[HN Gopher] I analyzed SaaS billing dark patterns
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I analyzed SaaS billing dark patterns
Author : indus
Score : 81 points
Date : 2021-11-17 16:48 UTC (1 days ago)
(HTM) web link (quolum.com)
(TXT) w3m dump (quolum.com)
| jedberg wrote:
| This is a very cynical take. Not all of these things are designed
| to trick you.
|
| For example, requiring a credit card for a free trial is to
| prevent free trial abuse. A normal person can only get so many
| valid credit card numbers, assuming you can detect burner cards
| (which for the most part the CC companies will happily help you
| do).
|
| Yes, a good company will notify you that a trial is going paid,
| and a great company will require an affirmative action on your
| part, but the main goal isn't to trick you and hope you forget.
|
| Also, the part about not prorating costs if you use less
| resources. Usually you get a discount for paying up front. The
| reason you get a discount is because it allows the company to do
| more efficient resource planning, a savings they pass on to you.
| If they allowed you to cut back, you haven't upheld your part of
| the deal. A big company can absorb the loss, but a small one
| can't.
|
| Yes, some companies do these are dark patterns to increase their
| profits. But most have some pretty good non-nefarious reasons to
| act like they do.
| moneywoes wrote:
| Does Stripe detect something like privacy.com?
| hdjjhhvvhga wrote:
| > Free trials should not require a credit card. Collecting your
| payment information is an obvious red flag that you will be
| billed as soon as the free trial period ends.
|
| I remember many people on HN defending this pattern saying that
| they are not interested in people who don't want to provide their
| CC details, that they are bad customers, they just want a free
| ride, and they are not sorry for setting it up like this. Oh
| well. I guess with time more people get burned and will finally
| learn the hard way this is just one of many grey patterns.
| rapind wrote:
| How is this a dark or "grey" pattern. Are they being sneaky
| about it?
|
| At most it could be a signal that a business intends to be a
| douche, but that's only because douchey companies ruined it.
| Just like duchey free customers ruined that for everyone.
|
| My employer probably thinks payroll is a "grey" pattern by this
| logic.
| CPLX wrote:
| This one doesn't bother me. In this scenario they're providing
| a real actual product that presumably they've worked hard on
| and has value. The free trial is their way of demonstrating
| that they have faith it's a good product and I'll want it. My
| credit card is a way of demonstrating that I'm a real customer
| that will pay if I do turn out to value it.
|
| That seems like a reasonably balanced transaction on both
| sides, not sure it fits into this framework. There are so many
| far far worse practices out there.
| rhizome wrote:
| This is exactly right. For years it was conventional business
| wisdom and best practice to focus on getting the CC. We could
| probably find some pretty embarrassing (for the web industry)
| threads if we wanted to look.
| human wrote:
| Requiring a credit card for a trial is fine, as long as you
| don't convert automatically to a paying membership. And if you
| do, please send me a reminder a week before at least.
| dhimes wrote:
| I'll add: A reminder with an opt-out link.
| dqv wrote:
| It's about what pisses off fewer customers. If I was stubborn
| and believed everything I read on HN about customers, I would
| continue to piss off a lot of people by designing under the
| assumption that I should only get CC details at the end of the
| trial.
|
| For certain types of customers, it is surprising and annoying
| to have to fill out CC info at the end of a trial. The customer
| gets the notice the trial is ending soon, but ignores the part
| about adding CC info to keep using after the trial. Then the
| day comes, we get them on the phone to ask if they will stay
| with us, they say yes but the person who has control of the CC
| is gone for the day. _You're not really going to turn it off
| are you?_ Sorry, but we have to.
|
| So the easy solution is to make the credit card form
| recommended but skippable. Skippers just need to know that the
| trial won't be extended if they can't pay. In either case, they
| still need to give the OK to charge at the end of the trial.
| digitalengineer wrote:
| Hubspot. The yearly plan is way cheaper. But you need to cancel
| it 3 months in advance or you're on the hook for 'the same
| period', thus another year. No reminder email of course.
| rsstack wrote:
| FullStory sent us a reminder email last week that we need to
| cancel 2 months before the annual contract ends. I started a
| Slack thread, we all agreed we love FullStory, done. I think
| SaaS that try to trick their customers by not reminding them
| about their cancellation policy (which isn't consistently 1
| month, 2 months, or anything, and is hard to track when you're
| a small startup) are just afraid their product isn't good
| enough or valuable enough for people to renew. Instead of
| improving their product, some exec can say "let's not remind
| them", and get about the same rate of retention.
| indus wrote:
| applicable to a majority of annual contracts of top SaaS
| vendors.
| encoderer wrote:
| Of all the nasty things somebody can do with billing, I'm
| surprised the author leads with card-upfront trials.
|
| "Free trials should not require a credit card."
|
| This is opinion presented as fact. This is not a dark pattern.
| Totally unrestricted free trials are wonderful, you've invested a
| ton in your product and you want a prospective customer to
| experience everything. But there are legions of abusers and bad
| actors of all kinds. Having an opt-in to use/abuse your platform
| for 2 weeks is not always viable. Card up front is not a perfect
| filter, but it's helpful in turning this noise way down and
| letting you focus on helping actual prospective customers become
| successful with your product.
| indus wrote:
| Dont you think users with malintent abuse the platform
| irrespective of whether a card is on file or not?
| kevincox wrote:
| Credit cards act as a "cost" of sorts. Credit cards are a
| limited resource, it is not free to acquire more credit
| cards. By requiring a valid credit card you are basically
| relying upon the verification that credit card issuers do to
| prevent unlimited abuse.
| atgarone wrote:
| I'm sure that when you're analyzing SaaS transactions for a
| year (full time), you see a lot more data than we more-select-
| few-who-can-discern do.
| dinobones wrote:
| You forget this is HN, where software engineers will go off
| on tangent talking about how "they could have designed the
| airplane rotor to not crash" or something equally ridiculous.
| Everyone here is an expert at everything, because they wrote
| a blog once, or since Paul Graham is perceived to be an
| expert on everything, they can be too.
| indus wrote:
| > since Paul Graham is perceived to be an expert on
| everything, they can be too.
|
| ROFL.
| flerovium wrote:
| It's about effort. The seller is asking you to put in the
| effort to enter your payment info in order to use the "free"
| version of the product. It's an exchange. The seller benefits
| because there is less friction to paying later.
|
| The dark pattern is billing the card _without_ consent from the
| user, or some weird implicit consent.
| saahilsaini wrote:
| as a new entrepreneur trying to understand saas expenditures this
| was an insightful read into the industry
| schnebbau wrote:
| > Your company needs a CRM, so you sign a year-long contract for,
| say, 50 seats on your chosen SaaS CRM. Then -- yikes! After six
| months, half your team is laid off. Will the CRM let you adjust
| and pay for 25 seats for the remainder of their contract?
|
| > That's a big NO. Unused seats? Still gotta pay for 'em. (It's
| called "SaaS waste" for a reason.)
|
| You committed to paying for 50 seats for a year. The CRM may have
| made decisions based on that commitment, such as hiring people,
| or themselves committing to bigger plans with their providers.
|
| Why should they get screwed because you choked? Don't commit to
| long fixed periods if there is any doubt you won't make it.
| hermes8329 wrote:
| Saas has obscene markups
| ZephyrBlu wrote:
| It has "obscene markups" based on costs, but that is not how
| SaaS is priced. It's priced on value.
| lordnacho wrote:
| Is anything being done about this kind of thing? It's one of
| those steal-a-dollar from 1M people tricks. If you stole 1M from
| one person they'd do something about it. Pick 1M pockets and
| nobody can do anything.
| indus wrote:
| there are a few ideas, to let technology help.
|
| Others are around legislation, such as the one that came
| yesterday from FTC on _call to cancel being illegal_.
| tie_ wrote:
| Here in Germany, physical businesses have even more egregious
| subscription policies than most "dark" SaaS-es. Think, you do not
| cancel 3 months before expiration date - congrats, you're now
| signed up for another year. As a result, ended up writing a small
| PWA to keep track of my contracts and subscriptions.
| indus wrote:
| Whaat! This one is new. You mean subscriptions from your
| neighborhood store such as milk, bread, newspapers, etc?
| tie_ wrote:
| More like gym, "clubs" (Verein-s), mobile phone, internet,
| electricity, etc. It's an established contractual practice,
| and e.g. Telekom are not in any way obligated to notify you
| when your cancellation date approaches. They can very well
| sue you, however, should you refuse to pay your
| automatically-renewed-in-advance contract.
|
| Even in the cases where you're allowed to cancel on the last
| day of the subscription, we as humans are very prone to
| forget to do that, particularly for longer-term contracts.
| Tracking contracts and subscription deadlines is a damn
| profitable habit that I wish I had acquired much earlier.
| indus wrote:
| Curious: if they sue, then the only damage is money they
| owe or there is more to it such as credit history, etc?
| tie_ wrote:
| I haven't really tested it in court, though I did get the
| official correspondence that leads up to it. Friendly law
| practitioner had suggested that I really don't stand a
| chance.
|
| Not sure about credit damage, but in case of a loss in
| such a suit, I'd also have to cover the expenses for the
| other side, so it's a risky proposition.
|
| With my wife we did consider it for a while, but then
| decided it's better to do focus on solving that problem
| with software and thus started working on contrax.app
| (shameless plug!).
| niklasd wrote:
| Newspapers, fitness studios, mobile providers, railway
| discount ticket (Bahncard). Can't say for neighborhood
| stores, I haven't really used a subscription at such a shop.
| dqv wrote:
| Ah yes they call those evergreen contracts in the US. Month-to-
| month works for me. It gives us both an out if one of us ends
| up not liking the other.
|
| > As a result, ended up writing a small PWA to keep track of my
| contracts and subscriptions.
|
| You can provide this as a yearly service where if by the ninth
| month they don't cancel, they must use it for another year ;)
|
| Edit: oh you already do sans the contract terms
| human wrote:
| I'm not sure it qualifies as a dark pattern, but I was really
| frustrated by the Logmein pricing. I was paying a relatively
| expensive amount for my 100 computers package. Once I went over
| that threshold I had to convert to the 500 computers package
| which cost 4x was I was paying. That was true even if I had 101
| computers and not 499. I ended up upgrading with a negotiated
| price but still don't understand why it's not a price per
| computer.
| rhizome wrote:
| Easier bookkeeping on their part.
| elliekelly wrote:
| That might be the reason for the different tiers but there is
| definitely a dark pattern in the auto-upgrade GP describes.
| LogMeIn could just as easily put a hard stop at 100 computers
| with a notification the user needs to upgrade to a higher
| tier package. Instead they auto-upgrade the user without
| asking. (I'm assuming there's no way to avoid the auto-
| upgrade. It's one thing if a user opts in to the tier scaling
| for their own convenience I think that's different.)
| human wrote:
| In their defense, I wasn't auto-upgraded. I just couldn't
| add computers anymore. I hovered around 99 for a while,
| removing old computers, but one day I had to open up my
| wallet.
| indus wrote:
| Easier bookkeeping is the main ingredient of debate between
| consumption-based billing (AWS, Twilio, etc) vs user-based
| billing.
| indus wrote:
| Not having consumption-based billing is definitely a callout
| issue and many exploit the simplicity of bundled t-shirt
| (Small, Medium, Large) SaaS pricing.
| cosmolev wrote:
| Subscription-based software is already a dark pattern.
| wbobeirne wrote:
| What would you recommend products that host the service and
| have ongoing upkeep costs to do?
| newfonewhodis wrote:
| I would recommend the creators ask themselves if their
| software _really_ needs to be hosted or can it be sold as a
| one-off (self-host or desktop/mobile).
| Veuxdo wrote:
| Seems orthogonal. You can have subscription-based
| desktop/self-hosted, and one-time-payment hosted software.
| mdasen wrote:
| I don't think you should be downvoted for this, but I do
| think there are some reasonable responses to it.
|
| First, supporting desktop/mobile software can be hard.
| Customers have all sorts of weird things on their machines.
| iOS cuts down on that, but you still lack access for a lot
| of debugging and that can cost a lot of money. Support is
| expensive.
|
| Second, I think there's this idea that desktop/mobile
| software is a one-off. What happens when Apple removes an
| API that your program used? Do you tell uses "sorry, your
| $X doesn't entitle you to a working program anymore?" For
| better or worse, software requires ongoing investment. If
| software requires ongoing investment, it kinda requires
| ongoing payment - or operating on the idea that new users
| will pay for the improvements required by older users.
| However, that's a dangerous assumption. At some point,
| there are a lot more older users than there are new users.
| Many companies tried to operate pension schemes assuming
| that new workers would pay for older workers retirement
| benefits. At some point, there are fewer new workers than
| there are old workers and it collapses.
|
| Software maintenance is important, but it can be hard to
| price. Do you tell users "you have a license for 2.0, but
| you'll need to pay $X to upgrade to 3.0...oh, and 2.0 won't
| be updated to support iOS 14 so you're basically forced to
| upgrade"? Do we tell creators "if you don't keep this
| software maintained in pristine condition for the next 20
| years, you're being predatory"? That kinda just demands
| that they do uncompensated work.
|
| Even if software isn't hosted, there are ongoing costs.
| Some of that can be priced into the initial purchase of the
| software. Some of it can't be. It's hard to guarantee that
| software will continue working for 2, 5, 10, 20 years when
| you have no idea what that might entail in terms of work.
| 20 years ago, Apple was shipping Mac OS 9. Since then, I
| may have needed to upgrade my app from Classic to Carbon,
| from Carbon to Cocoa, from 32-bit to 64-bit, from PowerPC
| to Intel, and now from Intel to ARM - not to mention the
| huge number of APIs that have been broken along the way.
|
| Is the right model something like what JetBrains does where
| you get a perpetual license to the version you bought, but
| that version might just stop working given changes around
| it (like OS upgrades or new machines it isn't compatible
| with)? That doesn't force you to subscribe, but it does
| mean that you're likely going to need to upgrade.
| Programming languages move on and you're stuck with an IDE
| highlighting things as bugs or that won't launch your
| program because it isn't compatible.
|
| Subscription-based pricing gives creators an incentive to
| keep investing in their program and it gives customers
| predictable costs. No one wants to hear "sorry, this won't
| run on M1 and we're not going to upgrade it for free for
| you so here's a $X charge that you have no way around given
| that Apple is abandoning Intel".
| magicalhippo wrote:
| Our software is subscription-based, and our customers love it.
| They get a predictable cost over time, rather than large costs
| every now and then. We can afford to include features that
| otherwise might not be justifiable in terms of new sales.
|
| On the flip side, one of our competitors who hasn't switched
| has been struggling for years and a recent new version almost
| killed them off as many customers didn't feel they could
| justify the $10-20k or so to buy the license to the new
| version.
|
| A key part of our success is that the subscription price scales
| linearly with customer activity. There's a fixed base price per
| active user, and in addition there's a cost associated with
| certain actions. This means that the subscription price scales
| with the customers activity and hence income. If they have a
| slow month they have less income but pay less, if they have an
| active month they have higher income but they also pay more.
|
| FWIW our software is primarily installed on premise, but we do
| offer hosted service as well (base cost is different for the
| two cases).
| hdjjhhvvhga wrote:
| No, I don't think so. If the seller actually incurs monthly
| costs like hosting, this is absolutely fair. What I would call
| a dark pattern is when you buy an app, a piece of software that
| executes code on your device, and are forced to pay monthly
| fees. This gets more and more common. I understand the reasons,
| but I personally prefer one-off payments and buy software in
| this way. If it's good, I will pay for upgrades anyway.
|
| Another dark pattern is switching off your customer's apps
| remotely as Adobe did to their customers in Venezuela two years
| ago.
| teddyh wrote:
| Why does hosting need to be bundled with software upgrade and
| support? Hint: It doesn't.
| wly_cdgr wrote:
| Without reading too much into the fact, it's still pretty funny
| that this is marketing for a SaaS product
| notyourday wrote:
| > Free trials should not require a credit card.
|
| I'm not in business to provide services to people who want stuff
| for free permanently. They complain on forums, raise stink and
| spend nearly no money. They are not my customers. I always ask
| for a credit card for a free trial. The fewer non-customers
| signup, the better it is for me.
| lgl wrote:
| While I kind of understand your point of view and not all
| businesses are equal, a free trial is not stuff for free
| permanently. You should be confident that your product will be
| able to make the customer willingly add their credit card after
| their trial is over if you are indeed providing them with a
| useful service.
| not1ofU wrote:
| I agree, and was going to posit the same argument, however, a
| credit card is a useful way to get unique info. If someone
| signs up to free trail without something like a CC, instead
| using an email address, then they just have to register a new
| email address to get further free service. Although I am sure
| there are alternatives that I havent considered.
| brooklinnash wrote:
| What's your thought on alternatives, like Ahrefs' $7 for 7 days
| trial?
| notyourday wrote:
| Unrestricted service at the highest plan level, 1 to 2 weeks,
| credit card not only required but is authorized for the plan
| price - do not settle transaction as it is still a free
| trial. This ensures:
|
| 1. Whoever tries the service at least theoretically met
| minimum qualification to be a customer - they have a credit
| card and can authorize several hundred dollars on it.
|
| 2. We get the real lead.
|
| 3. We limit the number of people who recycle free trials --
| this happens _a lot_.
| bazhova wrote:
| AWS costs are somehow always higher than your estimate. Even when
| using their little calculator. That's the dark pattern right
| there.
| atgarone wrote:
| I got locked into a reseller agreement with JustHost for my
| wife's GSuite account, which she uses for her full-time work. Now
| I'm paying them $90 a year just so I can retain my GSuite
| services without her having any downtime or losing her data.
|
| Only recently did I discover GSuite has an FAQ for getting out of
| reseller agreements. Going to have to act on that.
| elias94 wrote:
| I forgot the AWS password once for an account with only one S3
| bucket. I did the recovery procedure but they wanted to verify my
| identity using my document. I send them my ID, which was with a
| different address from my account information.
|
| They didn't accept my ID and I wasn't able to stop the service
| and the recurring payment. Fortunately I registered my payment
| with a prepaid credit card, so was easy to empty the card and let
| them billing into the void.
|
| Since then, I always use a prepaid card for recurring payment. It
| saved my ass in a way.
|
| One of the largest dark pattern is also having a poor customer
| service.
| r00fus wrote:
| Is failure to pay (ie, card authorization) good enough for
| inability to cancel? Couldn't they just invoice you and hold
| you liable for fees regardless?
| dmitrygr wrote:
| Only until they try to collect and you produce proof that you
| tried _A LOT_ to cancel
| indus wrote:
| A failed card auth does not remove the obligation to pay.
| Most vendors write if off, and don't follow-up after a few
| emails. Plus, they don't want users to get pissed off and
| post a negative review.
|
| Many vendors have now optimized their billing flow to reduce
| write-offs. They start charging on the first of the month for
| the upcoming use, and then cancel the account if the auth
| continues to fail.
| imilk wrote:
| Some banks make this much easier by allowing you to spin up
| virtual cards w/ daily spend limits on them.
| jmsuth wrote:
| This is one of my biggest qualms with building SaaS apps on the
| App Store. You can't do a free trial without requiring an Apple
| Pay confirmation which will auto-convert. We get lots of negative
| reviews because of it, but there's no way around it without
| offering some free version.
| indus wrote:
| Though apple pay does a decent job on the cancelation UI, the
| free-to-paid notifications (in email) are always a miss. I have
| seen this in trial subscriptions at home with buyer's remorse
| later.
| brooklinnash wrote:
| "Our research shows that companies underutilize their SaaS
| products by an average of 30% across the board"
|
| Big yikes.
|
| I'm curious which of these approaches would have the biggest
| impact on bringing that SaaS waste down.
| indus wrote:
| Though not easy to implement, but consumption driven billing
| rather than seat/user-driven would reduce the grief quite a
| bit.
|
| In the early days AWS EC2 became popular for their per compute
| per hour pricing compared to hosting providers fixed monthly
| cost.
| CPLX wrote:
| These are far from the worst patterns. I've seen so much
| awfulness out there.
|
| My favorite recent one was a renewal if you don't cancel by a
| deadline that's months ahead of the actual end of the contract
| period _and_ it also had a substantial rate increase _and_ all
| the language that we supposedly agreed to wasn 't actually
| present in the contract we signed.
|
| Those terms were in one of those "incorporate by reference"
| clauses where it says this contract incorporates terms and
| conditions that are at the following URL and it's 45 pages into
| the fine print of that URL. I mean supposedly, since it's their
| URL and could just change the terms whenever they want and lie
| about it.
|
| Which by the way wasn't clickable in the Docusign. Basically it
| was in an unlit basement behind a sign that said beware of the
| leopard.
|
| It's not ethical. It's just exhausting to deal with some of these
| companies. I think we all know who they are, they tend to be
| concentrated in the field of SaaS companies that cater to the
| sales and marketing functions.
|
| Lately I've had what I've found to be a fairly clever solution
| however. We wrote up a standard document that contains _our_
| terms and conditions for SaaS providers.
|
| The key clauses basically say "We hereby give formal notice that
| we do not consent to any automatic term renewals, any automatic
| price increases, any charges to credit cards made 'on account'
| without our specific consent as to the date and amount charged.
| To the extent our agreement requires advance written notice of
| any of the above this letter serves as that notice." and so on.
|
| Then we send it certified mail to the company's corporate HQ
| address and keep the tracking number. We do this on the same day
| we sign any software contract, it's basically an automated
| process at this point.
|
| So whenever it comes around, and it has, we just say sorry we've
| already given formal written notice we don't consent to that.
| Here's a scan of the document and the USPS receipt maybe work on
| your internal communications.
|
| The fact that we have to do this is _apalling_ but hey it 's
| better than the alternative.
| Plasmoid wrote:
| Does it actually work? Have you tested in in court?
| CPLX wrote:
| Haven't made it to court but it would certainly be legally
| sound. Courts love certified mail and formal notices it's not
| even clear what counterargument they could have.
|
| But in real life what it really does it get them to back off
| and go back to having a normal negotiation about what we _do_
| want to do for renewal instead of the bullshit attempt to
| mislead and trap us.
|
| Needless to say if there's any viable alternatives to
| companies that do this we take them but in some categories
| all the options suck.
| indus wrote:
| Interesting idea.
|
| But isn't there a risk that if the company that gets your
| certified mail, reads it, and then cancels your account?
| CPLX wrote:
| Sure I suppose that's a risk. But then they'd be in breach of
| the contract since the letter definitely doesn't say to
| cancel the account, it says that this is notice given to all
| extant notice clauses that could result in additional
| billing, renewal, and so on. It's worded well I'm
| paraphrasing.
|
| As a practical matter though I don't think there's much to
| worry about. These guys don't have a process to field letters
| like this.
|
| The joy comes from the elegance of it all. If they want to
| play a game of exploiting the fact that people don't read the
| fine print then they should be prepared for a fair contest.
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