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Very happy to see this, it is such a necessary feature. I was recently looking for an option to enable VAT calculation in Stripe and couldn't believe it wasn't

Very happy to see this, it is such a necessary feature. I was recently looking for an option to enable VAT calculation in Stripe and couldn't believe it wasn't there. Now it is, and it looks very well done as Stripe's features usually are. But 0.5% fee per transaction is.. steep.

chinathrow 5y ago
Yes, the 0.5% adds up. 0.5% for Billing, 2.9% + 30c per transaction, more if you add e.g. fraud for teams etc. Stripe is great and I use it too, but the way they charge you (a percentage of your revenue) is simply not that fair in the long run while their workload has a fixed cost per transaction.
- ttoinou 5y ago
  Seems very fair pricing compared to competitors
  - edwinwee 5y ago
    Yep, Stripe prices its products pretty competitively and talks to many beta testers before we settle on pricing. I think even adding all this up, it's less expensive than merchant of record providers like Paddle.
  - drexlspivey 5y ago
    Why does it have to be a percentage of your revenue? It’s doing exactly the same thing for a $100 invoice and a $10000 invoice, why does the latter cost 100x more?
    - duckmysick 5y ago
      Value. A service Y makes it easier to collect that $10000 invoice. Inversely, by not using a service Y, you might not see those $10000 or it will be more difficult to do so. A glass of water has more value to you when you're thirsty.
    - ttoinou 5y ago
      Why not ? If you have small transactions you end up not paying a lot, and the more you make money the more you pay Stripe. If you make so much money that you can have your own tax system, good for you ! Implement it and don't pay Stripe :) Fixed price schemes would be less fair for small businesses that want to grow. Stripe helps you to grow, so that your company becomes the one big enough to "subsidize" the small ones after benefiting this pricing in the first stage
- hardwaresofton 5y ago
  Welcome to the world of saavy SaaS businesses. Smart/enterprising SaaS founders and businesses these days all know to tie their billing to whatever metric/KPI they are solving for customers -- per-seat billing, per-pageview, etc. Why make a little money (even if it's 2-10x your cost) when you can make much more by taking a small-seeming percentage of every single <whatever> that comes through your business. When your customer wins (and when they aren't winning you aren't a huge strain on their wallets) you win, and if the 0-5% eaten up by their bundle of SaaS products never matters to them, then you get wildly rich doing it and no one is angry about it, since the incentives are aligned. Then you plow that extra revenue (that you wouldn't have gotten from the simple 2x-10x your cost) into expanding your service offering so you deliver so much value (or perceived value) that moving away from your service just doesn't make sense. This is HN and just about everyone and their mother knows this at this point, and has been living it for longer than I've been writing computers but I'll say it anyway -- Stripe is the dream SaaS company, essentially a financial middleman that no one hates (yet?). The SaaS promised land is a somewhat close cousin of the dystopian everyone-is-a-renter-and-only-a-few-own-the-capital future. Maybe the hand wringing I'm doing is wrong -- maybe it should have been the case all along that solution providers should have extracted a never ending royalty on the revenue generated by the solutions they provide. Not only service providers but maybe workers should want that (no one remembers pensions, but they kind of were this) too. Who knows. If you can sell a music single album to 0.3% of America for $1, you get $1MM. If you do that with a Stripe store, Stripe gets ~$30k, for infrastructure that probably cost them less than $300 to host (for a single customer) and an ever-decreasing amortized amount to build (assuming they eventually stop growing their development workforce for growth stake). The artist that just made $1MM probably doesn't care about $30k as a millionaire (maybe they should, maybe they shouldn't). It's a win-win, and it's why Stripe's goal is to increase the GDP of the internet.
  - justsomeuser 5y ago
    Apparently Buffet calls this a “toll booth” business. Once the road is built (customer integrates Stripe into their state machine), you can just keep collecting their toll for driving on the Stripe highway.
- eps 5y ago
  Don't forget they also force-convert payout wires to your native currency if you aren't in the US. Even if you operate mostly in USD, have USD accounts, etc.
  - chinathrow 5y ago
    Yes, I omitted the 2% currency conversion fee if you payout in to another currency. I solved this partially by using Wise (formerly Transferwise) for USD->XYZ conversion and paying way less now.
kmoriarty 5y ago
Thanks for the feedback! Completely understand your reaction to pricing. For a bit of context, we’ve spent the past year listening to users and trying to understand the best way to price. In finalizing our launch pricing, we made sure there are no fixed upfront costs or contracts, nor are there any per transaction fixed fees either. We tried to find a price point that ultimately was not prohibitive for small businesses but also portrayed the value of the product itself. Please do keep the feedback coming, we’re always open to hearing more from users: kmoriarty@stripe.com
- deleted 5y ago
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- deleted 5y ago
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- mchusma 5y ago
  My honest feedback on pricing was "expensive but we would only want to apply it on non-US users." Also, we wouldn't want to have to pay for invoicing, which is honestly much much worse of a value prop. For someone with a 20% margin business, the combination of these and payments products is about 4%, or 20% of all profit. While this is the first product since payments I have liked (so good work there) it would be nice to see Stripe work on reducing the transaction costs, particularly on the payments side. Right now for me I consider Stripe a part of the "credit card processing tax cabal". Payment processing fees are a huge tax on the world, and if stripe could help solve that and genuinely reduce it to the level it should be (nearly free marginally), I would have the utmost respect for them. I honestly think this should be the main company focus if they actually want to help customers.
  - cashewchoo 5y ago
    It's worth noting that there's the interchange fees that come along with using a credit card in the US aren't just a pure profit rake for the credit card companies. It obviously pays for computing resources and staffing and such, but beyond that it also, roughly, pays for all the fraud that happens with any credit card. In many cases, when someone does a fraud, it's someone "in the middle" (i.e. not the fraudster, the card holder, or the merchant) who ends up holding the bag. It's also paying for some aggregate amount of credit risk that card users pose to their banks. Credit card fees are high because fraud is such a colossal problem, and at various levels it's better for institutions to just eat costs (and thus slightly raise the minimum viable price they can charge for processing) than make it harder for people to buy things.

chinathrow 5y ago

Yes, the 0.5% adds up. 0.5% for Billing, 2.9% + 30c per transaction, more if you add e.g. fraud for teams etc. Stripe is great and I use it too, but the way they charge you (a percentage of your revenue) is simply not that fair in the long run while their workload has a fixed cost per transaction.

ttoinou 5y ago
Seems very fair pricing compared to competitors
- edwinwee 5y ago
  Yep, Stripe prices its products pretty competitively and talks to many beta testers before we settle on pricing. I think even adding all this up, it's less expensive than merchant of record providers like Paddle.
- drexlspivey 5y ago
  Why does it have to be a percentage of your revenue? It’s doing exactly the same thing for a $100 invoice and a $10000 invoice, why does the latter cost 100x more?
  - duckmysick 5y ago
    Value. A service Y makes it easier to collect that $10000 invoice. Inversely, by not using a service Y, you might not see those $10000 or it will be more difficult to do so. A glass of water has more value to you when you're thirsty.
  - ttoinou 5y ago
    Why not ? If you have small transactions you end up not paying a lot, and the more you make money the more you pay Stripe. If you make so much money that you can have your own tax system, good for you ! Implement it and don't pay Stripe :) Fixed price schemes would be less fair for small businesses that want to grow. Stripe helps you to grow, so that your company becomes the one big enough to "subsidize" the small ones after benefiting this pricing in the first stage
hardwaresofton 5y ago
Welcome to the world of saavy SaaS businesses. Smart/enterprising SaaS founders and businesses these days all know to tie their billing to whatever metric/KPI they are solving for customers -- per-seat billing, per-pageview, etc. Why make a little money (even if it's 2-10x your cost) when you can make much more by taking a small-seeming percentage of every single <whatever> that comes through your business. When your customer wins (and when they aren't winning you aren't a huge strain on their wallets) you win, and if the 0-5% eaten up by their bundle of SaaS products never matters to them, then you get wildly rich doing it and no one is angry about it, since the incentives are aligned. Then you plow that extra revenue (that you wouldn't have gotten from the simple 2x-10x your cost) into expanding your service offering so you deliver so much value (or perceived value) that moving away from your service just doesn't make sense. This is HN and just about everyone and their mother knows this at this point, and has been living it for longer than I've been writing computers but I'll say it anyway -- Stripe is the dream SaaS company, essentially a financial middleman that no one hates (yet?). The SaaS promised land is a somewhat close cousin of the dystopian everyone-is-a-renter-and-only-a-few-own-the-capital future. Maybe the hand wringing I'm doing is wrong -- maybe it should have been the case all along that solution providers should have extracted a never ending royalty on the revenue generated by the solutions they provide. Not only service providers but maybe workers should want that (no one remembers pensions, but they kind of were this) too. Who knows. If you can sell a music single album to 0.3% of America for $1, you get $1MM. If you do that with a Stripe store, Stripe gets ~$30k, for infrastructure that probably cost them less than $300 to host (for a single customer) and an ever-decreasing amortized amount to build (assuming they eventually stop growing their development workforce for growth stake). The artist that just made $1MM probably doesn't care about $30k as a millionaire (maybe they should, maybe they shouldn't). It's a win-win, and it's why Stripe's goal is to increase the GDP of the internet.
- justsomeuser 5y ago
  Apparently Buffet calls this a “toll booth” business. Once the road is built (customer integrates Stripe into their state machine), you can just keep collecting their toll for driving on the Stripe highway.
eps 5y ago
Don't forget they also force-convert payout wires to your native currency if you aren't in the US. Even if you operate mostly in USD, have USD accounts, etc.
- chinathrow 5y ago
  Yes, I omitted the 2% currency conversion fee if you payout in to another currency. I solved this partially by using Wise (formerly Transferwise) for USD->XYZ conversion and paying way less now.

kmoriarty 5y ago

Thanks for the feedback! Completely understand your reaction to pricing. For a bit of context, we’ve spent the past year listening to users and trying to understand the best way to price. In finalizing our launch pricing, we made sure there are no fixed upfront costs or contracts, nor are there any per transaction fixed fees either. We tried to find a price point that ultimately was not prohibitive for small businesses but also portrayed the value of the product itself. Please do keep the feedback coming, we’re always open to hearing more from users: kmoriarty@stripe.com

deleted 5y ago
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deleted 5y ago
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mchusma 5y ago
My honest feedback on pricing was "expensive but we would only want to apply it on non-US users." Also, we wouldn't want to have to pay for invoicing, which is honestly much much worse of a value prop. For someone with a 20% margin business, the combination of these and payments products is about 4%, or 20% of all profit. While this is the first product since payments I have liked (so good work there) it would be nice to see Stripe work on reducing the transaction costs, particularly on the payments side. Right now for me I consider Stripe a part of the "credit card processing tax cabal". Payment processing fees are a huge tax on the world, and if stripe could help solve that and genuinely reduce it to the level it should be (nearly free marginally), I would have the utmost respect for them. I honestly think this should be the main company focus if they actually want to help customers.
- cashewchoo 5y ago
  It's worth noting that there's the interchange fees that come along with using a credit card in the US aren't just a pure profit rake for the credit card companies. It obviously pays for computing resources and staffing and such, but beyond that it also, roughly, pays for all the fraud that happens with any credit card. In many cases, when someone does a fraud, it's someone "in the middle" (i.e. not the fraudster, the card holder, or the merchant) who ends up holding the bag. It's also paying for some aggregate amount of credit risk that card users pose to their banks. Credit card fees are high because fraud is such a colossal problem, and at various levels it's better for institutions to just eat costs (and thus slightly raise the minimum viable price they can charge for processing) than make it harder for people to buy things.