For anyone wondering about pricing, here's our approach.
- For new Stripe customers, this is free up to the first (lifetime) $1M of payments.
- For existing customers, there's no pricing change. You just get more functionality than before for free. This is what we generally try to do: we want Stripe to continually become better value for you over time, as you get more functionality for the same price.
- What we've seen over Stripe's history is that customers handling large amounts of revenue have been forced to pay substantial amounts for expensive third-party systems. So, we've decided to build something that we think will be better and cheaper -- and that will, over time, increase the net revenue of businesses built on Stripe.
I'm sorry about any confusion in our communication around this!
I couldn't believe my eyes when I read that you weren't returning fees anymore. I get not returning the flat 0.30 transaction fee, but not returning the % fees smacks of being more worried about the corporate bottom line than customers. Many processors refund the % fees, and there's no way you couldn't negotiate special dispensation with "the various payment partners we work with" to at least be able to return the % fee.
I used to unabashedly recommend Stripe as the best payment processor -- a little expensive on the rate, but easy to set up and no monthly or hidden fees to worry about.
That changed as soon as I had my first new customer screaming about getting whacked with fees on a refund. Didn't affect my account, and your messaging was horrible on that change as well, so I blissfully recommended unaware of the change until a new customer to whom I'd sung the praises of Stripe got hit and had to yank all of the Stripe code and go to a direct processor.
Just because you grandfather existing customers doesn't mean you get off scot-free on unfavorable policies.
My recommendation immediately changed to only use Stripe if access to special niche features like Stripe Connect or non card payments were required, and otherwise use a direct card processor with defined fees (and much lower rates, like 0.5% lower at least).
Clearly your focus has changed from doing right by the little guy to "customers handling large amounts of revenue" and policies tilted toward the bottom line vs "rightness". That's fine, and a natural part of many corporations during growth... Just telling you how it's affected my perceptions of Stripe and my recommendations to customers.
Edit: See also https://news.ycombinator.com/item?id=16772655
For example, these guys: https://www.netcompaysystem.com
And many of these processors will give you gross deposit which is the only way to make things easy for an accountant. The net fees model Stripe uses is a nightmare for reconciliation at any sort of scale.
This isn't to say I've abandoned Stripe entirely -- there are some cases where it makes sense, when you're actually using some of the advanced features and API, not just a straightforward card charge.
I just completed a Stripe Connect integration that handles millions a month for several clients... but even there you run into half baked/stapled on feelings when you try to produce a full featured process that works at scale. For example, there's no straightforward way to provide a batch report for a Stripe Connect client -- the charge ID's don't match up with the platform account, and the only way to fully map which charges/refunds/chargebacks are in a given deposit for the client account is to link them up by amount and date/time....
Btw, I was at the Stripe offices 2 years ago and it was an amazing experience. I really like what Stripe has done over the years. Keep it going and thanks!
Ahem, Stripe team. May I have your attention?
Could you please, please, please do something about helping your customers with calculating, charging, and tracking VAT to EU countries? It is currently a glaring omission from your services.
I know it's in the main Stripe API, but if I'm going to have to roll my own integration, I'm just going to go use PayPal.
PayPal has much cleaner API for non-card payments.
With Stripe I need two different codepaths for bank payments and cards....
On the UI side, mind shooting me an email at firstname.lastname@example.org? I can share some stuff we're working on!
Be aware, fellow Europeans: there is a cost to all regulation. If you feel like a constant afterthought, maybe it’s because you are.
(I know these are not necessarily specifically related to this Stripe product. It’s more of a cultural undertone. What I’m trying to say is: the parent comment has a point.)
There must be a happy medium between the two positions, I don't know that a country has gotten it right yet but the US is no paradise.
I really think it comes down to legislation philosophy. In the english speaking countries, cost of compliance is something that is thought about for small businesses, so many regulations are small business exempt until you get to certain employee counts or revenue numbers.
In the EU, that concept doesn't seem to exist and businesses of 1 are assumed to be $100M revenue businesses that can afford to do things like GDPR properly.
Edit: had to verify. It seems a bit more reasonable: """Article 83 of the General Data Protection Regulation provides details of the administrative fines. There are two tiers of fines. The first is up to €10 million or 2% of annual global turnover of the previous year, whichever is higher. The second is up to €20 million or 4% of annual turnover of the previous year, whichever is higher.""" - https://www.gdpr.associates/what-is-gdpr/understanding-gdpr-...
Also the GP post, there is more than 'avoiding collecting data'. If you have text field comments form and a 3rd party puts 'personal data' in that, then that is GDPR liable! You also need audit logs and and list of other requirements that needs multi engineer teams to implement properly.
As a result, most small businesses with email are probably not going to be properly compliant on some level and you can prosecute anyone. Just like the new-ish VAT laws, large stores are going to be compliant because they can afford it, while some petty bureaucrat will prosecute the small online shops instead.
=max(whatTheJudgeThinks, max(10mEUR, 0.02*turnover))
And claiming that regulation in EU is stifling business is a bit naive. Regulation is everywhere. Have you ever tried to sell an app that uses encryption (like TLS or SSH) on the app store? The stuff you need to do in the US for „export compliance“ is ridiculous (even if it‘s an app that wasn‘t written in the US in the first place)
Remember the EU Single Market and Custom Union does not cover every aspect of commerce and industry across all 28 member states.
Having said that, the Payment Services Directive 2 (PSD2) which applies to Stripe, will remove any remaining barriers and costs that still exist between member states when applied to the provision of electronic payments. If one was to add in the eIDAS directive then meeting compliance for identity, fraud, etc will soon be irrelevant.
I'd also like people to name specific regulations they disagree with, yet any time I challenge s/o they slink away.
In this case, a stripe rep in this thread posted a list of their todos for the EU. Note that literally "putting VAT ID numbers on invoices" makes their top 5! Can't be that bad after all:
"localize the invoices, add EU specific payment methods to invoices, improve tax support, make default invoice templates EU compliant with VAT ID"
US requirements around what we put on invoices: 0
EU requirements around what we put on invoices: Still figuring it out
The technical implementation is not difficult. It's dealing with all the lawyers and accountants who have to understand regulations of 27 different countries.
There is a significant difference between "not regulated" and "regulated at all". The burden of understanding the regulation itself is a cost, even if the actual compliance turns out to be simple.
There are two big differences.
Let's say I'm selling some digital good online. Consider three purchasers, one in the US in the state of Washington, one in Germany, and one in France.
First, how much tax do I have to collect from each?
For the German customer, that is easy. It is 19% VAT. I don't have to care where in Germany they live.
For the French customer, that is easy. It is 20$ VAT. I don't have to care where in France they live.
For the US customer in Washington...it is not easy. There is a state wide 6.5% sales tax, but there are also county, city, and other sales taxes that I have to collect. For example, if the customer is in the city of Seattle, I'm supposed to collect the 6.5% state tax, plus a 2.7% city tax, plus a 0.4% for something called the "Regional Transit Authority"...that's 9.6%. If that person is over in Bellevue instead of in Seattle, it would have been 10% (6.5% state, 3.5% Bellevue).
For the US customer, I have to care where in their state they live. Also, tax boundaries are not guaranteed to line up with postal code boundaries, so to do that tax accurately I really would need to collect their full postal address (which since I'm selling a digital good I have no use for except for calculating taxes).
Second, what do I do with the tax I collect?
For the EU, I sign up for the VAT MOSS system in a single EU country. Then each quarter I have to file a simple form with the tax authorities in that single EU country that simply lists each EU country, what my total taxable sales were in that country, the VAT rate I used, and the amount of VAT collected. I turn the collected VAT over to that single country's tax authorities. Then they deal with distributing it to all the other countries.
For the US...I have to deal with each state I collect tax for separately. Each has its own forms. Each has its own place to file them. Each has its own place to pay.
If you have to deal with more than just your own state and maybe a handful of others in the US, you pretty much have to use a third party service that specialized in handling all of this. For companies in lines of business that are only barely profitable, this could be prohibitively expensive.
If Congress ever decides to require online companies to collect tax for all states, instead of just those that they have a presence in, and they do not require that the states use something like the VAT MOSS system, and they do not require that each state has a single rate for out-of-state non-present sellers, it's going to be nightmare for small companies, and possibly drive many out of business.
Fortunately, there’s almost no enforcement at all with respect to small- to medium-sized businesses collecting and reporting interstate sales tax. Do the best you can with it.
Is there anything like it in Germany?
It's not as hip and fashionable as Stripe, but does work fairly well. They do subscriptions, but I had to take care of invoicing myself.
The email that existing customers received was ambiguous on this point. It said this: "Since you used Stripe Subscriptions in the past year, the Stripe Billing Starter plan is included in your current pricing."
Many existing customers that rely on basic subscriptions probably think their rates are about to go up. Maybe you guys need a follow-up email to explain that they're not?
I'm glad that I now know the answer, but I would've been asking Stripe support if I hadn't stumbled across this by chance.
Thanks for clearing up the communication on this! I've been a happy Stripe user for years, now!
Stuff like this is part of the reason I love Stripe so much.
we use stripe subscriptions now quite a lot, and I'm a bit worried about the whole invoice pricing - could you please clarify that a bit?
the web site says invoices are free for up to first 2K, then $1 per invoice. our recurring charges to customers now are around $2.99 per month, I hope you're not planning to take $1 more away from that. does the invoice price apply for each recurring payment cycle, or am I reading something wrong here?
Any thoughts on either acquiring https://baremetrics.com/ or creating similar functionality within Stripe?
Seems like a natural extension to Billing to also have Revenue Analytics.
Its a lot better, cleaner, more featureful and it's free.
Baremetrics is a great "early release" product, but we don't see development on it, nor even a hint at a roadmap. Profitwell has a lot more features (Paypal support, customer tracing, a powerful UI, etc) and we constantly see new features being added.
I could tell you the same stuff I said when we unsubscribed: Paypal support, a better API, "cancel at period end" support (which Profitwell does have), etc... Wish you well with it, and I hope for your success as I really like how transparently you run Baremetrics, but the product just doesn't cut it for us. And I think you should definitely pay attention to what Profitwell is doing (or any competitors really).
Since January we've been on a roll, releasing a slew of new features and updates and have a ton more on the way.
Certainly wish we'd handled that big rewrite differently since it did leave a bad taste for some folks, but it is what it is. ¯\_(ツ)_/¯
The features that are crucial to one business are inconsequential to others, so I appreciate your perspective on what you guys really need.
Would love for you to give us a try again down the road and thanks again for taking the time to give feedback!
As an outsider, comparing BareMetrics vs Profitwell - all I have to say is thank you for 2 specific reasons.
1. BareMetrics has a live demo. Profitwell tried to make me schedule a call with a sales person just to view the product.
2. BareMetrics has simple pricing. With Profitwell, I literally couldn't figure out how much it'd cost if I were to use them.
I know you wrote this to Josh, but just jumping in here to address the ProfitWell side. :)
1. You're 100% right. We don't have a live demo. We're working on a solution for you here, but it's been delayed for some other cool features. Happy to share when we launch something for you. I know a call can be annoying, but it wouldn't be a sales person. Most metrics demos are from our product/engineering team. :)
2. As for pricing - we don't typically hear it's confusing, but it's 100% free forever. We make money through our add-ons. There's definitely something here to get better at though, so I'll take this back to the team to make it rock.
The short answer to your question is, “Yes.” The long answer is:
> INFORMATION SHARING
1. With Third Parties:
We may share your information with third-party business partners...
2. With Service Providers:
We may share your information with third parties who provide services on our behalf...to which these services may include:
Providing customer service
Sending marketing communications
Conducting research and analysis
Providing cloud computing infrastructure
...which also means, “Yes.” In particular, “research and analysis” is not clarified (nor would a clarification outside the formal ToS be legally binding). As long as there is a defensible interpretation of these clauses, they can freely sell all of your information. This also might be of interest to you:
> We will respond to your request within a reasonable timeframe. In certain circumstances we may be required by law to retain your personal information, or may need to retain your personal information in order to continue providing a service.
There is a legitimate reading of this clause which allows ProfitWell to retain your data indefinitely because they’re providing a service to someone.
From a terms perspective, we don't access someone's account unless given permission for QA, analysis, and the like. We do aggregate data for research purposes, but there needs to be a minimum of 30 companies in that data set and if you'd like to opt out of that we're more than happy to sign/put together custom Ts&Cs, which we do with almost every company that requests one.
From a monetization perspective, we do offer a service to _someone_ - our customers. We sell Price Intelligently, ProfitWell Retain, ProfitWell Recognized, and ProfitWell Premium. All of these products are feature and performance based - and more than paying the bills for us to continue to invest in building the company without a drop of funding (which is intentional to keep us independent).
The reason we set up our monetization this way is that frankly we don't think there's a whole lot of value in taking your data and putting it into a bunch of graphs. I know that's trivializing BI/analytics, but that's the crux of the industry right now. Plus, doing willingness to pay and pricing analysis supports this - hence why most BI companies have to go upmarket to survive/grow. Instead, metrics are the gateway.
The world we're building is one where ProfitWell can show you the one graph (or few) that you need to look at - not the 60 you need to sift through to truly understand if there's a problem or not. Then we're going to help you see exactly the metric you should worry about (and the ones you shouldn't worry about) before offering up resources to help you fix it or a product that takes care of that metric for you with 0 work on your part through what we call an anti-active usage product (like ProfitWell Retain). This just feels like the right move to best serve our customers and the greater community.
All that being said - you clearly came to the page and thought the worst based on the language, so I guess it doesn't really matter if we're legally doing the right thing, we need to make sure you (and other folks who reach us) are interpreting and seeing what we're doing as intended.
Give me/us a little bit of time to figure out how to make this instantly obvious. As I mentioned, we're in the midst of clearing up our house based on GDPR requirements, so it's a good time to revisit. Really appreciate the feedback - only way we get better. :)
2. I’ve seen executives who do sell data deny that they sell data by being overly literal and obtuse about what users mean when they ask if their data is sold. When users ask if their data is sold they’re usually including “data sharing with affiliates”, even if they aren’t savvy enough to use that terminology. The concern there is that user data collected by third parties is allowed to be reshared by their affiliates and under opaque terms that do not preclude monetization.
The reason you don't see privacy policies which list that information is not because it has an exorbitant inconvenience cost, it's because they benefit directly from that information asymmetry.
edit: yes, you can send out a notification on every change and tell your customers that it is an implicit consent if they don't object. But I still wouldn't want to do that for every change of service provider, and there can be quite a few such providers in an SaaS.
"[in order to continue proving a service] to you."
would at least resolve the problem of retaining user data indefinitely, but I also totally agree with the free interpretation of "Conducting research and analysis".
Also, because Profitwell is available to customers in Europe, it will soon have to align with GDPR requirements (which also includes the right to being forgotten), even if it's not a European company or otherwise face fine risks.
Re: GDRP - you're absolutely right. We'll be required to align with GDPR in just over a month. We're all set from an engineering perspective and rolling through all the fun documentation, agreements, compliance records, and trainings from a legal perspective now.
I explained this in depth in response to one of the comments here, but the crux of this is that metrics are the gateway, which allow you to see the problems in your business. We then offer resources or products to help with those problems.
They do have an opt-in "Recover" product, just like Baremetrics, which is priced exactly the same way as Baremetrics.
For non-basic usage, that's a con, not a pro.
ChartMoguls is excellent if you want to be on a paid plan. It's also super expensive.
1. In software (and the subscription economy) we're moving away from function based pricing to outcome based pricing. Putting this simply in the context of analytics/reporting means that if I just take your data and put it into a bunch of graphs, it's helpful, but not valuable, even if they are the right graphs (and most of the time they aren't the right graphs, at least in most BI/analytics products).
2. Based on this, we believe in outcome based pricing. We make money by selling products like Retain, Price Intelligently, etc. that all have a specific number we can point to (in your free ProfitWell account :)) that we helped move in the right direction. For some of these products we then only perfectly charge based on our performance. Others where we can't measure this precisely, we still price on a value metric axis.
1. Metrics/analytics are a terrible business from a willingness to pay and unit economics perspective. People don't really appreciate how much work goes into 100% accuracy (that's our thing compared to our competitors fwiw). It took years to be perfect and even now we're still finding edge cases of edge cases. Multiply this by the number of billing systems and it takes a lot of work to support this free product.
Here's the thing though - back to that lack of appreciation - when measuring the willingness to pay for analytics/metrics, people just aren't willing to pay that much. We measured this well ahead of going all in on free and found that our unit economics, especially in a market that's weak in number of logos (subscription market is much smaller than people think). As a result, most BI/analytics companies go up market. We're upmarket and do have an enterprise plan for all the fun enterprise fixings people need, but we don't want to waste massive amounts of CAC fighting for $50/month or even $150/month. Creating a phenomenal user experience (we're not there yet) is so much valuable. Plus, we're able to show our customers they have a problem that we can then sell an add-on for.
Long story short, this business and space requires a scalpel, not a sledgehammer for growth. Hope that's helpful. Always up for answering questions.
Here's the blog post we wrote up with some of the data, too: https://www.profitwell.com/blog/why-we-released-a-better-pro...
"Plus, we're able to show our customers they have a problem that we can then sell an add-on for." - I really like that part.
We don't plan on stopping. Admittedly this gets us in some trouble being a growing company, because we need to make sure our free product is the best for our customers AND we offer up stellar paid products. A whole lot of surface area, especially for a bootstrapped company (although we're past the Ramen stage - $10M+ ARR and 45 folks :)).
There's a lot of work we did to make sure we're learning as quickly as possible that really helps advance the mission on all fronts.
We were literally looking for a Billing solution that works with Stripe YESTERDAY. T
This is phenomenal timing for us. Thanks Stripe!
Will anything change for those of us who might not need that new functionality? The wording in the email is that Stripe Billing "replaces" Stripe Subscriptions, but historically Stripe has been good at not breaking its API. We're concerned about another situation like GoCardless last year, where existing integrations would get broken.
The one thing we'd love to see improved is fixing failed charges. We've never been able to find much documentation on the previous settings for Dunning management, and support emails on the subject went unanswered. However, our stats for churn caused by mysterious Stripe payment failures are consistently quite a bit worse than the ones you mention in your publicity today, and relatively few of our customers resubscribe after their subscription is cancelled like that even if they were previously happy and active users so this does significantly hurt growth. This has been our #1 problem with Stripe for a long time. If this new system leads to better Dunning management and better documentation about how it works, that would be positive.
On high decline rates -- Of course, we're hoping Smart Retries and automatic card updater help you here without any additional work on your side. That said, drop us a line! There's actually quite a few things you can do on your end to minimize declines (pass us the right information at the time of charge, segment your decline reason codes in Sigma, experiment with trials, etc.) that can help reduce passive churn. (Docs on declines here: https://stripe.com/docs/declines)
On the decline rates, we actually have dropped you (Stripe) a line -- many times, in fact, and via multiple channels. In some cases, we never received a reply at all. In the others, the reply was essentially that you didn't know why the failure rates were so high and there was nothing actionable you could suggest to improve them.
I appreciate the link to the declines page, but I think that information has been available for quite a while now. What we have really needed is the detail about exactly what would happen if we configured the existing Dunning management to retry things, for example which objects get created in your system and/or get reused on retried payments, and which webhooks get sent at which points in the try/retry/give-up process and which objects they refer to. As far as I'm aware, none of this has ever been included in your usual documentation areas.
With today's announcement, it would now also be helpful to know the differences between the previous Dunning controls and the new Billing system, and how to migrate between them if necessary. The controls for the new smart retries feature seem to be in the same area on the dashboard, but as with the older controls, if there's any documentation anywhere about what any of these settings actually do under the hood, or how to simulate the relevant scenarios for integration and testing purposes, I can't find it.
It would also help to fix some limitations of the current tools, and again maybe the new Billing system helps with this but we haven't spotted it yet. For example, one problem we've run into a few times now is that address verifications are all-or-nothing. Either we don't use them (presumably worse for fraud detection) or we do (but then if a customer moves house and doesn't tell us, their next charge on a subscription will fail). In terms of risk, it would seem to make sense to check the details that don't appear on the card itself for the first payment(s), but after a while to trust that the card really does belong to the customer claiming it and downgrade/ignore those signals in later fraud checks, but this doesn't currently seem to be possible.
I appreciate that you're probably all very busy today with the roll-out of the new system, but I'm sure we're not the only ones who would be grateful if these kinds of documentation gaps and any actual limitations in the functionality could be addressed when time allows.
If you'd like to help, I'd suggest that the online documentation pages would be the most effective area you could look into. As Stripe has grown, gaps have appeared from time to time, where dashboard features or API calls weren't fully described. In this case, the entire feature set seem to be missing at the moment, so if there's anything you can do to fill in that gap and provide the kinds of specific details I mentioned in my previous comment, that could help others in a similar position to us as well.
Can you share some details on when Stripe will be available for Israeli start-ups? There's quite a big ecosystem here dying to use Stripe but we just can't.
Most of our clients have an accounts payable department that's different from the main contact email.
> Under invoices there are two new documents "Invoice PDF" and "Receipt PDF" which are different from the standard e-mail receipts. Are these documents emailed to the customer automatically? Is there a way to control this?
For receipts, you can turn them on in your account settings: dashboard.stripe.com/account
So... based on that, it seems that "existing customers" means "customers that have actually used the product we're replacing".
I think we'd all appreciate a confirmation or clarification, though. :)
Wait, what? What do you mean? I'm not seeing this at all.
Thinking about it, a medium sized SaaS company billing 15 million a year. 14,000,000 *.004 = 56k a year? For the same product they already had?
Obviously it is cool if you want metering and the advanced features, but I wonder if there is a way to opt out and use the old simple stripe without the new fee - or if this is to push those users into braintree / etc?
For all businesses -- not just startups -- we waive Stripe Billing fees for your first $1M in recurring billing volume so that you’re not worried about fees when you’re in the early days of growing your business. We also hope there’s much more additional value from the full set of Stripe Billing features that are included in this price -- the increase in revenue you get from our recovery product, the savings in manual operations that you get from automatic invoice reconciliation, and the flexibility in building new business models that you get from improvements we made to the core billing engine (better upgrades, prorations, metered billing & more.) And, we’ll continue to invest in building more features and creating the best end-to-end billing system for fast-growing businesses.
If you’re an existing Stripe Subscriptions user, there’s no change to your pricing or your integration: you can continue as you were. We’ve sent an email to existing users on how this affects you -- please let me know if you still have questions! (tl;dr there’s no changes to your existing pricing.)
If you ever have a question on pricing or the product, I’m happy to talk about it any time. I’m email@example.com.
Just as a friendly warning, I think your (Stripe's) position on this is maybe not coming across the way you would like.
Mysterious failing payments is an area where Stripe has been historically awful compared to other payment processing services, at least in the experience of my professional network, with very obvious negative effects on KPIs. We're in "you had one job" territory here.
Now it looks like Stripe finally has a way to improve that situation. However, instead of trying to roll out those improvements as quickly and widely as possible, they're being bundled into a new service with as-yet unclear implications for integration and somewhat confusing messaging on pricing.
You might like to consider whether that comes across as having a great new feature or as being the sales guy who sells you $100 broken software but then offers you a gold support contract for only $500/year so you can report the bugs.
I just examined the changes to the Stripe dashboard, and, coupled with the email I received from Stripe and the web page about the new "Stripe Billing", I'm utterly confused about several things.
I suspect I'm going to have to unexpectedly spend some time updating my Stripe integration to the latest API, without much gain for my current business.
Stripe doesn't normally drop the ball but I feel like they did on this one.
BTW, Stripe team: the feature people here in the EU really want from you is help with calculating and tracking EU VAT. But you know that, right?
Also I don’t know if this is on purpose but you’re not answering the question people are actually asking: what if you’re an existing user and you hit $1M... then what?
Yesterday: 0% extra
Today: 0.4% extra
> tarstarr 7 hours ago [-] (PM from Stripe) If you're an existing user, there's no extra fees, even if you are past the $1M threshold.
(Which is kind of the full circle of this thread)
Edit: the fee increase is only after $1M in revenue so still makes sense to use Stripe in a project's early stages.
How can I make sure of that? They have nothing to do with the actual invoices we already generate, send our customers, pass to our accountants and so forth and should any of these "Stripe-generated invoices" be made visibile to our customers it would create a HUGE accounting issue.
"Email invoice to customer when it is created"
was on by default but it appears only for "Invoices sent to customer for manual payment"
It's literally a bunch of 'value add' features maybe you'll use for a 0.4% increase in fees you didn't ask for.
Let me opt in to the new stuff.
Except that's not how it works.
I think this is a big step in the right direction for Stripe (unclear pricing aside). We’ve been thinking about usage based billing for a long time now. We built a bunch of apps using Stripe and found there was a lot missing if you wanted to track activity and bill for it, as well as with reporting and revenue optimization. Having not dug into the platform too far, this definitely looks like it could fill some gaps.
I will say I’m not a fan of taking a percentage for billing on top of taking a percentage on payments, though. There is risk involved for payments (chargebacks, fraud, etc), but billing is transactional. A percent there feels like a money grab to me.
The only other problem I see with this is that it all seems a bit convoluted. I get that it has to be tacked on to their existing platform. But we’ve found that the secret to an awesome usage based billing system was to track activity in real time, then apply automated billing to that tracked activity. It’s a different approach and we’re working on polishing that up and bringing it to market over the next few months.
Would love to hear more about how folks are thinking about consumption and usage based billing and pricing. I think it’s the next big wave in Internet monetization, so it’s important to get right.
Excited to check out Cheddar when it launches!
Based on what I see in the market with other billing/subscription providers, they all do the same thing (rev share). Since these businesses are not the payment gateway they try to do a revenue grab with the % share.
I hoped Stripe would be able to disrupt this by already being positioned as a payment gateway and offer this on top in a transactional model....
Hope they rethink this strategy. And no first $1MM isnt going to cut it. Any serious business will see this as a growth challenge. Backend billing flows are challenging to build and once you are committed to this you are locked in for quite sometime from the roadmap perspective.
More broadly, we believe in revenue-based business models because it's the clearest way to align our incentives with those of our customers. We want to be forced to find ways to generate more revenue, via smart recovery, better invoice payment methods, more payment method support, etc.
Secondly, transaction/user based models are also aligned with customer incentives. With growth, customers will execute more transactions on the system.
Frankly, Smart recovery is an area where I can see you can ask for % share. Other features like payment methods etc sound transactional again.
Finally, Stripe has a payment gateway business already. This will ensure growth on that side of the business. Optically this seems like a revenue grab. You have the opportunity to disrupt the ecosystem.
Thanks for responding to my comment. Appreciate the interaction.
Paypal has free recurring billing. Sure it's a pain to set up but once you've built it in it works pretty damn well with little to no maintenance. If you do even a smallish amount of business through them you can set up daily sweeps into your bank account to stave off the famous Paypal "random freezing of funds" nonsense.
"Since you used Stripe Subscriptions in the past year, the Stripe Billing Starter plan is included in your current pricing."
Edit: Since my posting this Stripe has clarified that existing customers get the Starter package at no further cost, we we are grandfathered in.
> Since you used Stripe Subscriptions in the past year, the Stripe Billing Starter plan is included in your current pricing.
Which implies you're opted into the Starter Plan with the regular 1+mil fees.
The initial communication left some room for clarity, which really had me confused in the same way as others in this thread. Really outside of the norm for Stripe, who's communication is usually very clear.
When communicating important and potentially difficult to understand information: have some non-insiders read the text and ask them what they think it means.
After that, 0.4% on recurring charges
Does this mean recurring charges don't carry Stripe's standard 2.9% + $0.30 charge? Or is the free at first/then 0.4% _on top of_ the 2.9% + $0.30 charge?
I love that they are constantly innovating, but every time they do, I have to refactor my product, and then decide how much of my current product's custom functionality can be replaced by Stripe. Then I have to decide if I want to double down on Stripe (at the peril of other integrations), or create a wacky payflow that acknowledges dozens of additional gateways.
I don't want a single product that does everything. I want a great product that does a few things really well. This is starting to kill my love affair with Stripe.
More and more I feel Stripe catering to the non-engineers who just want a simple workflow at the expense of customization.
I still dislike v3 for the fact it tries to push me to use their own interface.
I was happy hooking your library up to my form. I know I can "customize" it (change the css classes... wooo) but it completely replaced v2 with no way to get that functionality back.
I wish Stripe would have "full tricycle wheels, we charge a bunch" or "barebones, we get out of the way and charge you very little".
Edit: The answer is no.
This announcement has burnt through a lot of goodwill that’s accumulated over the years. Not cool!
Charges do carry the standard fee.
There are two different products, each with different pricing models.
Billing - tools to manage reoccuring subscriptions.
Payments - tools to accept/charge a credit card.
Payments pricing: 2.9%+ $0.30 per-charge.
Billing pricing: 0.4% after the first $1M in reoccurring subscription charges.
"Free for the first $1 million of recurring charges." would actually be a better deal for early startups than their standard pricing of "2.9% + $0.30 charge".
Also, since they've migrated old subscriptions into this new "Billing" product, does that mean I'll start NOT paying fees on existing recurring subscriptions?
Stripe needs to decide if they are a b2b API, or b2c checkout and invoicing product.
The analytics/easy plan mgmt and email invoicing in recurly is something stripe doesn't have.
Would you advise against that ?
I was hoping that this signaled that Stripe was beginning to integrate that valuable featureset into the Stripe platform.
I checked the preview link and the only option to pay was by credit card. I sent the invoice anyway and the test user's credit card was immediately charged.
1) Send a user an invoice
2) The user copies the auto-generated bank details and manually initiates a transfer from their bank?
Hope to move away from Wave Accounting to Stripe invoice, once I can match the design... thanks!
What are people doing?
With my UK small business hat on: Sometimes, it is just easier and cheaper to build it yourself than to rely on an outsourced service that doesn't do exactly what you need.
We have a database table of VAT rates per country with starting dates when they come into effect. All customer accounts are tied to a specific country, so all payments or subscriptions for an account can look up the current rate from the database and apply tax as necessary.
All successful payments (one-off or recurring) are recorded in our DB, triggered by webhooks from the various payment services we use. The DB records include all the tax information that applied at the time of the payment, including things like country and proof-of-location as required under EU VAT rules, and also including generating a sequential ID for each payment to comply with the rules there. This is also the point at which we do any necessary currency conversion calculations, and we then generate and send customers an email automatically with all the same details.
A little scripting looks up the necessary sales and tax figures from the database for the various VAT returns we are required to file for UK and for other EU customers.
The significant limitations are mostly around keeping that VAT rates table up-to-date (I know of no acceptable automated method for doing this, so we just have to review the information manually at frequent intervals) and around handling money repaid (refunds, or if we do ever get a chargeback or similar). As far as I'm aware, none of the automated services is even close to getting these things right either, so we're still no worse off having to do a few things by hand in these relatively rare situations.
Setting that lot up was a decent chunk of work, particularly all the hassle around EU VAT, which we had to retrofit in at least one case I can recall. However, it's certainly achievable for an average developer within a few days.
> I know of no acceptable automated method for doing this, so we just have to review the information manually at frequent intervals.
This announcement suggests "usage-based", which is how AWS and Google Cloud bill you: for how much you used during the previous billing period.
Having a service like Cleverbridge  / Avangate , where they end-up having someone to manage this for them for a bigger % of the sale, was the better deal.
Not sure how the startup-scene will solve this, but it's actually still really hard to do this properly.
My best solution would be to have Stripe doing whole-sale solution, where they invoice customers and you simply invoice them each month.
It just takes too much efforts to do this >legally< in Europe if you are on your own.
1 : https://www.cleverbridge.com/corporate/
2 : http://www.avangate.com
As someone who is completely oblivious to how payments work behind the scenes (for the most part) could someone please explain how this became necessary?
When you charge a credit or debit card, send a bunch of messages that end up going to an organization called a payment processor. Payment processors do stuff like make sure your account has enough money/remaining credit and also have fraud checks and other security features. Sometimes, the payment processor rejects a payment because of insufficient funds, suspected fraud, their system being down or a malformed request. Unfortunately, a lot of this stuff is pretty archaic and there are a few layers between your servers and the processor, so it's very hard to debug. On your end, you could simply retry payments if they get rejected, but that might lead to a set of ping pong failures that might even trip fraud alerts to the customer. You can also have retry logic that uses an exponential backoff, just like any other request. That's a reasonable strategy, but you can probably do better.If you're a big company, involuntary credit card churn is actually a pretty sizeable source of churn for you. 99% transaction completion rate sounds pretty good until you realize it means a guaranteed 1% churn rate (assuming people don't sign up again), which is not insignificant. You really want to get this as low as possible.
Enter Stripe: Stripe has handled a very very large number of payments, and they probably have really comprehensive data about failure rates. This allows them to identify patterns and come up with some rules around retries. A simple (fully hypothetical) example is: If a transaction is declined for insufficient funds, retry again on the 15th and the last day of the month (usually when people get paid). These rules can get really complicated. We had some rules that were as complex as "If the cardholder is in Spain, and the card is Amex, retry in three days before 5pm if it's a weekday, otherwise wait until Tuesday."
Overall, this is a pretty nice feature for large customers with high transaction volumes. We did the data analysis/rule generation ourselves and hand rolled the retry logic in our system, but offering it as a built-in service is a convenient (albiet probably expensive) perk.
Turn and burn it seems
Subscription billing has been in Stripe for many years... it's just been very weak until now. Totally makes sense for them to work on this and if you built a subscription billing company on top of Stripe you should have known it was only a matter of time before theirs got better.
Also Stripe still rely on their partners to drive business to them at the end of the day. No denying that it’s a big part of their funnel. A startup looking at their offering cold now will just be confused as well. What even is it? Some people think it’s a checkout when it’s not. It’s just s slightly more advanced subscription api with a price tag.
Also by cannibalising their partners will dry up their eco system. Chances are the partners do a better job as they’re focused on it. Can’t be perfect at everything.
I’ll see what they have to say on the call I have with them tomorrow.
But congrats and good job Stripe. Just reconsider the pricing.