

Ask HN: How do you handle auto renew for SaaS? - chatmasta

If you have an SaaS product (or any product with recurring billing), what is your auto renew policy? Obviously not all forms of payment support it, but for the ones that do, how do you ask the customer if he wants? The options as I see them:<p>- Checkbox at signup, checked by default<p>- Checkbox at signup, not checked by default<p>- Auto opt in, with a note at signup, and an opt-out in client dashboard<p>- No auto billing
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patio11
You prominently disclose that it is priced on a monthly basis and then charge
your customers as agreed. Very rarely, a customer will be very surprised that
SaaS which is priced on a monthly basis means that they will be billed a
second time in the second month. You will apologize to them for the confusion
and ask whether they'd prefer a refund or your software.

This question suggests you may not be psychologically OK with taking people's
money, since approximately every SaaS handles this identically, without drama,
in a fashion which doesn't even seem to be in your solution set. You run a
business. I would counsel coming to the realization that, if you're providing
value to people, it is in fact OK to take their money.

~~~
chatmasta
I am perfectly okay with taking people's money. In fact, in the past I managed
$20,000 of monthly recurring revenue. In that case, it was set to auto bill.
However, I found that many customers, rather than coming to the site or
emailing support to cancel, would simply submit a chargeback on their credit
card. Obviously that did not stop recurring billing, so then they would submit
another chargeback the next month. Sometimes this was compounded by the fact
the credit card was also stolen.

The problem was likely due to cancellation requiring an email to support,
rather than a way to do it on the site. That business was selling proxies to
SEO people. I eventually let it whither because 1) I was not happy with my
customer base's use of the product, and 2) chargebacks got out of control due
to the above fact, combined with fraud. At one point it had a chargeback rate
of 14%, and close to half of those were stolen credit cards. I'm now starting
a VPN business, which will face many of the same problems, so I'm merely
wondering the best way to mitigate this one particular reason for chargebacks.

~~~
NameNickHN
> rather than coming to the site or emailing support to > cancel, would simply
> submit a chargeback on their credit > card. Obviously that did not stop
> recurring billing

Why not? If I receive information that a payment has been stopped, I
deactivate their account and send them an email that their subscription has
been canceled. Unless the customer sends a new payment, the account stays
deactivated and I make a +1 under "Lost Customers".

~~~
chatmasta
The short answer is that the payment system I was using at the time had no
easy way to do this programmatically. Remember, a chargeback is not a missed
payment. I would receive the payment on time, and then some arbitrary 15-20
days later I would get a paper envelope in the mail notifying of a chargeback
with last four credit card numbers XXXX. It was a mess.

But yeah, all these are good points and also reasons I shut down the business.
This time around I can apply all these lessons learned.

~~~
NameNickHN
> This time around I can apply all these lessons learned.

Good luck. :-)

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palidanx
This is how I handled it. As for auto renew, I have it where all saas
subscriptions by default are auto-renew.

1) On credit card submit, I had a checkbox at sign-up NOT checked by default.
Also right next to it was a link to the terms of service they can read.

2) On billing confirmation e-mails, I put a link where they can change their
plan or cancel.

Now here are a couple particular scenarios I've handled

\+ Several customers called in the second month being very surprised they got
charged as they thought it was a one time fee and not a saas subscription. In
both cases, they e-mailed or called me directly. I told them I could refund
their last month's charge and cancel their account.

\+ I had one chargeback, but it was a generally unhappy customer. I let that
chargeback go through, and e-mailed the client apologizing and mentioning I
would not challenge the chargeback.

\---Chargebacks Now in the general case of chargebacks, you can defend against
them (I use Braintree Payments who have been awesome in guiding me through the
process), if you generally do the following

1) State exactly what your refund policy is in your tos. For me, I have a 'we
refund your last month for any reason'.

2) Keep track of your billing e-mails. If the client files a chargeback, the
bank will check to see if the payment has been monthly. If the bank sees it is
a monthly bill, there is a very low chance of them winning the chargeback.

tldr; Make your tos policies as transparent as possible.

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srehnborg
Having sold two different SaaS products over the last few years, I would do a
couple of things.

Make it clear on the website. $20.00/user per month. To most people, that is
clear that they will be charged each month that price.

In addition to that, in your terms & conditions, you can explain the exact
details of the terms.

Depending on the price of the product, I wouldn't waste too much space on the
website explaining that they will be auto-renewed as it should be self
explanatory and it could cause confusion.

Also, do you have a sales team or do you rely on people to just sign up on the
website?

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byoung2
You should try this as a poll:
[https://news.ycombinator.com/newpoll](https://news.ycombinator.com/newpoll)

