Why I'm going back to capturing credit cards up front
planscope.io
planscope.io
I actually agree CC upfront is better overall than not. Depending on the audience of course (some business users don't have access to CC's without approval from finance dept).
That being said. I found a higher conversion rate via what I call "resource-based" trials. One's not based on time ('14-days') but resources/services your app provides.
For example, in our app users can create 10 free entries with no time restriction. This sounds like a good deal to the user. But what makes it effective is the type of user who ends up paying for our app, was always creating 10 entries the first day already. So it was essentially getting them to commit and signup for free, then give us their CC the same day.
I've been meaning to blog about this for about 2 years now :P
That's different from a "free trial", because there really is no way to use our app for free on an ongoing-basis without paying for it.
(Not logged in ⇒ trial never expires) = no surprised and pissed-off users.
Get the CC number up front, but still require an 'opt in' after trial expiration to begin charging. You won't start automatically charging, you'll require the user to do something -- but the 'something' is just clicking a single 'yes, start charging me' button, with no need to enter the CC at that point, cause they entered it up front.
I have no idea if that will work to get the conversions he's getting with, well, automatic conversion. But I can't help but think products where a free trial automatically starts charging your CC on a certain calendar date if you don't opt out -- are getting conversions via trickery, and is not going to build a sustainable customer relationship.
The goal isn't to trick people into paying. The goal is to make it feasible for one person (me) to support a product by attracting those who have a business case for using it.
What fraction of paying customers have never visited/logged in since you started charging them?
Now, these end up being essentially the same thing, but if you marketted it like that would it hurt conversions? I don't know. But if it _would_ then it would definitely make me suspect that many of your conversions are accidental, and accidental conversions are the shady part, right?
If you're not ready to pay, then why the hell are you trying my service?
It's not a charity, it's a small amount of money each month.
Of course, your business is not there to make me happy, so it's up to you what you do. Just surprised that this question even gets posed when it has such an obvious answer ;)
To find out if I like your service enough to pay for it?
I thought I remmebered this, and just confirmed it. Go to http://aws.amazon.com/free/ in an incognito window. Click on 'get started for free'. Pretend you don't have an Amazon account and create a new one -- you have to create a new account with a credit card, before finishing up and going on to 'get started for free.'
However, with Amazon, I'm pretty sure that they won't charge you if you don't cancel in X days. They'll only charge you if you later opt in to a non-free service. (But am I wrong there?)
Nobody thinks it's shady, but then, it's a large company everyone's heard of.
I assumed the reason in part was to lower any barriers to later signing up for a paid component of the API, wit one click.
I understand why OP is doing it, but I still totally think it's shady to have you sign up for a free trial, and then start charging you at a certain calendar date unless you explicitly and manually opt out. At least, if you're doing this, you better be very very clear that's what you're doing when you get the initial sign up -- but the clearer you are, the more harm you're probably going to do to your conversions.
This is why most services these days, seem try to give a trial limited on resources of some kind rather than calendar. You get up to 4 Widgets on the free plan, you have to upgrade to the paid plan for 5. Get ads on the free plan, upgrade to paid to not have em. Get 4k page views a month on the free plan, etc. You get public repos on the free plan, need to upgrade to paid for private. Etc.
Note that the services that offer that kind of free trial seem especially beloved.
Can you think of popular and beloved cloud services that offer a time-limited free trial after which they will automatically start charging you unless you explicitly opt out? I can't think of any.
Even the new york times, when they give you an initial X month subscription at 25 cents a day or whatever, and then when it's time to renew it's gone up like 500% -- you still have to actually opt in and choose to renew your subscription at full price, they don't just charge your credit card.
I don't feel good about 'capturing value' from users who forgot to cancel... but the alternative (what I'm doing) is to make them take a positive action every renewal. (In my case, the account auto-renews, but it sends the user a bill that they have to actively pay; if they don't pay, the account goes away.)
Now, some people do prefer the 'bill me every month without asking' model... but I think the right thing to do is to make this an option; one option where the account will expire if the user doesn't take positive action to renew the account, and another option to automatically continue billing until the user asks to stop.
I don't know if many others feel this way, but as a user of subscription services, this is something I think about. I know that I'm probably going to forget to cancel, and that canceling is often difficult, so generally I consider services that don't autorenew to be much 'cheaper' even if they are the same price in terms of dollars.
But of course, people are missing the billing receipt emails!
I assume that was GP's point.
Miss both e-mails.
See both e-mails.
See the reminder, miss the receipt.
Miss the reminder, see the receipt.
All four kinds of people exist, no doubt, but you'll only hear from the last kind.
Others, like KissMetrics, sends you an email a few days before billing you... but their price points start in the 3-figures.
I think a policy of "We will bill you monthly and send you an invoice every time we bill you, and we'll always refund your last month's payment if you'd like" is best.
Would like to point out that separate from the fact that it bothers you and/or might not be right or ethical or whatever there is no doubt that in general in business you don't want to make it to easy for someone to think and cancel.
I don't think everyone feels that they are "ripped off" just because they didn't get notified that they were still paying for something that they agreed to.
An example is, say, with cable and a premium channel.
We decided to get showtime so we could watch Dexter. We forgot to cancel. The cable company didn't ask us each month "by the way we are still charging you for Showtime, ok?". By some of the comments in this thread it's as if people would expect that would be the "right" thing to do.
Forgetting personal responsibility for a moment if, as a business, you constantly give people a chance to bail many of them will bail (even for the wrong reason) and you will make less money.
The credit card companies by the way will approve charges even on expired credit cards. (Under a certain dollar amount you just have to put in the current month to get an authorization). Apparently they haven't found that practice to be a problem with consumers (although I'm sure they do get complaints.)
Eh, I think if I have a product that the consumer doesn't want, I've pretty much already lost. 'extracting value' from people who aren't paying attention is best left to the professionals. I mean... the line between making it hard to cancel and outright fraud... can get fuzzy. I think it's best to make, as it were, a "Good faith effort" to insure that you are only charging people who want to be charged.
Now, you can argue that recurring billing with an easy way to cancel can count as that 'good faith effort' - It's certainly the industry standard.
If you start doing things with the goal of making it hard for users to cancel, though, you are certainly stepping outside of that 'good faith effort' - and where the line is between that and outright fraud, I do not know. I do think that my current system, with it's manual cancellation process would be unacceptable by my standards if I pulled money from customer accounts. I don't think it would be unacceptable by legal standards, but it would be well into the gray area.
What I've found as a general rule is depending on where the line is people tend to think that someone who does something that they wouldn't do (wherever the line is for them) is either a) "really honest" or b) "a crook, cheat, dishonest etc."
Same with paying taxes. If we can assume that most people fudge a bit then someone who fudges 5 times as much is a cheat but someone who goes to extraordinary means to pay every cent is "really honest". Because it's usually in relation to how you view what you do as being "the right middle ground".
You strike me as being really honest by the way simply because (using my own ethics) you do things that I don't do more in the direction of being transparent and to the benefit of your customers at your own expense.
That, and risk tolerance. You could just as easily call me a coward. Especially when it comes to taxes; There are few mistakes I can make that I can't get out of through bankruptcy. Screwing up my taxes is one of those mistakes. (and I'm in a situation where my revenue, but not my profit, is fairly significant. So obviously, if a substantial portion of my revenues are ruled profits, I'm... in trouble.)
It's also, I'm given to understand, important to maintain a 'good faith effort' to pay the taxes you owe... my understanding is that has a lot to do with what happens after you are audited. If they think you intended to defraud them, that's criminal. If you just made a mistake, well, you've still gotta pay it back plus penalties, but you aren't getting a criminal record.
>You strike me as being really honest by the way simply because (using my own ethics) you do things that I don't do more in the direction of being transparent and to the benefit of your customers at your own expense.
That is the goal I aspire to... I don't always live up to those standards. Usually my failures can be attributed to (or framed as) incompetence rather than dishonesty, but... that can be difficult to determine externally. I personally see dishonesty as way worse than incompetence, even when the effect is the same, though I acknowledge and have a hard time arguing with the argument that the effect is what matters. I actually have some conflicts here because I /know/ I'm overconfident about how quickly I can get something done... but by how much? it varies a lot. Does this mean I shouldn't take jobs? I've chosen to take jobs. I pad my estimates a lot (like 2x) to cover the uncertainty, but sometimes that's still not enough. (and sometimes, it's way too much) I personally see that as a little bit dishonest. But, I don't think it's entirely unreasonable to re-frame it as incompetence, which is easier for me to swallow.
A good way, I think, for me to get around this is to take more 'pay upon completion' type projects. If I make it? great. If I don't? I don't get paid. I'd feel pretty good about that. Unfortunately, most of my good-paying contacts want to go hourly; all the per-job offers I've gotten have been... much less remunerative, for any reasonable estimate of how long the project would take.
I'm not entirely sure that a focus on honesty and transparency is entirely 'at my own expense,' though; It could also be seen as me trying to turn one of my weaknesses into a strength.
I'm sure you can get ahead by pushing that line if you are good at it... but because my line is so, for lack of a better word, conservative, once I step over my line... I have a hard time seeing where other people would set their line. I suspect (partially supported by some tentative exploration when I was younger) that I'd be bad at pushing that line. Worse-off than if I was too conservative.
I don't really see the line between the normal schmoozing and quid pro quo of enterprise sales and the unacceptable kinds of kickbacks. Pushing that line is... difficult; there's a sea of cultural norms that don't make any sense at all to me, and knowing how to give the acceptable gifts and not offer the unacceptable kicbacks is essential to enterprise sales. If you do it improperly, well, everyone sees you as very unethical, and your behavior can easily be seen as criminal. So again, here is both self-knowledge (that where other people draw that line makes no sense to me, so I can't predict where that line would be) and cowardice, in that I don't want to 'guess and check' where the consequences to being wrong are so high.
But yeah, a lot of it is also just what makes me, perhaps irrationally, feel good. I can make a pretty good living as an individual contributor, and my financial needs are small. I
A good example of how it is just irrational good feelings is that I'm mostly okay working for body shops and having someone else do all that shady shit. As long as I do my job, I feel pretty okay. I'd class this as the same variety of hypocrisy as eating meat but being unwilling to kill animals yourself.
I'll give you an example (which doesn't relate to business). My state requires front license plates. But I have a nice car that I don't want to mess up. But I also don't care if the cops stop me. So I didn't put the license plate on the car. Worst case is I get pulled over. I get a ticket for $85 or whatever. Maybe in some extreme case something even worse will happen but it shouldn't. So I decide to take that chance. (Nothing has ever happened not that it couldn't etc.).
In the case of the body shops you are probably shielded enough from the down side both legally and also emotionally so you are ok with it. I think that's fine from the way you are describing it.
My life partner, actually, is sort of stepping into the role you describe. It's hard for me letting go, but I'm far more likely to be okay with my partner taking that role than some random sleazebag. I mean, her background is more technical than mine; which is a downside in that role (though an upside for me actually following. Like most technical people, I have a hard time accepting leaders who don't have a technical background.) but eh, hiring for that role is really hard; judging from my past, when it comes to evaluating business people? I'm worse than random.
But it's still ultimately my business, and ultimately mistakes (or unethical decisions) made by that business are still my responsibility. Perhaps I will feel differently if someday I'm no longer the majority shareholder? (my partner is vesting in over time, so I am still the majority shareholder by quite a bit..)
But it's probably good that it's her; we have a lot of shared values and cultural background, and ultimately I see her as a good person, so while she's probably not the best businessperson available, she might be the best at working with me.
>I simply weigh the downside to any decision vs. the upside. It's almost automatic. After a while your brain just works that way.
Yeah, but almost nobody weighs moral concerns as zero. I mean, for an extreme example, you wouldn't murder someone for money even if you were certain you wouldn't get caught, and wouldn't face any negative consequences save those you imposed yourself.
(I'm not claiming that 'sharp' business practices are anything like murder; I'm just pointing out that you have the same line I have, even if yours isn't quite in the same place as mine. Almost nobody does a pure cost benefit analysis with no ethical or moral overlay.)
As a business you might give someone a 100% money back guarantee. But the same business would never go to someone and say "by the way you haven't complained are you sure you are 100% satisfied? If not let me know and I'll give you your money back!" What do you think would happen then?
(The above is a bit of an extreme example to make a point.)
It seems to me that he's saying that he sends reminders that the credit card will be billed and people don't cancel. But as soon as they get emailed that a charge was made, they do see that email because they're quick enough to cancel and request a refund.
It sounds to me like OP is actually going a fair job of managing this. He sends notice before billing, and a receipt after. Though I might change it so that the first billing required an opt in, with daily reminder emails in the last few days.
Provided...that the service had an easy and obvious way to cancel when I wanted to.
Yup. A bunch of my users have expressed the same sentiment. (I offer a fairly hefty discount for people who want to pre-pay, but I certainly understand that is a very different sort of thing.)
That's why I think it needs to be an option, selectable by the user. I think it's especially important to have the 'only keep it if I take positive action' for trials, but I think it's good policy to give everyone the option all the time.
>Provided...that the service had an easy and obvious way to cancel when I wanted to.
Yeah, also very important. Right now my process for that is "email us, we'll confirm with the email on file" which is... pretty bad. But I think the badness is somewhat ameliorated by my default billing method (e.g. if you just forget about the domain, it gets turned off and I don't get paid for any time that elapsed between when your account expired and I shut you off.) But it's still pretty bad.
I'm down to maybe three places that have my CC on file. Everyone else, I enter it - every month - at time of payment. I don't exactly like this, either - there is still the possibility that a poorly written component is logging the card somewhere[1], but it's better than handing over my wallet and walking away.
[1] seen it...
There is still a matter of trust: you can say you're using a given provider, but I can't verify it. It happens that I believe that you actually are - but unfortunately it really is a judgement call that has to be made for each service provider that I want to sign up with.
I think it's a larger issue, but the types of solutions that would help have largely been rejected by the market place: centralized storage of payment data with a few trusted providers.
I have some good (and I think relatively new) ideas on how to fix it, but it would require a fairly massive buy-in from the industry in order to work. So essentially, DoA.
You're spending more of your life entering your credit card number every month than is likely to be spent dealing with fraud.
The time to pull a different card out of a different wallet is seconds. The time and tedium to re-enter your credit card every place you want to make a payment is greater. You should have backup bank accounts and credit cards anyway. What if you lose your wallet? If I do, I have my backup one ready to go.
You're worrying over nothing. You're so heavily protected by the bank that you're just making work for yourself for no benefit. If your card details get nabbed, you're not going to lose anything anyway. And hey, who knows, they might be storing your card numbers behind the scenes anyway with your order, and therefore you're not at any advantage! Or they might have been compromised and your card details are floating off every time you enter them. Who knows? In any event, I'd be more worried about my card being skimmed at an ATM. That's definitely more likely than having it compromised online.
And hey, who knows, they might be storing your card numbers behind the scenes anyway with your order, and therefore you're not at any advantage
Indeed. Frustrating as hell.
I create a new card for every purchase, but long standing relationships (ie my VPS provider) gets a longer lasting card so I don't have to update it every month.
[1] The only time I ever enter my true CC is when bying something that requires a physical card (some airlines, certain tickets).
[2] similar to http://www.visaeurope.com/en/cardholders/virtual_cards.aspx but branded by my bank
But the markup ... say EntroPay of 3.5% makes regular usage very expensive.