing rates (loses P&L visibility and upsell flexibility).

Ryan Meo is the founder of Invoisure, a white-label invoicing and payments platform for ISOs, acquirers, gateways, and independent agents. He writes about ISO economics and merchant software. To talk to him directly, book 20 minutes here.