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The EU Just Killed ARR

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Re: The EU Just Killed ARR

#71

Post by some_random »

bilekas wrote: post #45
some_random wrote: post #25

Earlier quoted context omitted.

You can, but the thing that you get as a SaaS company in exchange for that 3 year discount is the certainty that you'd have a customer for 3 years. There is no longer an incentive to offer the discount.

But there is once you remain competitive, if the reason for people staying on your platform is because they're locked in for 3 years then you're not offering a good enough service as others. This opens the market to competition who will offer better services or prices. The free market at work.

First off, we all know that unfortunately just offering the best product is not enough to guarantee that a customer will pick you and stay with you. Secondly, because of the use of ARR as a key metric that lock in has an extra benefit to the SaaS provider in dealing with investors.

Re: The EU Just Killed ARR

#72

Post by arnon »

yoavm wrote: post #34

If your ARR is built upon the idea that your customers cannot cancel their subscription, you're getting it very wrong.

ARR assumes customers will stay with you - that's why it's a bad metric.

Re: The EU Just Killed ARR

#73

Post by arnon »

bearjaws wrote: post #7

Seems like great for competition, if someone can steal your business you have a bad business.

Agreed, but it does open up some cans of worms where you may accidentally lose customers when they forget to renew (even if they meant to)

Re: The EU Just Killed ARR

#74

Post by arnon »

DevelopingElk wrote: post #61
hosh wrote: post #40

Does that mean, things like AWS Reserved Instances or Savings Plans do not comply with this EU law?

I think that AWS Reserved Instances will still be OK. That is purchasing a product with an expiration date, with the product being compute hours. And its mostly B2B, this article is mostly focusing on B2C. AWS will mostly be in the clear. Services are already billed per call or per monthly usage.

Usage-based will be fine, but if you sell usage-based with a discount that assumes the customer will stay with you for, say, 3 years - this law means they can leave after 1 and not stay for the full length.

Then, you've given a discount that wasn't in your interest to provide.

Re: The EU Just Killed ARR

#75

Post by arnon »

basisword wrote: post #54
throwoutway wrote: post #27

Earlier quoted context omitted.

I agree the article seemed disingenous and almost felt like it was shady (can you believe the EU lets them cancel in a sane way?!). When I hear ARR, I don't think of an annual contract. ARR is equivalent to MRR*12 and can be a mix of contract types or even utility spend ($ per bytes). I understand that "committed spend" is when a business agrees to pay $XX annually, but that's not defined by ARR.

>> ARR is equivalent to MRR 12 Sure but if you actually have customers paying the annual fee in one go (instead of 12 monthly payments when they can cancel at anytime) the ARR number will be much more reliable. With MRR 12 you're counting people who sign up for a month and quit.

And ARR assumes it's recurring too - it's a metric that (people incorrectly think) shows how good your business is at retaining revenue year-over-year.

If a big proportion of contracts in Y1 get terminated at the end of the 12m period (because, say, the customer forgot to renew) - then the ARR will drop like a rock in Y2.

Re: The EU Just Killed ARR

#77

Post by raincole »

spwa4 wrote: post #70
bilekas wrote: post #51

Earlier quoted context omitted.

Absolutely, companies who remain stagnant will fall behind if they don't offer something as good as or better than competition. Only shareholders who are concerned about "guaranteed income" regardless of its sources will not like this imo.

... of course it's the EU. It won't be enforced against large companies. I mean, it seems to me pretty obvious that this outlaws microsoft office. And yet, it's september, and ... https://www.coolblue.nl/en/product/963184/microsoft-365-pers... https://www.coolblue.nl/en/product/952796/adobe-photoshop-el... Seems to me these trivially violate just about every condition talked about in this article ... yet it's still f…

> Non-cancelable, of course

Have you contacted Microsoft and they rejected your request? EU is not asking SaaS providers to implement a 'Cancel Anytime' button. EU is not banning SaaS providers from selling one-year subscription either.

> this article

You mean this AI slop. The OP's article has very little to do with what EU Data Act is.

A much better article explaining EU Data Act: https://www.twobirds.com/da/insights/2025/the-data-act-what-...

Re: The EU Just Killed ARR

#78

Post by spwa4 »

raincole wrote: post #77
spwa4 wrote: post #70

Earlier quoted context omitted.

... of course it's the EU. It won't be enforced against large companies. I mean, it seems to me pretty obvious that this outlaws microsoft office. And yet, it's september, and ... https://www.coolblue.nl/en/product/963184/microsoft-365-pers... https://www.coolblue.nl/en/product/952796/adobe-photoshop-el... Seems to me these trivially violate just about every condition talked about in this article ... yet it's still f…

> Non-cancelable, of course Have you contacted Microsoft and they rejected your request? EU is not asking SaaS providers to implement a 'Cancel Anytime' button. EU is not banning SaaS providers from selling one-year subscription either. > this article You mean this AI slop. The OP's article has very little to do with what EU Data Act is. A much better article explaining EU Data Act: https://www.twobirds.com/da/insigh…

That article still says that "the likely outcome is that providers will be required to refund customers for the unused portion of prepaid terms".

So can I now call Microsoft and get 75% of my Office 365 subscription back?

Re: The EU Just Killed ARR

#79

Post by raincole »

spwa4 wrote: post #78
raincole wrote: post #77

Earlier quoted context omitted.

> Non-cancelable, of course Have you contacted Microsoft and they rejected your request? EU is not asking SaaS providers to implement a 'Cancel Anytime' button. EU is not banning SaaS providers from selling one-year subscription either. > this article You mean this AI slop. The OP's article has very little to do with what EU Data Act is. A much better article explaining EU Data Act: https://www.twobirds.com/da/insigh…

That article still says that "the likely outcome is that providers will be required to refund customers for the unused portion of prepaid terms". So can I now call Microsoft and get 75% of my Office 365 subscription back?

From my understanding, yes. Microsoft should give {unused portion} - {operation cost of migration} back with you if they're compliant with EU laws.

Actually, I expect they'd do that. I actually contacted Adobe support many years ago to complain about the cancel fee, and they did cancel the cancel fee for me.

Re: The EU Just Killed ARR

#80

Post by bilekas »

spwa4 wrote: post #78
raincole wrote: post #77

Earlier quoted context omitted.

> Non-cancelable, of course Have you contacted Microsoft and they rejected your request? EU is not asking SaaS providers to implement a 'Cancel Anytime' button. EU is not banning SaaS providers from selling one-year subscription either. > this article You mean this AI slop. The OP's article has very little to do with what EU Data Act is. A much better article explaining EU Data Act: https://www.twobirds.com/da/insigh…

That article still says that "the likely outcome is that providers will be required to refund customers for the unused portion of prepaid terms". So can I now call Microsoft and get 75% of my Office 365 subscription back?

> That article still says that "the likely outcome is that providers will be required to refund customers for the unused portion of prepaid terms".

You say it like that's a bad thing, surely that's fair actually?

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