Charging Ahead

For Dan Price, the disturbingly young CEO of Gravity Payments, there is no greater calling than that of the small-business owner. Price, the 24-year-old entrepreneur who founded his credit-card processing firm in 2004 while attending college, has a healthy respect for the men and women who run America’s small businesses. These people, after all, are increasingly becoming his main customers.

“I’ve always really liked working with small-business owners, and I’ve always loved innovation,” Price says. Growing up in Nampa, Idaho, Price didn’t need to look far for inspiration. His father, Ron Price, ran a business consulting firm; Dan remembers assisting his dad make a slide-show presentation in Taiwan when he was 9 years old. He went on to run a number of businesses as a boy and got into the payment processing industry in high school.

As a teenager, when he did contract work for a credit-card processing firm, he first became aware of inequities within the industry. “It seemed that small businesses were paying a lot more than large businesses in credit-card processing,” Price says. He also noticed that the large processing firms often levied hidden charges, billed their customers with opaque, confusing statements and simply weren’t listening to their small-business customers’ complaints.

So after his division of the payment firm folded in 2003, Price, along with his brother, Lucas, started Gravity Payments. Their first office was Dan’s dorm room at Seattle Pacific University.

Gravity’s goals were simple: Charge customers less than other competitors, be completely transparent with all billing charges and provide excellent, personalized customer service.
Price’s simplified strategy has brought a stable and fair product to the market in an industry that’s well known for shady business practices. Gravity now has 37 employees serving in excess of 3,000 corporate customers in 48 states. The firm has grown by more than 100 percent in each of its four years of existence.

He is also working to reduce the single biggest marginal cost in the payment processing business: customer turnover. According to Price, the market average is a 25 percent churn per year.

“We’ve found that if we can keep our customers for 25 years, then we can charge about a third of what the traditional market is charging—and we’ll still make a decent profit,” Price says. “So our goal is not to lose more than 5 percent of our customers annually,” a limit that Gravity has stayed under each year.

Price credits part of his success to Gravity’s dedication to its customers. He relates an incident that occurred on Valentine’s Day of 2008, a huge day of revenues for Gravity’s many restaurant-owning customers. The owner of Chez Shea, a romantic restaurant in the Pike Place Market, called Price saying that the restaurant’s land-based phone lines had just failed, rendering their credit-card machines useless. Because Gravity’s tech-support staff was already in the field assisting customers, Price hurried straight to the restaurant with a card-imprinting machine. He stayed on site for hours, processing cards by hand before eventually helping to repair the phone lines.

“My goal when I started the company was to find some way to retire here,” Price says. “That sounds weird, as young as I am, but there’s something really nice about coming to work every day and being really excited to be there, feeling really alive.”

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