Company hits small SaaS with $3250 chargeback because they “forgot to cancel” | Hacker News Reader

Company hits small SaaS with $3250 chargeback because they “forgot to cancel”

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35 pointsKomoD21 comments

I guess that it's not great to have such a request come in, but if the customer hasn't used the service at all for months, what would you actually lose by giving them a refund?

Money

A chargeback isn’t just a refund. It’s a ridiculous inconvenience.

I mean that if someone has paid you $3250, but the cost to you of supplying them with a service that they haven't used is $0, refunding them won't cost you anything.

The chargeback has happened because the customer isn't satisfied with the refund policy.

If the company had pre-emptively issued a refund (perhaps minus a small admin fee to cover the transaction costs), then the chargeback may have been avoided entirely. The customer may have been happy to receive $3000 back.

I would have a lot more sympathy for the company if they could quantify specific costs they have incurred in providing the service.

Who knows if they used it or not? Maybe it was setup ready to go and none of their customers used it?

But if they genuinely didn't use any resources, depending on the payment processor, card charge fees are not refunded - Stripe does this.

This is stated in the Twitter thread:

https://twitter.com/PierreDeWulf/status/1636027002887995393

I run a small SaaS and it's surprising how many people never even use the service (over 20%).

It's a small service that runs for cheap, so we don't have a ton of engagement/nagging emails, but we do send a monthly email when the card is charged (with an easy link to cancel). And lots of people still don't cancel.

So now it's in our monitoring, at least for now, and we try to reach out when we spot non-users. I figure it's maybe great financially, but it's not great for the service (if they're not using it, they're not promoting it)

Subscriptions are a toxic business model.

So how would you charge for servers?

Offer prepaid credits, that of course doesn't allow for huge surprise bills so it's not that common.

and suspend services in case of sudden traffic? many companies would not like that

For personal accounts prepaid would make cloud offerings a lot easier and more predictable.

I personally don't use any "traditional" cloud services like AWS, GCP, because of the uncertainty of costs of anything going haywire while I'm at work or on vacation.

> many companies would not like that

And many companies come here when they get a surprise bill after a buggy push. Not having a spend limit is more often than not a complaint. Notice I wrote "offer" not "switch to". They don't have to be mutually exclusive and big corporations could still get limitless spending if they want.

I prefer when making mistakes is difficult.

If they don't like that, they don't have to enable spending limits.

He would offer it for free, amass a large customer base while subsidizing it on VC money, and then alienate them all in 30 days by jacking up prices.

Toxic, no.

Subscription pricing certainly made Adobe products far more accessible when I was younger.

Now that I’m older I do wish I could pay a one off payment.

Subscriptions are healthy for some things: I have mixed feelings about Creative Cloud but it does make the product accessible to many people and also put updates into everybody's hands for products that they are continuously improving.

On the other hand I think for a lot of cases the real business case is "user will forget that their bank account is being bled dry by 20 subscriptions they forgot about."

Another one is that I've seen in the long term, together with bundling, they lead to industries that set new revenue records year after year despite being senescent. Cable TV is a particular case: subscribers had no ability to "walk with their feet" when MTV gave up showing music videos. I can't unsubscribe to CNN or Fox News or both of them and still keep my subscription to less pernicious channels. I'm afraid that Microsoft's GAME PASS is going to follow the same trajectory and make the scene for XBOX ONE games even worse than it already is. (Shoulda bought a PS4 is what I know in retrospect.)

Subscriptions for legitimate ongoing services make a lot of sense.

I use "legitimate" there because a lot of SaaS is only offered as a service to soak customers, with no technical need or benefit to being sold as a service. That's the toxic business model.

The owner of ScrapingBee tweeted about a company who forgot to cancel their subscription, they agreed to a partial refund, but then they went silent, and launched a chargeback for $3250.

Well you were charging them month after month for nothing since they weren't using your service. So who's scamming whom?

The customer is the one who signed themselves up.

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