In this article, we will give an overview of our initial experience with Paddle, and why you should consider integrating their system for online subscription payments.
What is Paddle?
Paddle allows you to sell software and digital products online from over 170 countries. The big selling point is that they collect taxes from each country on your behalf. Not only is this a massive time-saver, but also helps smaller startups sell globally, without the worry of complex tax laws and regulations from each country. Paddle was founded in 2012, UK-based, and serves over 2,000 customers.
How did we find them?
We had been using Stripe for years on previous SaaS products. They offer a brilliant API that lets you sell anything from a basic one-time purchase to complex volume-based subscription models. Last year in Europe, we were subject to SCA-regulations, which required us to add a few extra security checks at checkout to ensure compliance. For our previous products, this was a massive headache and involved quite a bit of development work to ensure everything worked.
On top of this, we only sold our subscriptions in Sterling (£) to make it easier to process tax our end. In a SaaS climate, it's standard practice to offer your services globally, however, as a bootstrapped founder this made it a daunting task to deal with complex tax regulations.
When Astrola started back in May 2020, I noticed a few people mentioning Paddle on IndieHackers as a new Stripe alternative. Naturally, I checked it out. The first slogan I seen on their landing page was "Unify your entire SaaS billing stack" - Brilliant! Sounds good, what's the catch?
Unify your entire SaaS billing stack - Paddle
Paddle currently charge 5% + $0.50 per transaction - this was fairly hidden on their site at the time, and only found this out after contacting support. Sure, this is slightly higher than Stripe's 1.4% + 20p in the EU, but they take care of all your tax, customer payment support, subscription billing, abandoned cart, chargebacks, fraud detection, and also allow PayPal at checkout.
From our experience, we also found support to be excellent. Shout out to Jeppe for helping us knuckle down our subscription tiers!
Our tech stack consists of Laravel for the backend and Vue on the frontend. Luckily, Laravel was building a Cashier Paddle package as I was starting in May. Setup was really easy and required way fewer steps compared to Stripe's set up with their new SCA requirements.
Setting up subscriptions from Paddle's dashboard is fairly straight-forward. Add an icon, billing interval, trial period, quantity, and set a custom price for each country. Custom pricing is interesting, as you can as for each country and pull in prices dynamically on your site based on their IP locale. In the end, I decided not to use this feature as we only want to charge in dollars at the moment - a cool feature nonetheless!
Paddle also takes care of payment failures to try and re-capture customers that have an expired or invalid card. You also have the option to notify customers before their next subscription is due. If you require custom plans for certain customers, you can make use of "Pay-links" to set a custom price that's only shown in their dashboard. This is great as we can tailor a package for customers that require more saved contacts and price them individually. It also means they can go through the usual payment pop-up rather than bill them through an external system.
When a payment is processed, Paddle acts as a Merchant of Record, which means they collect all the payment and taxes on your behalf. It's much like Apple's app store, where they collect payments and payout to the developer.
After a transaction is complete, a webhook is fired back to your application and you can validate the subscription. The widget also supports the ability to update customers' cards and change/cancel subscriptions.
Metrics and management
The Paddle dashboard is built specifically for subscriptions, which is good for SaaS companies. You can view overall revenue, transactions, MRR, and churn - everything you need to get started. They also have integration with ChartMogul.
You have full control of managing customers' invoices and current subscriptions. Modifiers also let you add extra charges to individual billing. We were going to go down this route once a user went passed our plan limits. Instead, we opted for multiple tiers and set custom prices for each plan tier.
Very easy to setup.
Collect all local taxes and act as a Merchant of Record.
UK based - Slightly biased, as we are UK based too!
Flexible subscription plan setups.
Paddle handle support questions for customers subscription payments.
Slightly higher fees than others (factor in their other features though).
The interface can be quite slow at times, especially when loading a customer subscription on the dashboard.
No real API testing solution like Stripe. They do however have a webhook simulator now.
Overall, we are really happy with Paddle, and look forward to seeing our business grow faster without needing to think about collecting taxes globally! I recommend you check out their landing pages and give them a try for your SaaS payments.