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Unexpected challenges of making money on the internet

359 points by jenthoven 9y ago

welanes 9y ago
> 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 9y ago
  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.
  - kowdermeister 9y ago
    Bank accounts don't, but debit cards do have an expiry date, same as credit cards.
    - epanchin 9y ago
      Direct debit is a debit direct from your bank account, using your non-expiring account number. Different from a debit card which is a debit from an expiring card.
      - nicky0 9y ago
        I don't think Direct Debit is a thing in the US.
        joncrocks 9y ago
        The nearest equivalent in the US is ACH - https://en.wikipedia.org/wiki/Automated_Clearing_House https://en.wikipedia.org/wiki/Automated_Clearing_House
        adventured 9y ago
        I pay several persistent monthly bills using the equivalent of direct debit in the US, which is ACH. My electricity, natural gas, and auto insurance bills all pull out of my checking account via that. It's pretty common.
        nicky0 9y ago
        Cunningham's Law in action. Thank you.
  - londons_explore 9y ago
    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 9y ago
      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.
  - blattimwind 9y ago
    For European customers, you can make quick friends by offering payment via invoice and wire transfer. E v er y company is equipped to handle that efficiently; if you only offer credit cards, someone needs to get up and find "that guy with the company credit card for AWS".
  - gingerlime 9y ago
    We had a very different experience. First of all, we had lots of issues with Direct Debit. And it takes a good few days (1-2 weeks) until things authorize. In the meanwhile, you have to provide free service in the hopes that it does. Second, we had a potential gap with the equivalent of chargebacks. A customer could contact us for a refund, and we issued it. Then their bank (or them?) blocked the payment, which results in another refund + chargeback fees. So we can actually lose money... Third, and take this with a grain of salt, because it could be specific to our audience, but we actually A/B tested it, and with/without Direct Debit option, our revenue was more or less the same. Some complained, but lots accepted using Paypal / CC. We're still relatively small, so perhaps your comment applies and we're simply not big enough, but I'm really unsure how much of a big win this is. YMMV.
- pjc50 9y ago
  Your bank charges you a fee for lost/stolen cards?
  - runeb 9y ago
    There is usually a fee to receive a new card
- speby 9y ago
  > Banks must be rolling in lost/new card fees. It's not like that at all. There are tons of exceptions that can occur when charging a card. Yes, cards get lost but more often than that, cards will get canceled or closed for various reason. Also, there many people who actually max their credit limits out regularly and therefore a credit limit is hit and the card can no longer be charged any further. Card accounts can be temporarily locked down due to fraud or irregular account activity. Charges can be blocked due to certain characteristics of the charge or the merchant. And yes, of course people do lose cards and get ones, with new numbers, etc. Cards also regularly expire, too, and the expiration number will change even if the card number does not and they must match in order to charge the card.
  - welanes 9y ago
    I get it, and agree with everything you said. My comment was mostly in jest.
- gnicholas 9y ago
  Interestingly, banks offer a way for merchants/payment processors to roll subscriptions onto new cards issued to replace a fraud-affected card. Stripe apparently has this feature; my card was recently compromised, and I updated my subscriptions for most services, but not for my own account with my startup (which I used just for testing to make sure payments went through appropriately). I was shocked to see a monthly payment hit on my new card, and I called the credit card company to find out how this was possible. They said that big merchants/processors have an agreement with them to automatically get the new numbers for subscribed customers. Also, Stripe recently made it very easy to have the system automatically email customers whose cards were declined. I turned this on for our account and have seen much better retention. I am not a huge fan of Stripe in general—mainly due to issues with their process for handling challenged transactions—but they do make it easier to retain customers.
- klenwell 9y ago
  I'm a monthly subscriber to my local NPR station and I've had this happen twice when my card reached its expiration date. I got mailed a new card but the online subscriptions didn't automatically roll over (or some did? I don't know how this works. In any event, this subscription definitely didn't roll over.) The first time it happened, I didn't notice for 3 years. Ended up costing the station (um, $5 * 36...) an absolute fortune. Still, I'm sure I'm not the only one whose donations have slipped through the cracks. And to renew, I basically had to sign up again as a new subscriber. So anyway, I'm not surprised to hear this is a major factor for online payment processing. I'm just surprised it isn't something that can be handled more seamlessly on the consumer side. And if anyone associated with KCRW is on this board: this is something you should look into fixing. Maybe it's not costing you millions of dollars, but I imagine it would pay back the dev team's cost to fix it relatively quickly.
milkers 9y ago
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 9y ago
  Hey, we're using a basic MERN stack (MongoDB, Express, React, Node) and using FFMPEG on the back end
deleted 9y ago
[deleted]
ensiferum 9y ago
It's ok. Little hacker news advertisement should help, right?
- hailk 9y ago
  Advertisement or no, as a person who is still planning the payment model, this was quite useful.
  - knrasgarg 9y ago
    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
- epanchin 9y ago
  You do understand this is a forum run by a VC? Probably not the place to hang out if you’re as deeply affected by plugs as your comment history suggests.
probably_wrong 9y ago
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 9y ago
  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 9y ago
    >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 9y ago
      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.
    - romaniv 9y ago
      Last time I read about it, using 3D Secure changed your liability agreement with the credit card provider. Not to mention that its implementation is a confusing mess that bounces you between badly designed websites with questionable security.
  - mf2hd 9y ago
    Exactly this. I just don't want to get up, find my wallet, enter the card number, choose the expiration date from a select, enter the CVV, hit submit, and after all this there is a chance it's not going to work, who knows why, I don't even care. I don't like paypal, but it's really convenient.
greysteil 9y ago
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.
qilo 9y ago
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?
a_imho 9y ago
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 9y ago
  Personal itch scratching is one strategy but scratching other people's itches is rather a good one too.
firefoxd 9y ago
And here I am, month 4, still coding away and waiting for perfection before I launch.
- realusername 9y ago
  What are you building?
  - firefoxd 9y ago
    Here: https://www.ottomon.net https://www.ottomon.net It's coming out soon...
    - yorwba 9y ago
      I think the description above the fold should be more detailed about the purpose than just making things "smart". I also doubt that whoever randomly comes across a tagged object will want to install your app to contact the owner, so I hope you're making sure that the QR code points to a website that can be used without the app. But I'm not a potential customer, so if you have actual user studies then ignore what I said.
      - firefoxd 9y ago
        Thank you for your feedback. I'll try to clarify that description. It works fully on mobile browser. The app is an addition, since it allows to use the phone's flashlight in the dark. Also any qr code reader will work as well.
    - mrleiter 9y ago
      Also some feedback from me: 1)It tells me what it does and how it works. But what I want to know in the first place is why. Why would I need it? 2)https://imgur.com/a/kuZC3 https://imgur.com/a/kuZC3 here I would switch the order from left down and then right down, because the smart phone in the middle spaces this like a book, so I initially read the left side first, then the right side (1/3/2/4). Only then I realised the actual order. 3)Also I do not really understand its purpose. PS: I am also unfortunately not in your target audience, but wish you the best luck!
thisisit 9y ago
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 9y ago
  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).
mpeg 9y ago
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.
marcus_holmes 9y ago
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 9y ago
  Preferably before you build it.
  - pbhjpbhj 9y ago
    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 9y ago
      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.
    - allannienhuis 9y ago
      no, the pattern is to ask them to pay, but not actually make them pay before it's built. If they're willing to click the buy button with the price clear, you've learned something valuable about the price/value you're presenting, and you can learn that before you spend the money building the product. To be honest, I've never been 100% comfortable with this pattern - it seems deceitful at the surface. I'd prefer an alternative that makes it clearer the product isn't available yet, but allows you to capture that same information. But I think once you do that, lots of people that might be happy with the price simply won't bother letting you know they'd be willing to pay - they just go somewhere else. [edit] Sibling comment talks about a 'pre-order' button, which is close to what I meant by the second option. I think you learn something really valuable with that approach, but I'm not sure it's the exact same thing you'd learn if the user thought it was available now. IDK, maybe it's _more_ valuable...
jgh 9y ago
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.
gomox 9y ago
> 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.
- Liron 9y ago
  We used to only use Stripe, but some users preferred PayPal and now it's 20% of our revenue.
- orthecreedence 9y ago
  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.
  - slobotron 9y ago
    With stripe checkout, you can click "remember me". https://stripe.com/checkout/info https://stripe.com/checkout/info
  - mglukhovsky 9y ago
    You could also look at the new W3 Payment Request API [1] that stores card details securely in modern browsers. Stripe has a Payment Request Button that enables one-click buying with Apple Pay, Google Pay, or the Payment Request API. [2] The button will choose whichever method is best and available for your specific browser. [1]: https://www.w3.org/TR/payment-request/ https://www.w3.org/TR/payment-request/ [2]: https://stripe.com/docs/stripe-js/elements/payment-request-button https://stripe.com/docs/stripe-js/elements/payment-request-b...
mi100hael 9y ago
Why do users get the option to skip payment and remove the watermark for free? Stop doing that.
- akassover 9y ago
  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".
  - deleted 9y ago
    [deleted]
- jonwachob91 9y ago
  It may not be that bad of an idea if right now she really wants to show e^x growth (for investors) while still getting something tangible (quality feedback and community engagement). It may not work for all ventures, but it may work for some.
sbob 9y ago
(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
dorianm 9y ago
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
gwbas1c 9y ago
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!
gumby 9y ago
> 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?
- weaksauce 9y ago
  I would (almost) never use a site that only allowed this as a means to login... it's so absurd that these are the only options. There should be two things they are interested in: 1. Is the email valid? 2. Is the credit card and details for that valid? Anything else is a distraction to making money.
  - stickfigure 9y ago
    I would (almost) never use a site that only allowed... If you're a business customer, you'll use whatever auth system is presented. And 80% of the time Google login is perfect; the other 20% will deal. "Oh, your product will save me thousands of dollars? But it requires a Google account? Sorry, can't use it"... said nobody, ever. There's a huge difference between B2B and B2C customers, and you need to understand which business you're in. Yeah, if you're trying to accommodate the mass market, you need all the options. If you have a niche product that makes money for people, you should spend all your time working on features that make people money. Auth is not one of them.
    - whatyoucantsay 9y ago
      > "Oh, your product will save me thousands of dollars? But it requires a Google account? Sorry, can't use it"... said nobody, ever. You've clearly never worked in China. All people are not living your circumstance.
nickjj 9y ago
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 9y ago
  What are some of the SAAS apps that they have built?
quadrangle 9y ago
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-serve https://www.gnu.org/philosophy/who-does-that-server-really-s... ) — it shouldn't be a thing, people should run such software locally

359 points by jenthoven 9y ago

> 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 9y ago
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.
- kowdermeister 9y ago
  Bank accounts don't, but debit cards do have an expiry date, same as credit cards.
  - epanchin 9y ago
    Direct debit is a debit direct from your bank account, using your non-expiring account number. Different from a debit card which is a debit from an expiring card.
    - nicky0 9y ago
      I don't think Direct Debit is a thing in the US.
      - joncrocks 9y ago
        The nearest equivalent in the US is ACH - https://en.wikipedia.org/wiki/Automated_Clearing_House https://en.wikipedia.org/wiki/Automated_Clearing_House
      - adventured 9y ago
        I pay several persistent monthly bills using the equivalent of direct debit in the US, which is ACH. My electricity, natural gas, and auto insurance bills all pull out of my checking account via that. It's pretty common.
        nicky0 9y ago
        Cunningham's Law in action. Thank you.
- londons_explore 9y ago
  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 9y ago
    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.
- blattimwind 9y ago
  For European customers, you can make quick friends by offering payment via invoice and wire transfer. E v er y company is equipped to handle that efficiently; if you only offer credit cards, someone needs to get up and find "that guy with the company credit card for AWS".
- gingerlime 9y ago
  We had a very different experience. First of all, we had lots of issues with Direct Debit. And it takes a good few days (1-2 weeks) until things authorize. In the meanwhile, you have to provide free service in the hopes that it does. Second, we had a potential gap with the equivalent of chargebacks. A customer could contact us for a refund, and we issued it. Then their bank (or them?) blocked the payment, which results in another refund + chargeback fees. So we can actually lose money... Third, and take this with a grain of salt, because it could be specific to our audience, but we actually A/B tested it, and with/without Direct Debit option, our revenue was more or less the same. Some complained, but lots accepted using Paypal / CC. We're still relatively small, so perhaps your comment applies and we're simply not big enough, but I'm really unsure how much of a big win this is. YMMV.
pjc50 9y ago
Your bank charges you a fee for lost/stolen cards?
- runeb 9y ago
  There is usually a fee to receive a new card
speby 9y ago
> Banks must be rolling in lost/new card fees. It's not like that at all. There are tons of exceptions that can occur when charging a card. Yes, cards get lost but more often than that, cards will get canceled or closed for various reason. Also, there many people who actually max their credit limits out regularly and therefore a credit limit is hit and the card can no longer be charged any further. Card accounts can be temporarily locked down due to fraud or irregular account activity. Charges can be blocked due to certain characteristics of the charge or the merchant. And yes, of course people do lose cards and get ones, with new numbers, etc. Cards also regularly expire, too, and the expiration number will change even if the card number does not and they must match in order to charge the card.
- welanes 9y ago
  I get it, and agree with everything you said. My comment was mostly in jest.
gnicholas 9y ago
Interestingly, banks offer a way for merchants/payment processors to roll subscriptions onto new cards issued to replace a fraud-affected card. Stripe apparently has this feature; my card was recently compromised, and I updated my subscriptions for most services, but not for my own account with my startup (which I used just for testing to make sure payments went through appropriately). I was shocked to see a monthly payment hit on my new card, and I called the credit card company to find out how this was possible. They said that big merchants/processors have an agreement with them to automatically get the new numbers for subscribed customers. Also, Stripe recently made it very easy to have the system automatically email customers whose cards were declined. I turned this on for our account and have seen much better retention. I am not a huge fan of Stripe in general—mainly due to issues with their process for handling challenged transactions—but they do make it easier to retain customers.
klenwell 9y ago
I'm a monthly subscriber to my local NPR station and I've had this happen twice when my card reached its expiration date. I got mailed a new card but the online subscriptions didn't automatically roll over (or some did? I don't know how this works. In any event, this subscription definitely didn't roll over.) The first time it happened, I didn't notice for 3 years. Ended up costing the station (um, $5 * 36...) an absolute fortune. Still, I'm sure I'm not the only one whose donations have slipped through the cracks. And to renew, I basically had to sign up again as a new subscriber. So anyway, I'm not surprised to hear this is a major factor for online payment processing. I'm just surprised it isn't something that can be handled more seamlessly on the consumer side. And if anyone associated with KCRW is on this board: this is something you should look into fixing. Maybe it's not costing you millions of dollars, but I imagine it would pay back the dev team's cost to fix it relatively quickly.

milkers 9y ago

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 9y ago
Hey, we're using a basic MERN stack (MongoDB, Express, React, Node) and using FFMPEG on the back end

deleted 9y ago

[deleted]

ensiferum 9y ago

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

hailk 9y ago
Advertisement or no, as a person who is still planning the payment model, this was quite useful.
- knrasgarg 9y ago
  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
epanchin 9y ago
You do understand this is a forum run by a VC? Probably not the place to hang out if you’re as deeply affected by plugs as your comment history suggests.

probably_wrong 9y ago

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 9y ago
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 9y ago
  >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 9y ago
    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.
  - romaniv 9y ago
    Last time I read about it, using 3D Secure changed your liability agreement with the credit card provider. Not to mention that its implementation is a confusing mess that bounces you between badly designed websites with questionable security.
- mf2hd 9y ago
  Exactly this. I just don't want to get up, find my wallet, enter the card number, choose the expiration date from a select, enter the CVV, hit submit, and after all this there is a chance it's not going to work, who knows why, I don't even care. I don't like paypal, but it's really convenient.

greysteil 9y ago

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.

qilo 9y ago

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?

a_imho 9y ago

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 9y ago
Personal itch scratching is one strategy but scratching other people's itches is rather a good one too.

firefoxd 9y ago

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

realusername 9y ago
What are you building?
- firefoxd 9y ago
  Here: https://www.ottomon.net https://www.ottomon.net It's coming out soon...
  - yorwba 9y ago
    I think the description above the fold should be more detailed about the purpose than just making things "smart". I also doubt that whoever randomly comes across a tagged object will want to install your app to contact the owner, so I hope you're making sure that the QR code points to a website that can be used without the app. But I'm not a potential customer, so if you have actual user studies then ignore what I said.
    - firefoxd 9y ago
      Thank you for your feedback. I'll try to clarify that description. It works fully on mobile browser. The app is an addition, since it allows to use the phone's flashlight in the dark. Also any qr code reader will work as well.
  - mrleiter 9y ago
    Also some feedback from me: 1)It tells me what it does and how it works. But what I want to know in the first place is why. Why would I need it? 2)https://imgur.com/a/kuZC3 https://imgur.com/a/kuZC3 here I would switch the order from left down and then right down, because the smart phone in the middle spaces this like a book, so I initially read the left side first, then the right side (1/3/2/4). Only then I realised the actual order. 3)Also I do not really understand its purpose. PS: I am also unfortunately not in your target audience, but wish you the best luck!

thisisit 9y ago

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 9y ago
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).

mpeg 9y ago

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.

marcus_holmes 9y ago

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 9y ago
Preferably before you build it.
- pbhjpbhj 9y ago
  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 9y ago
    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.
  - allannienhuis 9y ago
    no, the pattern is to ask them to pay, but not actually make them pay before it's built. If they're willing to click the buy button with the price clear, you've learned something valuable about the price/value you're presenting, and you can learn that before you spend the money building the product. To be honest, I've never been 100% comfortable with this pattern - it seems deceitful at the surface. I'd prefer an alternative that makes it clearer the product isn't available yet, but allows you to capture that same information. But I think once you do that, lots of people that might be happy with the price simply won't bother letting you know they'd be willing to pay - they just go somewhere else. [edit] Sibling comment talks about a 'pre-order' button, which is close to what I meant by the second option. I think you learn something really valuable with that approach, but I'm not sure it's the exact same thing you'd learn if the user thought it was available now. IDK, maybe it's _more_ valuable...

jgh 9y ago

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.

gomox 9y ago

> 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.

Liron 9y ago
We used to only use Stripe, but some users preferred PayPal and now it's 20% of our revenue.
orthecreedence 9y ago
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.
- slobotron 9y ago
  With stripe checkout, you can click "remember me". https://stripe.com/checkout/info https://stripe.com/checkout/info
- mglukhovsky 9y ago
  You could also look at the new W3 Payment Request API [1] that stores card details securely in modern browsers. Stripe has a Payment Request Button that enables one-click buying with Apple Pay, Google Pay, or the Payment Request API. [2] The button will choose whichever method is best and available for your specific browser. [1]: https://www.w3.org/TR/payment-request/ https://www.w3.org/TR/payment-request/ [2]: https://stripe.com/docs/stripe-js/elements/payment-request-button https://stripe.com/docs/stripe-js/elements/payment-request-b...

mi100hael 9y ago

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

akassover 9y ago
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".
- deleted 9y ago
  [deleted]
jonwachob91 9y ago
It may not be that bad of an idea if right now she really wants to show e^x growth (for investors) while still getting something tangible (quality feedback and community engagement). It may not work for all ventures, but it may work for some.

sbob 9y ago

(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

dorianm 9y ago

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

gwbas1c 9y ago

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!

gumby 9y ago

> 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?

weaksauce 9y ago
I would (almost) never use a site that only allowed this as a means to login... it's so absurd that these are the only options. There should be two things they are interested in: 1. Is the email valid? 2. Is the credit card and details for that valid? Anything else is a distraction to making money.
- stickfigure 9y ago
  I would (almost) never use a site that only allowed... If you're a business customer, you'll use whatever auth system is presented. And 80% of the time Google login is perfect; the other 20% will deal. "Oh, your product will save me thousands of dollars? But it requires a Google account? Sorry, can't use it"... said nobody, ever. There's a huge difference between B2B and B2C customers, and you need to understand which business you're in. Yeah, if you're trying to accommodate the mass market, you need all the options. If you have a niche product that makes money for people, you should spend all your time working on features that make people money. Auth is not one of them.
  - whatyoucantsay 9y ago
    > "Oh, your product will save me thousands of dollars? But it requires a Google account? Sorry, can't use it"... said nobody, ever. You've clearly never worked in China. All people are not living your circumstance.

nickjj 9y ago

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 9y ago
What are some of the SAAS apps that they have built?

quadrangle 9y ago

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-serve https://www.gnu.org/philosophy/who-does-that-server-really-s... ) — it shouldn't be a thing, people should run such software locally