No surprises here, it's just worth noting that yes, from a business perspective B2C is more complex at scale too.
Yet B2B has a higher and more complex entry barrier. Once you've overcame all that and is already billing your first clients, B2B is "easier" and your clients are much more stable and stay for longer
All people I know in the EU who build something use Lemonsqueezy, Gumroad or Paddle to invoice their customers. 3 companies not in the EU which are charging an arm and a leg to do the complicated invoicing for EU makers.
It's kind of strange, how the EU manages to not only put their companies at a disadvantage but also drive new business for non-EU companies.
Some of my EU friends even consider only offering their services to US customers, because with those, the invoicing is easy. It's called something like "3rd party country revenue" in the EU tax system and has no additional bureaucracy attached to it. While doing business with customers from within the EU is so complicated, that none of my EU friends understands it.
Frankly, doing business within EU from EU is more complicated than selling overseas, at least with certain digital products. VAT on digital services is a fantastically dreadful thing: you have to pay VAT to the country of your customer rather than your country. VAT MOSS [1] makes things a bit easier, but it still involves complex reporting and bookkeeping. When I was actively working on my startup in Finland, in the early days of this new VAT rule it was such a mess...
Yes, depending on thresholds which vary by state. For some you have to figure out taxes from the first transaction, for others from the 100th and then there are some that consider revenue, like $100k. At least at a conceptual level, taxes in the US seem much more complex than the EU, where you have only one tax rate per country.
I wonder if the reason it's perceived as "easy" is because companies are flying under the radar. In my experience, you get a bit of leeway until the country you're selling into starts to notice and demands you start collecting and paying sales tax. Perhaps the fact the US is split across jurisdictions internally means tax authorities don't have a very clear picture until the company gets big enough.
Either that, or more companies are using third parties who mask the complexity for them. Kinda like a duck looking serene on the water but its feet are paddling furiously to keep moving.
When you're inside a jurisdiction, you don't really have the option to ignore the law for long because the tax authorities will come knocking sooner rather than later.
It's not like the US is better, with states and counties imposing a myriad of (hyper)local taxes. Hell the US is the only country I know where price tags in ordinary retail stores doesn't include taxes because that is too complex to organize.
In contrast, no matter where I am in Europe, I know precisely down to the cent how much I'll pay at the counter.
> doesn't include taxes because that is too complex to organize.
It’s not too complicated. There just isn’t sufficient political momentum to require total price to be shown prior to checkout.
This year, California couldn’t even get restaurants to include all non tax charges in menu prices. They passed a law requiring businesses to include all non tax charges in advertised prices, and then passed another law to exempt restaurants.
The retail price thing could be solved in brick and mortar stores (because the location of the register is well-known), but there’s a desire of some to have the taxation amount be explicit. (I have some sympathy for the philosophy, but practically, it’s annoying, which is probably part of the motivation.)
The vat bit is interesting. In Europe, the companies are the one responsible, in the USA, it's the consumers.
I think VAT is a bad tax overall, a vestigial appendage from colonialism, and would prefer to ultimately remove it, but I think the US system is overall better. At least more transparent.
That actually was the point, in colonial economies, (declared) income taxes hit colons way more than locals for a lot of very good reasons (and one bad, undeclared work that prevented owners to pay social security contribution), and for a lot of very bad reasons, French government/business owners wanted that to stop, hence VAT.
What's funny is that the families behind the fast implementation of VAT in colonized Africa are still two of the most powerful and rich French families.
There is 2checkout in Europe. It was Avangate, now it's Verifone, it's not owned by private equity, so maybe not technically a EU company? Although your contract will be with Avangate BV, Amsterdam. And for all intents they do fine job with handling EU (and non EU) taxes.
Also, there was German based ShareIt, which was purchased by Digital River. Sadly, it's now in lot of problems, have problems paying venders, and is not to be recommended anymore.
Lemonsqueezy, Gumroad, and Paddle also act as the merchants of record, meaning they assume liability for every transaction. Their role extends beyond simply handling invoicing.
Everything is harder in B2C than in B2B. Starting from the obvious: usually, the amount of users in B2C in larger, margins are smaller, but the support pressure is higher. Also, B2B customers often have lower motivation to "get things done quickly", because they are not personally invested, it's just another part of their job. So, they are less picky, and are also more acceptable of the idea that e.g. their feature request "will be considered", because they could just pass on this message to their superiors and be done with it.
With the exception of cash flow. With B2C you sell something, you get the money. With B2B you MIGHT get money in 30 days, but then sometimes you have to chase invoices for months.
In my experience, you cannot rely on getting the money in B2C even when you got the money. Even without considering refund policies, etc., simple credit card disputes are very painful. Your customer buys a product, then disputes the charge with their bank, the funds get effectively frozen on our side (e.g. in Stripe), then we have to provide proof of a legitimate transaction, but neither the bank nor the customer are really interested in clearing the dispute, so often it stays, we pay the money back, then we pay a fee for processing the dispute. And also we've wasted that card transaction fee of the original payment. So, we've wasted time, wasted money, and got a dispute record on our account.
B2B payments get delayed, but the contractual guarantees are much higher, and customers don't just invoke bank investigations out of the blue.
> You’d want to future-proof your platform to accommodate for unknowns in pricing, packaging, and feature gating.
You don't have to do this. You don't need tons of complexity. You can make any system infinitely complex, but this is a choice. A billing system with -- and I quote -- "160000 combinations" is too complicated for customer support to understand, too complicated to explain to consumers, and will inevitably result in people getting billed incorrectly.
Do you need to operate a B2C business this way? You really don't. It's OK if your billing system is slightly suboptimal. The overwhelming majority of businesses are held back by the quality of their product and by their distribution. Billing just needs to be simple and functional.
Completely agree with this, it's a case of "perfection is the enemy of good" and if you do go to these lengths and abstract so much of it away, it'll be a nightmare to maintain and support as well.
The complexity this article talks about (discounts, tiers, billing periods, dunning, chargeback disputes) has nothing to do with compliance. It's all about maximizing revenue.
> You don't need tons of complexity. You can make any system infinitely complex, but this is a choice. A billing system with -- and I quote -- "160000 combinations" is too complicated for customer support to understand, too complicated to explain to consumers, and will inevitably result in people getting billed incorrectly.
I think the author is just referring to a configurable promo's and deals type of engine, which is pretty common.
It just gives the business the ability to configure as opposed to hard code. For example, maybe the business wants to run a buy one get one free type promotion, this can just be configured into a generalized engine that allows for qty hurdles (or amount hurdles) that trigger some discount on some set of items.
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[ 4.2 ms ] story [ 43.2 ms ] threadYet B2B has a higher and more complex entry barrier. Once you've overcame all that and is already billing your first clients, B2B is "easier" and your clients are much more stable and stay for longer
It's kind of strange, how the EU manages to not only put their companies at a disadvantage but also drive new business for non-EU companies.
Some of my EU friends even consider only offering their services to US customers, because with those, the invoicing is easy. It's called something like "3rd party country revenue" in the EU tax system and has no additional bureaucracy attached to it. While doing business with customers from within the EU is so complicated, that none of my EU friends understands it.
1. https://europa.eu/youreurope/business/taxation/vat/vat-digit...
Either that, or more companies are using third parties who mask the complexity for them. Kinda like a duck looking serene on the water but its feet are paddling furiously to keep moving.
When you're inside a jurisdiction, you don't really have the option to ignore the law for long because the tax authorities will come knocking sooner rather than later.
In contrast, no matter where I am in Europe, I know precisely down to the cent how much I'll pay at the counter.
It’s not too complicated. There just isn’t sufficient political momentum to require total price to be shown prior to checkout.
This year, California couldn’t even get restaurants to include all non tax charges in menu prices. They passed a law requiring businesses to include all non tax charges in advertised prices, and then passed another law to exempt restaurants.
Infuriating, to say the least.
I think VAT is a bad tax overall, a vestigial appendage from colonialism, and would prefer to ultimately remove it, but I think the US system is overall better. At least more transparent.
What's funny is that the families behind the fast implementation of VAT in colonized Africa are still two of the most powerful and rich French families.
Also, there was German based ShareIt, which was purchased by Digital River. Sadly, it's now in lot of problems, have problems paying venders, and is not to be recommended anymore.
B2B payments get delayed, but the contractual guarantees are much higher, and customers don't just invoke bank investigations out of the blue.
You don't have to do this. You don't need tons of complexity. You can make any system infinitely complex, but this is a choice. A billing system with -- and I quote -- "160000 combinations" is too complicated for customer support to understand, too complicated to explain to consumers, and will inevitably result in people getting billed incorrectly.
Do you need to operate a B2C business this way? You really don't. It's OK if your billing system is slightly suboptimal. The overwhelming majority of businesses are held back by the quality of their product and by their distribution. Billing just needs to be simple and functional.
guess which one is the hardest.
I think the author is just referring to a configurable promo's and deals type of engine, which is pretty common.
It just gives the business the ability to configure as opposed to hard code. For example, maybe the business wants to run a buy one get one free type promotion, this can just be configured into a generalized engine that allows for qty hurdles (or amount hurdles) that trigger some discount on some set of items.