Managed pricing - free trial - processing fee

Shopify App Store
1

Hi,

Our app is using Shopify managed pricing, which means that the merchants install the app and go through the Shopify provided billing system.

There are two issues with the way it works we identified with this system that affect us.

1 - No grace period to cancel and get a refund.

we often have merchants who demo the app with the free trial, they start a yearly subscription and they forget to opt out before the trial ends.

They uninstall the app one day after the trial ended but they’re not refunded. Which is a first weakness. It would be ideal if they had a grace period for cancelling and getting a refund.

Which means they get charged for 1 year for an app they will never use. Sometimes they contact us upset and even though we will happily issue a refund, the frustration is here.

2 - Processing fees are not refundable

When they pay there is a processing fee that seems to be a percent of the paid amount.

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That processing fee is immediately deducted from the subscription’s amount, and for a large subscription it can be a few USD, which is not neglegible. There is no ways to refund this processing fee. I can refund the full amount including the processing fee, but in this case we are the ones paying for the processing fee for a sales that was not made because of a mistake.

In return if I decide to refund them the full amount minus the processing fees - they’re the ones paying for this. Which once again means frustrated merchants. Potentially negative review, and resentment toward the platform.

We’re trying to do business honestly so we want to refund them the full amount but at the same time we shouldn’t be the ones paying for this weakness in the system. On the other hands if we didn’t want to refund them in full we would penalize merchants and get them frustrated, which not only is not a good thing, humanly speaking, but also because they’d be more likely to leave a negative review (which, you know it, is terrible for an app).

Ultimately it feels a bit unfair to see this money going to Shopify in processing fees for something we haven’t sold because of cancelling the subscription one day too late.

My question is: Could we have the team to review this and offer a better solution in that regard?

PS: Also I have not verified by myself, but it seems that refunding the amount will not actually cancel the subscription. Which mean they could still use the app with a subscription despite a full refund was issued.

Thank you for your time.

2

Hey @Soufiane_Ghzal,

The processing fee is documented in the refund app charges guide.

When you issue a refund to a merchant for an app or theme, Shopify refunds you only for any commission collected. The processing fee charged on the app or theme sale is not refunded.

For cancelling a charge, there’s no way to stop recurring charges from your end. The merchant has to uninstall the app. That’s the only thing that terminates the subscription and stops future billing. Once they’ve done that, what you do next depends on where things stand.

If the charge is still pending on their upcoming invoice, issuing a credit removes it before the bill goes through.

If it’s already been collected, a refund through your Partner Dashboard is the path forward. Make sure that the merchant has uninstalled first on all cases.

I also find that it’s helpful to review the merchant facing documentation as well as it can help a frustrated merchant understand the expected behaviour: https://help.shopify.com/en/manual/your-account/manage-billing/billing-charges/types-of-charges/third-party-charges/app-charges

Personally, I too have paid for many subscriptions because I forgot to opt out after a trial so I can empathize with the merchants frustrations. What I find helps is that I really appreciate the services that email me a few days before the payment processes. I would suggest doing something similar. You could frame this as a proactive reach out to see how the trial is going and a reminder that the automatic renewal is coming.

Hope that helps.

3

Hi @KyleG-Shopify thank you for the detailed answer.

Regarding the refund system, I truly appreciate your advice on the mater, but it would be great if Shopify considers making things more straightforward for everyone, because I still think that having to pay processing fee is unfair when they haven’t used the app and we’ve refunded a few days later.

Yesterday again I have paid an invoice twice by mistake. They gave me a full refund for it. I don’t understand why it wouldn’t be possible for Shopify to also do that for merchants.

I would also love to set up an automated email, but I found that most of the time they don’t read the emails sent to the email address attached to their account. Very often it’s the support, or a company generic address.

Proof is that by multiple occasions I contacted merchants after we reviewed our pricing and plans to inform them they are overpaying after we updated, months after they’re still overpaying.

I also feel like it should be part of the Shopify managed pricing system, as we’re going to engineer something that could fail to correctly trigger for hundreds of different reasons, while Shopify already has all the tools and is the one responsible for charging the client in the first place. It’s also better for the client to have an unified notification system rather than having 10 apps doing their one things.

The whole point of the managed pricing, and the fees we pay for it is to make it worry free and we can focus on the actual app development rather than re-inventing the wheel on the billing side.

I hope this all makes sense to you. Thank you for your time.