Stop Charging Your SaaS Users Like This

- A random event made my business suffer a huge hit in revenue. A video explains how to fix it and how it resulted in a 23.3percent increase in revenue for my SaaS. - There was a massive dip in the stripe dashboard around July 13th. At first, I thought it might be caused by churn, but then I realized that other SaaS products showed the exact same pattern.

On July 13 this year, a random event somewhere in the world ended up making my business suffer a huge hit in revenue. And I need to tell you about this because it could be costing your SaaS a lot of money too. I promise I'll keep it short and to the point. In this video, I'll explain what this random event was, how it impacted my business, and how it probably impacted yours too, how to fix it, and how fixing it accidentally resulted in a 23.3percent increase in revenue for my SaaS. Let's take a look. So what was this big problem? Well, around July 13th, when I got up to check my stripe dashboard, it seemed like someone had flicked the switch overnight, which caused a massive dip in my mrr. Now, churn happens, and unfortunately it comes in waves. So my first thought was that a bunch of users had left the platform over the past few days. So I started investigating. Maybe there was a critical bug in our system that we had missed, causing people to leave in frustration. Though I couldn't see any substantial decrease in our user base, this was very odd. If this was not caused by churned, then what caused it? I started digging deeper, and then I realized that my other SaaS products, which each have their own stripe account, showed the exact same pattern. And here's where things get interesting. After googling for a bit, I noticed that the value of The S&P 500 followed a very similar pat. And when checking the news, I could confirm that something had happened in the United States which had cost the entire stock market to take a serious hit. And it took me a few moments to realize how the US Stock market and the MRR of my businesses were not only correlated, but one had directly impacted the other. And once I took a further look at how our stripe accounts were set up, the answer was staring me right in the face. So let me explain how this works. When you set up a stripe account, you need to link a bank account that stripe will use to pay out the money it collects. And depending on where in the world you operate, you typically get a few choices for the currency you want to use for these payouts. In United States, you'd pick the US Dollars. In UK you'd pick the pound. And in countries that uses Euro, for instance, in Germany you'd pick Euro. And in some European countries that don't use Euro, you typically get to choose between Euro and the local currency the country uses. In my case, since company is operating from Switzerland and uses a Swiss bank, I have my currency set to Swiss Franc. Now, here's where I realized I made a huge mistake. In the same Stripe account, I had all my products configured to charge users in US dollars. Why? Well, I don't know. I wish I could say that based on the demographics of my icp, I knew that most of our users would be from us, yada yada. That's not why I did it. It just seemed like the most universal currency to charge in. And yeah, I really didn't put much thought into it. And this mistake is exactly what was causing the issue. Can you figure out what the problem is here? Well, let me explain. When you charge your users in a given currency, but making payouts in another currency, these currencies needs to be exchanged. This happens every time a user's credit card is charged. So in my case, every time Stripe charges a user, it happens in the US Dollar and is then exchanged to Swiss Franc using the USD to Swiss Franc exchange rate at that moment. Now, the Swiss Franc is a very stable currency, more so than the US Dollar. And when some bad news comes out of the United States, it may cause the US dollar to decrease in value compared to the Swiss Franc. The same thing applies for Euros. In times when the US is shaking, the value of the US dollar compared to Euro might decrease. And sometimes this happens very fast, just like it did on July 13th. If we look at the exchange rate over time, we can see that the value dropped pretty aggressively around this time. And obviously this is a very undesired side effect from charging in another currency than you use for your business. So how do we fix it? Well, obviously if you're a business operating in the US and you charge in US dollars, you don't have a problem and you don't need to do anything. If you're operating in Europe and you know that most of your users are from the eu, simply charge in Euros. Don't fool yourself into thinking that US dollars is the default for SaaS like I did. If you're from another country, like Switzerland, it doesn't really make sense to have your official prices in a currency that only one small country is familiar with. So you need to pick one of the major ones. US or Euros. Or even better, why not have both? In fact, this is exactly what we did on our website. We use geolocation to detect which country a user is from, and we simply display our prices in Euros if they're from Europe or US Dollars if they're from anywhere else in the world. In stripe, we then set up two prices for each product, one in US Dollars and one in Euro. And when they upgrade to a paid plan, we simply tell Stripe to use the one that fits the country they're from. And if you're super thorough, you could of course expand this list to include a whole bunch of other countries too. However, I'd say that if you have US dollars and Euros, you're pretty well covered. You'll still be charging some users in US dollars, so the problem doesn't entirely go away, but at least you soften the impact of the volatility of a single country quite significantly. So let me create a small checklist for you to sum up. How to solve this. Create two prices for each product in Stripe. One for USD and one for eur. If you have monthly and yearly pricing, you need separate prices for USD and EUR for these two on your website, detect where the user is coming from and display your pricing page. And EUR if they're from Europe, and US Dollars if they're from anywhere else. When a user upgrades, tell Stripe to use the price ID for either USD or eur, depending on where they come from. And that's really it. But here's a bonus for you. In fact, this is almost the best part. When I set this up, my initial idea was to roughly translate the prices from US dollars into euros so our $29 plan would become 26.5 EU. But those prices just doesn't look very nice on the landing page. So I was going a little back and forth with this, but since I was in a hurry, I thought, fuck it, I'll just charge European users €29 to keep the numbers nice and clean, even if it's slightly more. And surprisingly, this had zero impact on our European users. Our conversion rate and how often users picked one plan over the other was completely untouched. But since €29 is around $32, our overall revenue ended up increasing. And you might be thinking, why don't you just raise your prices then? Seems like your users clearly don't mind paying more. Well, I beg to differ. It's about the psychology of the numbers. $32 just looks like much more than $29. So if we change this price in the US, I bet we would see a negative impact on signups. Also, this really wasn't meant to be a price increase, but I'll take it. Oh, and if you're watching this and you think that you can just use a vpn, bounce over to the US and then get my products cheaper, you're absolutely right, you can. No, we didn't do anything crazy. To prevent this. So by all means, serve yourself if you want to save a few dollars. Handling payments for your products can sometimes be a real headache. And I certainly learned that the hard way. Here. I hope you got value from this video. Leave a like and I'll see you soon. Take care.