Ask HN: Is it okay for a SaaS vendor to retroactively bill for billing errors? | Hacker News Reader

Ask HN: Is it okay for a SaaS vendor to retroactively bill for billing errors?

2 pointsmuttantt4 comments

We are the SaaS. We have a large customer that we realized 4 years into the relationship that we never added some line items to their bill. Is it acceptable to retroactively bill them for it now? Or say last 6 months? Nothing in our agreement with them addresses this particular situation. Thoughts?

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Retroactively bill for a mistake you've made for FOUR years? Yikes, no way. That's a great way to throw away your humanity, respect, and any goodwill you've built up over the years.

Bill for the last invoice or two? Maybe. Are you letting them know about the error 3 months after they've made an annual payment? Bad. Are you letting them know 3 days after a monthly charge was processed? Okay, and you're in a better position to talk about why their next bill will be a little higher.

"Hey, we made a big mistake, here are the details, this was our fault and we're really sorry, FYI your next invoice is going to be larger than usual and your total monthly cost will increase going forward, here's why, happy to answer any questions and schedule time to chat..."

Or, you eat your losses, keep them on their current plan and current price, and move on. Or, if they're agreeable, depending on their billing term, you let them know, give them some wiggle room for planning, and defer the cost increase for another few months as a courtesy.

Also, have they been (truly) using the product or feature or seats or service or whatever that you want to bill for? For all those years? If yes, you can work this into the discussion. If no, maybe it's not worth chasing. If it's an astronomical increase they can't afford, maybe you can find a middle ground, help them stay on a reasonable plan and price that works for their usage, keep them as customers.

This isn't about who has more "leverage", that's a shit way to frame a relationship with a customer—it's about doing the right thing. I have been on both sides a few times: having to write a difficult email to let customers know that we made a big billing mistake, and also in a position to fight this sort of thing out of principle. I have been successful in both scenarios.

In any case, take time and get your language right. Don't make things worse with poor communication.

There's no industry standard around this, this is basically a negotiation, with the appropriate considerations for how much leverage you or they have. We've had situations where our SaaS vendor was too big and we were too dependent on them to pick a fight over back-charges, so we paid. And there were other vendors with whom we raised enough of a stink around this that they relented, because they were not an essential dependency and we could switch.

How essential are you to the operations of your customer?

It sure is ok. It's also ok for a customer to disagree and leave.

First up, ensure they'll stay once you start billing for this in the future.

Next, see if they are willing to cover the cost of services provided in the past that was unbilled due to your error. It's good to offer some incentive (like your back-charge for 6 months only) to make it clear that your mistake caused this to go unnoticed.

I'd argue that no one can fully answer this except yourself. How profitable is this customer? How much good will do you want with this customer? How big is the size of the missing line items?

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