Stop Charging Your SaaS Users Like This

I recently experienced a huge drop in Monthly Recurring Revenue (MRR), and it hit me like a ton of bricks—I had been charging my users wrong this entire time! 🤦‍♂️ Let me take you through the details of what happened, how it impacted my business, and how you can avoid the same pitfalls.

The Unexpected Revenue Drop

On July 13th, a seemingly random event somewhere in the world caused my business to suffer a significant revenue hit. I promise to keep this short and to the point, so let’s dive right into it!

• Big Problem: I woke up and checked my Stripe dashboard only to find that my MRR had taken a massive dip.
• Initial Thoughts: I assumed that a bunch of users must have left the platform. So, I started investigating.
• Outcome of Investigation: I couldn't find any substantial decrease in our user base, which left me puzzled.

Connecting the Dots

Things got interesting when I realized that my other SaaS products, each with their own Stripe accounts, showed the same pattern. After a quick Google search, I noticed that the value of the S&P 500 was following a similar trend. The news confirmed that something significant had happened in the USA, which caused the entire stock market to take a hit.

This realization hit me: the US Stock Market and my MRR were correlated, and one had directly impacted the other.

Understanding the Currency Issues

Here’s where things got complicated:

Fixing the Problem

So, how do we fix it? It's straightforward!

• For Businesses in the US: If you operate in the US and charge in USD, you don't have a problem!
• For European Businesses: Charge in Euros instead of USD. Don't fall into the trap of thinking that USD is the default currency for SaaS.
• For Others Like Myself: If you’re based in Switzerland, consider charging in either USD or Euros.

Here’s what we did:

• We implemented geolocation detection on our website to show prices in Euros for European users and USD for everyone else.
• We created two price configurations in Stripe for every product: one in USD and one in Euros, ensuring users were charged according to their location.

Summary Checklist

To sum up, here’s a useful checklist:

1. Create two prices for each product in Stripe: one for USD and one for Euros.
2. If offering both monthly and yearly pricing, ensure separate prices exist for each currency.
3. Use geolocation to detect user location and display the correct pricing page.
4. When users upgrade, instruct Stripe to use the appropriate price based on the user's location.

Bonus Insight: The Psychology of Pricing

Here's the exciting part! Initially, I planned to translate the prices neatly from USD to Euros, resulting in €26.5 for our $29 plan. However, I chose to charge a clean €29 instead, despite it being slightly higher than the conversion. Surprisingly, this had zero impact on conversion rates!

Why? Well, €29 doesn't feel as daunting as $32 to users. It's all about the psychology of numbers! In the end, our revenue benefited from this adjustment—what a win!

Final Thoughts

Handling payments for your products can sometimes be a real headache. I learned this the hard way! I hope you found value in these insights.

If you enjoyed this content, please leave a like, and I’ll see you soon! Take care!