
Unexpected challenges of making money on the internet - jenthoven
https://www.kapwing.com/blog/unexpected-challenges-of-making-money/
======
gumby
> Relying on Google and Facebook Identity is not sufficient for some
> professional users...We like that accounts have mostly real names and
> verified email addresses,...but I do think the validity of emails will
> decrease. Takeaway: If you’re creating a sign up flow for your app, you
> should think about these trade offs between social and email-based auth.

This is absurd and shows that they aren't thinking from the perspective of
their users (even though they have an "I really don't want to pay" option).

There are many reasons why people might want not to link everything together;
in fact this is a reason why many prefer paypal (more transactional) to
linking directly to their CC. This is also especially true for low-intensity
sites like this one (you may see the justification for linking Tinder to your
FB account, but you likely use this service much less than you use TInder!).

Secondly, and again related to low-intensity sites: why should they care about
real names?

~~~
jenthoven
Google Accounts are free and simple to create, so if a user doesn't want to
"link everything together" they can create a new separate account that they
only use for Kapwing. Plus, we're aren't "linking" to your Facebook/Google
data; we're just reading your name and email from your account.

We decided to rely on Google and Facebook for three reasons: 1. It's
technically easier, and since so few users care about needed to sign in with
one of them it's a low-priority feature request to add email sign in. 2\. My
co-founder and I worked on Google's identity team for a year. The fact is that
passwords SUCK - people hate them and they lead to a huge amount of friction
in UX. Reducing the number of passwords that a user needs to remember is a
huge benefit. 3\. Having user's "real" identity helps with validating credit
card transactions, sending follow-up receipts and confirmations, and
personalizing the site. If we do one day become a social network, we're less
likely to be taken over by bots.

~~~
gumby
Your blog post already explained why you thought this would be a good idea
from _your_ POV; I was pointing out that it's not uniformly a good idea from
your _customer 's_ POV. But your reply to me was also from _your_ perspective,
not from a wide spectrum of customers'. That's a limit to growth. The friction
of "simply" creating a new account on a different site in order to use yours?
Forget it!

If your business runs the way you want it to then what I'm saying doesn't
matter to you, and shouldn't. I don't mean this as criticism

(BTW I doubt you know about the failure rate because people who don't want to
do that are most likely to silently go away without becoming customers. It's
like a paywall, or those horrible splash screens that you have to click-away
that try to get me to sign up before showing me the content. I simply refuse
to visit those sites (I have a blacklist keystroke) so the people who deploy
those antipatterns don't even know they are missing out on pageviews. Instead
the collect only the positives and reason from there.)

~~~
jrnichols
I'm of the same mindset. I won't make a Google account just for a website
login, and I won't use Facebook login for anything at all after an experience
with winding up in "Facebook Jail" after they decided an image I posted
"violated community standards" and then unable to log into another account I
had tied to Facebook. I don't know if it was a transient issue or what, but it
made me step back from using anything that required such logins.

I run my own email still, and I won't manage to get locked out of my own
stuff. The same cannot be said of Google or Facebook.

------
gomox
> 6\. Many users prefer Paypal to credit cards:

I've had the same experience with my customers. I think Stripe is leaving a
lot of money on the table by not promoting their brand to end users more. As
an informed technical person, I would much rather hand my CC to Stripe than to
PayPal, but Joe Sixpack doesn't feel the same way. Their impression is that
they're giving randome websites their CC information, when actually Stripe's
architecture is very reasonable.

If this affected conversions in a meaningful way for my business, I would have
a hard time justifying not using PayPal instead of Stripe.

~~~
orthecreedence
As a programmer AND a Joe Sixpack, I already have Paypal. They already have my
bank/cc. I'm not going to get rid of it. By going to Stripe, now my attack
vector has doubled.

That said, if there was an alternative that stored my CC info and let me do
one-click buying (does Stripe do this??) that was integrated into 60%+ of
payment systems, I'd gladly use it instead of Paypal, who I've grown to abhor.

~~~
ThrustVectoring
Why are you worried about unauthorized use of your credit card number? Under
US law, you are liable for $0 of the charges. If you lost your physical card
or had it stolen, you're liable for up to $50 of charges made before you
reported it as such.

Legally and financially, if a malicious website uses my card number poorly,
the consequences for me are "I notice an issue and Chase mails me a new credit
card".

 _Debit_ card numbers, sure, that's a whole other ball game. But a credit card
number? IDGAF if it gets stolen. It's not my problem, and I like it that way.

~~~
matwood
> Why are you worried about unauthorized use of your credit card number? Under
> US law, you are liable for $0 of the charges.

While you're correct, it's a huge PITA replacing a CC. I have almost all my
bills going through my CC for points. Then there are places like my crap gym
that charges a fee if the CC is ever denied for any reason.

~~~
edwhitesell
Some (most) CCs will allow prior recurring charges to continue with an
old/lost/stolen CC number for some period of time (potentially until the
expiration date) so you can avoid that headache.

In the case of my AmEx, I have some monthly charges still using an old number
from 3 years and 2 stolen cards ago. Discover used to offer this too, though I
don't know if they currently do.

~~~
matwood
Except I think the vendor has to do something? I know some vendors immediately
start failing and others seemingly work fine. Regardless of whose problem it
is, it becomes a PITA for me.

~~~
edwhitesell
I don't see why the merchant would have to do anything. If the card/bank
allows the transaction, because they recognize the merchant using the "old"
card info it'll go through.

------
probably_wrong
I wonder what's the impact of requiring Google/Facebook accounts to sign up. I
never sign up for anything that requires either, but at the same time I'm not
the target demographic.

I'm also surprised that users would ask for PayPal support. I've read too many
PayPal horror stories to trust them, but apparently users like it.

~~~
yelnatz
I'm a sucker for PayPal.

Most of the time it's 2-3 clicks when I want to buy something off of a random
website, worst case is I have to login again.

Compare that to reaching out for your credit card and putting in your info.
Plus you'd have to trust them now with your CC data.

~~~
literallycancer
>Plus you'd have to trust them now with your CC data.

This is a failure of the CC provider, not that the customer cares. If you use
something like 3D secure, you don't have to worry about the merchant misusing
your data.

~~~
icebraining
Don't underestimate laziness; I've given up on buying stuff just to avoid
getting up from the couch or bed to get my phone :D

It also made purchases with the company CC annoying - couldn't buy anything
when the boss was in a meeting.

------
thisisit
Last two insights alone make this a worthwhile read:

> 8\. Customers are bad at telling you how much they would pay

> 9\. People will pay for things you wouldn’t pay for: When we started
> charging $10/month for our video meme maker (the first Kapwing tool), some
> people on Product Hunt and Hacker News told us we were crazy.

~~~
speby
9 seems mind-blowing to us all at first. When you unpack it a bit more, you
realize that there are literally tens of thousands of different kinds of
business selling so many different kinds of products and services. Ask
yourself, how many of those tens of thousands of businesses are/would you be a
customer of? Your immediate answer is that you're only ever going to be a
customer of a very, very small percentage. Then you ask yourself why are all
the others still in business, then? And it is because of this reason. There
are so many different kinds of needs and wants people have that are unlike
your own and therefore, what you might not pay for, many others very well
might (and do).

------
welanes
> I knew that people’s credit cards failed and changed, but from my own
> anecdotal experience I considered this a rare edge case. Wrong.

This is one of the biggest surprises when you build SaaS. Delinquent customers
average 25% of churn rates.

Banks must be rolling in lost/new card fees.

~~~
greysteil
If you're in the UK / Europe, using Direct Debit is a big win here - bank
accounts don't expire. Something to optimise once you're big, rather than as a
startup, though.

~~~
londons_explore
Gocardless has an API to make direct debit fairly easy for most of europe.

It's only really good for subscriptions rather than one off payments though.
Not knowing if the payment was successful for 5 days is probably the biggest
downside. Very low fees and low churn is the upside.

~~~
aswerty
If you're talking about B2B it's not just subscriptions - any continuous
relationship can be a good fit for direct debits. For example many breweries
in Ireland will sign up their clients (i.e. pubs and off-licenses) via direct
debit. Then if they make a delivery the payment collection will be automated
at the end of the month.

In this situation direct debit gives the vendor the comfort of delivering
goods without payment, and it gives the customer the flexibility of ordering
without having to go through a purchasing process.

------
firefoxd
And here I am, month 4, still coding away and waiting for perfection before I
launch.

~~~
greysteil
Launch! If your experience is anything like mine with Dependabot, optimising
for a big launch is a terrible idea - we spent days fretting about how our
infrastructure would handle the load, only to get zero pickup. Lots of sales
and hustle since then have got us to ramen profitability, but the time we
spent building up to the launch was worse than a waste of time - it made us
way too emotionally invested in an event that was basically pot luck.

~~~
firefoxd
Thanks for your story and advice.

------
mi100hael
Why do users get the option to skip payment and remove the watermark for free?
Stop doing that.

~~~
akassover
Having this option makes me think that maybe the author is having a tough time
being a capitalist. I've come across quite a few people who are uncomfortable
making a profit off of someone else and instead provide the option to give
things away so they don't "feel bad".

------
gwbas1c
I think your pricing model, which includes a per use fee, a monthly fee, and
an annual fee, is ideal.

I personally find the premise of recurring payments insulting when I want to
try something or know I will only use it a few times. There are so many things
that I have not tried, just because I don't want to have to go through the
trouble to cancel it after I've tried it.

So I think your decision to allow me to pay a buck every time I use your
service is very respectful of me and my finances!

------
mpeg
If that's a screenshot of your actual pricing page, you should not highlight
the $2 per video option in green, it makes it more likely people will choose
it.

I don't even understand why have a $2 per video option, it doesn't seem to be
great value to you after credit card processing fees and you say 75% of people
skip the paywall through the "I can't pay" link.

Also if your demographic for monthly/annual payment is creators and social
media marketers, you should focus your marketing site on the tools they might
be interested in. It seems to be your meme maker might have been great for
exposure but it probably doesn't pay the bills? I'd highlight the other tools.

Maybe think about offering integration with third party software that your
paying users are likely to be using as well, as a feature only for the annual
plans, or even as an entirely new plan so keep the current monthly/annual as a
"Creators" plan (give the option to choose payment frequency and default to
annual) and add a new plan at a higher cost (also with monthly/annual choices)
with extra features for people who are putting it on the company card.

Just my 2c, might be completely off the mark because I don't know enough about
your numbers from a blog article, but these are things I've done with my
clients that have worked out.

------
a_imho
_I would personally never pay $10 /month for Kapwing, but I’m also not a
social media marketer and creator that needs the service._

Scratch your itch and all that.

~~~
nicky0
Personal itch scratching is one strategy but scratching other people's itches
is rather a good one too.

------
milkers
Great insights, thanks for the article. It inspires how you can grow
incrementally with a relatively simple product. Could you share your tech
stack?

~~~
jenthoven
Hey, we're using a basic MERN stack (MongoDB, Express, React, Node) and using
FFMPEG on the back end

------
marcus_holmes
key point:

"Customers are bad at telling you how much they would pay"

been there, done it. Got users telling me they'd pay $100/year for the thing,
only to launch the thing and have them waffle about features.

The only way of testing if customers will pay for something is to ask for the
money.

~~~
mooreds
Preferably before you build it.

~~~
pbhjpbhj
As in get them to pay before they can get the product?

Seems like they'll then blame you for not making the product you said you'd
make, if they pay for a product that's made they can't reasonably make that
objection (but could argue misselling I suppose).

~~~
graeme
When you don't charge, users who say "I would buy that" are not actually
saying yes to your marketing pitch. They're usually saying "hmm, seems
interesting"

When you say "preorder now!" the users who pay you money have most definitely
said yes.

Some will be disappinted, yes. But, if you actually have a product, some
people will still be disappointed and want a refund. This is inevitable.

What asking for a preorder does is it filters down to people actually
interested in paying money for your pitch.

------
nickjj
If anyone happens to like Python and wants to bypass a bunch of the challenges
with accepting payments I do have a ~10 hour video course on building a SAAS
app with Flask. The source code in that course has been used in production for
years and is well tested / polished.

Details can be found at
[https://buildasaasappwithflask.com/](https://buildasaasappwithflask.com/)

The course covers a lot of real world features but one thing we do is set up
Stripe for both recurring subscriptions (multiple plans) and one off payments
(microtransactions for the game we develop which is protected by the paywall).
Everything you would expect such as changing subscriptions, billing history,
etc. is included.

Lots of people have taken the course and then went on to build their own SAAS
apps using the course's app as a base app for their project.

~~~
blackrock
What are some of the SAAS apps that they have built?

------
qilo
User's feedback mentions some payment service PayPay in Europe. It's mispelled
PayPal, or some European specific service of which I've never heard of?

------
jgh
Thanks for this article. I'm looking at adding payments to a small project
I've been making so this is really helpful stuff to think about.

------
greysteil
Congrats on Kapwing, and on some really great blog posts! 300% month-on-month
is totally insane - fingers crossed things keeping going so well for you.

------
quadrangle
Unrelated to the main post, a website where you edit video is total SaaSS (see
[https://www.gnu.org/philosophy/who-does-that-server-
really-s...](https://www.gnu.org/philosophy/who-does-that-server-really-serve)
) — it shouldn't be a thing, people should run such software locally

------
ensiferum
It's ok. Little hacker news advertisement should help, right?

~~~
hailk
Advertisement or no, as a person who is still planning the payment model, this
was quite useful.

~~~
knrasgarg
Advertisement jes, but not in the form of traditional advertisement they have
at best a 1% watch to pay rate so advertising by having people spread it in
social media is way more money effective

------
dorianm
If anybody is interested I'm making a new currency called the Points on the
internet, so literally making money on the internet, it's called
[https://pointsproject.org](https://pointsproject.org)

------
sbob
(A) I will almost never use a real facebook or google account on a small site
like this since I will normally expect to be spammed to no end. So normally
for signup I use some disposable gmail account

(B) I certainly prefer Paypal. First I never heard of Stripe before and I
assume that the site will either: (a) try to store my CC info, will get hacked
and I will have to deal with fraudulent charges or (b) keep trying to charge
me after I completely forgot about this service and no longer need it.

(C) If I use a credit card on a site like this it will be a virtual account
number with a single charge limit. This probably explains credit card charge
failures

