expands its target market by handling VAT and PayPal charges via Paddle

A little backstory

If you ever built a SaaS business, you undoubtedly wondered, at one point or another, what is the best way to calculate your Monthly Recurring Revenue (described by some as the most important metric for a SaaS business). This is where I found myself at the beginning of 2015, having just launched a tiny SaaS app. After reviewing both paid (other SaaS apps) and free options (manually updated excel spreadsheets) on the market, I realised there still isn’t a single solution able to calculate the MRR metric, that focuses on precise results, is fully automated and doesn’t break the bank at the same time. Being a developer who loves building new things I decided to create it myself, and offer a free plan for tiny startups and indie developers, to give back to the community that taught me so much. Stumbling upon a short (and very much to the point) domain sealed the deal and soon after was created.

If you’re running a SaaS business via Paddle, you’re in luck

At the moment, can handle Paddle subscriptions (as well as Stripe subscriptions) in a fully automated way, calculating not only your Monthly Recurring Revenue, but also a ton of other useful metrics for your business. On top of that you can also manually add subscriptions that are handled outside of Paddle (e.g. if you have customers paying via invoice). It’s free as long as you have no more than 100 paying customers, and the Pro plans above that threshold are reasonably priced, with the ability to pay with Credit and Debit cards or PayPal from any country in the world ...but it wasn’t always like this. Let me explain.

The search for a solution

The rules surrounding VAT in EU were already complex back in 2014 and it didn’t help that on January 1st 2015 the new rules effectively removed the VAT registration threshold for those selling across the border.

Being a one-man operation I decided I’m not going to complicate my tax returns by registering for VAT, so I started looking at my options, and what I learned was not pretty:

I could either add some clunky manual step in the purchasing process to avoid being classified under the new VAT rules (bad customer experience!), or outright ban any sales within the EU (except for the UK, where I could still sell without registering for VAT) - either option is bad. There’s plenty of countries I can sell to outside of the EU, but let’s be honest, Europe is a big market and it would not be wise to ignore it.

My initial approach was to ban sales to Consumers (B2C) within the EU (while still accepting anyone from the UK and outside of the EU) - to make sure my customers are Businesses (and not Consumers) I’d force them to choose their country of residence and enter VAT number. No VAT? No sale! Talk about horrible checkout experience.

Enter Paddle

This is where Paddle comes into the picture. I’ve been contacted by the Paddle team, who made me aware of their product, and that it might be a solution to my VAT problems.

Switching from my old payment provider to Paddle turned out to be a breeze. I expected it to take a long time (based on my experience with several other payment providers), but turns out I was wrong. The entire process, end-to-end, took only a few hours, and I expect future integrations to take even less time.

The end result was great: I was able to discard that additional in-app screen asking for the country and VAT number, a DIY invoice generating code, and a good chunk of code dealing with subscriptions. And, best of all, I could sell to anyone, anywhere, be it Consumers or Business, and let Paddle handle all the complexities of the VAT system (and VATMOSS).

The unexpected benefit

One other benefit I did not expect from this transition was the ability to use PayPal as a payment method, without any additional work required on my end. I dismissed the possibility to use PayPal to accept payments long time ago, after hearing just enough stories about funds frozen for months, but the fact that Paddle acts as an intermediary between Paypal and myself gave me enough confidence to use it on my website. This helps immensely, as some people feel much safer using their PayPal credentials online, as opposed to paying directly with their credit or debit card.

Paddle +

In the end, expanded its target market by opening up to Consumers within EU and allowing anyone and everyone to pay with PayPal as well as credit/debit cards.

Now it’s your turn: if you are a Paddle customer and use their Subscriptions system, I’d like to invite you to try out for free for 30 days, no credit card required, no strings attached. I’m sure you will find it valuable to be able to check Monthly Recurring Revenue and other metrics for your business in real time.

Try out for free!