Stop Charging Your SaaS Users Like This

Summary

In this video, the speaker shares a pivotal lesson learned from a significant drop in monthly recurring revenue (MRR) linked to a sudden downturn in the U.S. stock market. Investigating the issue, he discovers that charging U.S. customers in dollars while operating from Switzerland, with payouts in Swiss francs, caused currency exchange losses. To address this, he recommends businesses offer pricing in both U.S. dollars and euros, depending on the user's location. This strategy not only mitigated the impact of currency volatility but also inadvertently increased revenue by adjusting pricing psychology without raising prices. The speaker emphasizes the importance of aligning currency with customer demographics.

Takeaways

• 😀 A sudden drop in monthly recurring revenue (MRR) can occur due to external factors like currency fluctuations.
• 📉 Currency exchange issues arise when charging customers in a different currency than the payout currency.
• 🔍 It's essential to investigate revenue drops thoroughly before concluding that user churn is the cause.
• 💵 Using the US dollar as a default currency for charging might not be suitable for all businesses, especially those based in Europe or other regions.
• 🌍 Implementing dual pricing based on geolocation helps align pricing with the local currency of users, minimizing currency volatility risks.
• ⚙️ Stripe allows for flexible pricing setups, enabling businesses to charge in multiple currencies seamlessly.
• 🧮 The psychological impact of pricing shows that customers perceive $29 as significantly less than $32, influencing purchasing decisions.
• 📊 Offering prices in both USD and Euros can attract a broader audience and increase overall revenue.
• ✅ To avoid issues with currency conversion, businesses should set up two prices for each product in their payment processor.
• 🚀 Aligning charging currency with the business's operational currency is crucial for maintaining revenue stability.

Q & A

What random event occurred around July 13th that impacted the business?

The business experienced a significant drop in monthly recurring revenue (MRR) due to a correlation between the US stock market's performance and their sales.

How did the business owner initially react to the drop in MRR?

The owner first suspected that users were leaving the platform and investigated potential critical bugs or issues that could have caused the decline.

What realization did the owner have regarding the currency used for transactions?

The owner discovered that charging users in US dollars while making payouts in Swiss francs was causing issues due to the fluctuating exchange rates.

Why is charging in US dollars problematic for a business operating in Switzerland?

When the US dollar decreases in value against the Swiss franc, the business suffers financially because of unfavorable currency exchange rates during user transactions.

What solution did the owner implement to address the currency issue?

The owner created separate pricing for US dollars and euros, using geolocation to display the appropriate currency based on the user's location.

What was the impact of charging a higher price in euros compared to the USD equivalent?

Charging €29 instead of a lower converted price led to an increase in overall revenue without negatively affecting the conversion rate among European users.

What psychological aspect did the owner mention regarding pricing?

The owner noted that $32 looks significantly higher than $29, influencing customer perception and potentially impacting signups negatively if raised in the US market.

How did the business owner set up their Stripe account for pricing?

They set up two prices for each product in Stripe, one in US dollars and one in euros, to accommodate users from different regions effectively.

What additional measure can businesses take if operating internationally?

Businesses can expand their pricing options to include other currencies based on their user demographics to mitigate the risk of currency fluctuations further.

What advice did the owner give for handling payment processing issues?

The owner emphasized the importance of understanding currency implications in pricing and recommended taking proactive measures to avoid similar pitfalls.