Infrastructure Tax Framework
Framework for deciding whether to build own infrastructure or pay network operator fees (10-30% 'infrastructure tax').
Framework for deciding whether to build own infrastructure or pay network operator fees (10-30% 'infrastructure tax'). Based on principle that network operators (Stripe, AWS, Visa, fungi) extract consistent fees because they provide value individual participants can't replicate.
When to Use Infrastructure Tax Framework
Use when evaluating whether to build in-house infrastructure or continue using third-party providers as company scales.
How to Apply
Calculate Current Infrastructure Spend
Sum all fees paid to network operators (payment processing, cloud, logistics, platform fees). Calculate as % of revenue.
Outputs
- Annual infrastructure spend
- Infrastructure spend as % of revenue
Estimate Build Cost
Calculate upfront investment + annual maintenance for in-house solution. Include engineering, compliance, operations.
Outputs
- Upfront investment
- Annual operating cost
Calculate Payback Period
Payback = Upfront investment / (Current annual spend - Projected annual operating cost). Decision rule: Build if payback <3 years AND volume stable/growing. Stay with provider if payback >4 years OR volume uncertain.
Outputs
- Payback period in years
- Build/rent decision
Assess Strategic Value
Even with long payback, build if infrastructure is core competitive advantage. Even with short payback, rent if network effects exist (can't replicate Visa acceptance, AWS scale).
Questions to Ask
- Is this infrastructure core to competitive differentiation?
- Do network effects make replication impossible?
- Is speed-to-market more valuable than cost savings?
Outputs
- Final recommendation