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The EU Just Killed ARR

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Re: The EU Just Killed ARR

#81

Post by bilekas »

some_random wrote: post #71
bilekas wrote: post #45

Earlier quoted context omitted.

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.

> 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

I'm sorry to the investors but I'll still prioritize users experience in the saas lifecycle.

Re: The EU Just Killed ARR

#82

Post by some_random »

bilekas wrote: post #81
some_random wrote: post #71

Earlier quoted context omitted.

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.

> 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 I'm sorry to the investors but I'll still prioritize users experience in the saas lifecycle.

Sure, but again the issue is that this is the incentive behind those discounts and when that incentive goes away justifying that discount is that much harder.

Re: The EU Just Killed ARR

#83

Post by bryanlarsen »

arnon wrote: post #72
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.

The churn rate is always part of ARR financial models. They generally do assume that the churn rate stays constant, but not that it is 0.

Re: The EU Just Killed ARR

#84

Post by nurettin »

If you wanted to get rid of your subscription, you were going to waste money on something you weren't going to use, and that doesn't really help the business or you. (except the business leeches cash, but that shouldn't be their business model anyway)

So nothing of value was lost.

Re: The EU Just Killed ARR

#85

Post by quentindanjou »

arnon wrote: post #72
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.

ARR is a metric. It does not assume anything. The people using it assume, and that's where the mistake is.

Most of the monthly subscriptions currently allow you to cancel at any time. And most of the yearly plans are actually "yearly-prepaid", and this isn't affected (per my understanding) by this law. What is actually impacted are plans like the Adobe year plan, where you pay monthly for a service and cannot cancel unless you pay for the amount remaining of the year.

ARR isn't dead, at all. ARR of the current year was always a predicted metric, subject to plenty of factors such as payment refused on peoples cards. Maybe some businesses were not correctly using this metric and now will have to be more careful.

Re: The EU Just Killed ARR

#86

Post by nurettin »

sgjohnson wrote: post #32

Just adopt the JetBrains model? Each consecutive year of uninterrupted subscription gets you a discount, up to a point.

Jetbrains started the whole "you don't own the software you paid for" movement. I am angry at them and their supporters.

Re: The EU Just Killed ARR

#88

Post by hosh »

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.

Does the law as written distinguish between B2C and B2B?

Re: The EU Just Killed ARR

#89

Post by mpawelski »

nurettin wrote: post #86
sgjohnson wrote: post #32

Just adopt the JetBrains model? Each consecutive year of uninterrupted subscription gets you a discount, up to a point.

Jetbrains started the whole "you don't own the software you paid for" movement. I am angry at them and their supporters.

Don't you keep the the current version of the software even if you don't buy the subscription for the next year?

Re: The EU Just Killed ARR

#90

Post by spwa4 »

bilekas wrote: post #80
spwa4 wrote: post #78

Earlier quoted context omitted.

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?

I expect that in the EU, this is somehow only going to apply to small EU companies. I'm sure there's technical reasons for that, that are currently thoroughly de-emphasized, difficult to find, but that will be the outcome.

This is also too little, too late, as usual in the EU. Extremely large companies have already profited incredibly of of this.

Plus, most provisions are again people, business people, refusing to pay for software. As a software engineer, I can't say I like this idea.

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