For those who sell their own software: how do you ...

# random

[Stefan Oltmann]

For those who sell their own software: how do you handle it? I'm curious.

Which payment provider do you use, and how do you manage license keys?

Do you just use PayPal for Business and handle everything manually, or do you go with something like Paddle.com (or an alternative)?

If you use Paddle, how do you manage the license keys?
Do you have a custom AWS Lambda that generates and revokes them via webhooks, or is there an existing service for that?

[Alex Styl]

I use Stripe for everything. Best solution for flexibility (API and payment solutions) and handle everything manually.

I am selling licenses, with a custom server solution. Havent found an open source lisence server and pretty much every developer selling licenses built their own from scratch (which everyone recommends against it cause it's a PITA to manage)

[Stefan Oltmann]

Thank you!

It’s strange that no one came up and build a open source solution for license management yet. Feels like a gap. I see some companies selling their solution for a significant price. Maybe that’s why.

Stripe is just a payment provider like PayPal, right? What’s with these features like chargeback and other fraud protections that Paddle advertises? Doesn’t that happen often?

Why did you stop using Paddle? Just because of 5heir cut or did you have technical issues?

[Stefan Oltmann]

This „Merchant of Record" promises some safety - at cost.

[Stefan Oltmann]

How do you manage taxes worldwide?

[Alex Styl]

It’s strange that no one came up and build a open source solution for license management yet

got to finance it somehow. no one is going to build a battle tested open source solution for the shake of it

[Alex Styl]

Let me give you the gist re merchant of record charge backs etc:

[Alex Styl]

Stripe is a payments provider. What this means is that they handle payments for you. You 'own' your customers and you are doing business directly with them.

Paddle is not a payments provider. Paddle sits between you and your customers. You do not 'own' your customers in the sense that Paddle sits between you and your customers.

Stripe has some features regarding chargebacks and fraud protections before they happen. You can set rules to block suspicious actions before they happen. They have something that is called Radar but I havent looked into it.

The reason why I stopped using Paddle is because I value speed of iteration and flexibility more than what paddle offers. Stripe has no code solutions (ie create a payment link with checkout without writing code), which lets me move fast and try many diff things in my business. Checkout loading speed is really fast, which is important for sales. I found other payment providers merchant of records to be significantly slower (ie sending the customer to checkout).

Paddle and 'merchant of record's advertize about handling taxes and charge backs etc, but that has never been a real issue for me. The way I run my business is I want to have an ongoing relationship with my customers. If someone wants a refund I am happy to give it to them. For chargebacks I just end the relationship with that ex-customer and move on with my life.

Not sure how PayPal works, so I cannot compare.

[Alex Styl]

How do you manage taxes worldwide?

I don't. Will probably handle this later next year

[Stefan Oltmann]

An, ok, thanks. So the one and only thing Paddle brings in is the tax handling as Stripe does everything else, too. You’re right about refunds… that feels like something that should be discussed with the customer as it may just be an misunderstanding.

[Stefan Oltmann]

Oh wow, I just learned about chargeback fraud.

Users can wrongly initiate a chargeback and Paddle/Stripe/PayPal not only take all money from the sale back, but you are left with a minus of $20 for chargeback fees.

If you get a lot of those fraudulent users this can really hurt business. WTF.

@Alex Styl how is your experience here?

[Stefan Oltmann]

You mentioned chargebacks, but I just now looked up why they happen and there seem to be a lot of users abusing the system to get free products. Looks like a serious issue.

[Stefan Oltmann]

Paddle advertises chargeback protection on the main page, but they actually take at least $15 for each (for their „pre-chargeback alert“). That’s not a protection, lol.

[Alex Styl]

no matter the biz u you have malicious behavior. that's just how humans are

my enterpreneur friends usually complain about disputes (someone asks their back to refund the payment instead of talking to the biz).

you can submit papers to the bank showing that the payment is legit but in the end of the day is up to them to decide.

I don't care at this stage tbh. it's a better use of my time to keep growing the biz instead of focusing on individual cases like this.

I've only had a single case where someone disputed a payment a day after the return policy was over. Tried to reach them asking if everything was ok, and never got a reply. At that point I blocked their card and payment cause it is not a relationship I wanted to have with that person. Paid the dispute fee and moved on with my life. End of story

[Alex Styl]

eventually people block payments from specific countries that have high risk of fraud and cases like this. Haven't been at that stage yet

[Stefan Oltmann]

Thanks for sharing your story. What you describe is what I read also elsewhere.
So you can get lucky and only have a few, but there is a risk that you get a lot hurting your business.

Maybe selling in Microsoft Store is the safer option. Their 15% cut is higher, but they protect from chargebacks & any fees related to that. If someone refunds or does a chargeback it’s like the sale never happened. Sounds safer to me.

[Alex Styl]

depends what you are after

in my experience safer is never the way to go

[Alex Styl]

without context of your business, it sounds like you are trying to optimize for a problem that doesnt really exist

[Alex Styl]

i prefer ultrafocusing on growth than minimizing the costs/damages. cutting down costs/damages is a distraction imho

[Stefan Oltmann]

My business idea is just making improved versions of my (existing) pet projects and sell them.
So maybe a more feature-rich version of my minesweeper clone for 5€ or something like that.

And hearing of chargebacks make me think: One guy that does a chargeback kills 5 sales at once (minimum).

However, thank you for your advice! 🙏🏻

[Alex Styl]

none of this is advice. just sharing my experiences

[Stefan Oltmann]

Yeah, you're not a lawyer and so on. Got you. 😉

[Alex Styl]

it's not that. (and yes im not a lawyer etc etc)

it is not possible to give advice in business. the amount of variables is so high, it's impossible for me to give any advice that actually makes sense without knowing your biz/skills/background/experience