You prominently disclose that it is priced on a monthly basis and then charge your customers as agreed. Very rarely, a customer will be very surprised that SaaS which is priced on a monthly basis means that they will be billed a second time in the second month. You will apologize to them for the confusion and ask whether they'd prefer a refund or your software.

This question suggests you may not be psychologically OK with taking people's money, since approximately every SaaS handles this identically, without drama, in a fashion which doesn't even seem to be in your solution set. You run a business. I would counsel coming to the realization that, if you're providing value to people, it is in fact OK to take their money.

I am perfectly okay with taking people's money. In fact, in the past I managed $20,000 of monthly recurring revenue. In that case, it was set to auto bill. However, I found that many customers, rather than coming to the site or emailing support to cancel, would simply submit a chargeback on their credit card. Obviously that did not stop recurring billing, so then they would submit another chargeback the next month. Sometimes this was compounded by the fact the credit card was also stolen.

The problem was likely due to cancellation requiring an email to support, rather than a way to do it on the site. That business was selling proxies to SEO people. I eventually let it whither because 1) I was not happy with my customer base's use of the product, and 2) chargebacks got out of control due to the above fact, combined with fraud. At one point it had a chargeback rate of 14%, and close to half of those were stolen credit cards. I'm now starting a VPN business, which will face many of the same problems, so I'm merely wondering the best way to mitigate this one particular reason for chargebacks.

Seems you have a fraud problem, not a chargeback problem. I'd use a fraud prevention service such as Sift Science to reduce the fraudulent credit card usage.

For legitimate users that are causing chargebacks, the following helped reduce it for us:

1) Emailed invoice every time there's a charge

2) When canceling, also sending an confirmation email stating the date of cancelation (so if they still receive a final charge, they'll know it's because cancelation date was after that final charge).

3) Changing the "Statement descriptor" for the credit card charge to be our domain name instead of our company name.

Since implementing those changes our chargebacks have gone down to almost zero. Hope it helps.

> rather than coming to the site or emailing support to > cancel, would simply submit a chargeback on their credit > card. Obviously that did not stop recurring billing

Why not? If I receive information that a payment has been stopped, I deactivate their account and send them an email that their subscription has been canceled. Unless the customer sends a new payment, the account stays deactivated and I make a +1 under "Lost Customers".

The short answer is that the payment system I was using at the time had no easy way to do this programmatically. Remember, a chargeback is not a missed payment. I would receive the payment on time, and then some arbitrary 15-20 days later I would get a paper envelope in the mail notifying of a chargeback with last four credit card numbers XXXX. It was a mess.

But yeah, all these are good points and also reasons I shut down the business. This time around I can apply all these lessons learned.

> This time around I can apply all these lessons learned.

Good luck. :-)

I would be annoyed if a SaaS didn't auto-renew by default. And I'd also be annoyed if I had to send an email to cancel it.

An alternative I also like is just to add account credit for metered usage.

You have to make it both easy to cancel, and easy to find out how to cancel. If they have to look for more than a few seconds or you make them jump through hoops, they're going to just do a chargeback.

>Obviously that did not stop recurring billing

Obviously? If I get a chargeback from a customer, I cancel their service.

This is how I handled it. As for auto renew, I have it where all saas subscriptions by default are auto-renew.

1) On credit card submit, I had a checkbox at sign-up NOT checked by default. Also right next to it was a link to the terms of service they can read.

2) On billing confirmation e-mails, I put a link where they can change their plan or cancel.

Now here are a couple particular scenarios I've handled

+ Several customers called in the second month being very surprised they got charged as they thought it was a one time fee and not a saas subscription. In both cases, they e-mailed or called me directly. I told them I could refund their last month's charge and cancel their account.

+ I had one chargeback, but it was a generally unhappy customer. I let that chargeback go through, and e-mailed the client apologizing and mentioning I would not challenge the chargeback.

---Chargebacks Now in the general case of chargebacks, you can defend against them (I use Braintree Payments who have been awesome in guiding me through the process), if you generally do the following

1) State exactly what your refund policy is in your tos. For me, I have a 'we refund your last month for any reason'.

2) Keep track of your billing e-mails. If the client files a chargeback, the bank will check to see if the payment has been monthly. If the bank sees it is a monthly bill, there is a very low chance of them winning the chargeback.

tldr; Make your tos policies as transparent as possible.

Having sold two different SaaS products over the last few years, I would do a couple of things.

Make it clear on the website. $20.00/user per month. To most people, that is clear that they will be charged each month that price.

In addition to that, in your terms & conditions, you can explain the exact details of the terms.

Depending on the price of the product, I wouldn't waste too much space on the website explaining that they will be auto-renewed as it should be self explanatory and it could cause confusion.

Also, do you have a sales team or do you rely on people to just sign up on the website?

You should try this as a poll: https://news.ycombinator.com/newpoll