Comparing Lemonsqueezy versus other Payment processors
When comparing Payment processors for your next SaaS, it is important to look at the correct metrics. What is important in a payment processor, what are their fees, and how do I pick what's right for me.
These are all the topics we will be discussing in this blog. On top of that, we will look at possible replacements and why Supaboost has picked Lemonsqueezy as their main choice.
The metrics we looked at before deciding what would be the best fit for Supaboost, were:
- Payment options
- Integration ease
- Payment features
- Transaction fees
If everything is right, but the price feels off, the we prefer to reconsider our options. That is why we don't only look at fees, but also at other topics. Setting up the integration is a one-time thing, but you still need to be able to complete it. Checking which payment options can be vital for your customer demography, as well as payment features.
In the table below, we have created our comparison without any conclusions.
One of the key options available with Payment processors, is their payment options. Especially for a SaaS business, you want to be able to provide as much as possible for your (potential) customers. You really don't want to lose a sale because their favorite options was not present.
However, we also need to look at getting paid. A Dutch option, iDEAL, is a nice option for one-time payments, but for your next SaaS, it is not the best fit (ideal 😎).
In this comparison, you can see that Stripe wins, by a long shot. They have the most options available, mainly because they also do invoices, one-time purchases and others. If your main focus is SaaS (which would be appropriate given the website), then you would look at Credit Card, Paypal and Google Pay.
Stripe, Gumroad, Paddle & Lemonsqueezy all provide this payment option. So there is no 'winner'.
With great power comes great responsibility. Making sure you actually get paid when someone selects buy is a crucial part of being a founder, business or any other legal entity.
Making sure integration with the payment processor is easy and understandable is a very important part of the payment processor. Just like with the payment options, in the integration ease there is no big winner. There is only a loser, as Gumroad does not have a native SDK available. Actually the same is true for Paddle, but they still have the option to connect this way.
We must say, that the comparison focussed on if it was available. If we look at ease of setup, then Lemonsqueezy wins by a long shot, followed shortly by Stripe.
Together with your new SaaS application, you may also want to know if they have marketing means, possibility for lead magnets or include on time payments for implementations and such. That is why we added this part of the comparison to the page.
For SaaS, it's vital that you have a good system to back up your product. Good marketing does not consist of build and they will come. You need to provide freebies, where you receive their email, you need to be able to sell a Lifetime deal for the same product (if you wish), you will want to be able to do international taxes, without doing international taxes and more.
Everything considered, we find that Lemonsqueezy was the best fit, with a 100% score on all topics.
After you sell something, all providers will take a (small) cut. Some larger than others.
This is much more personal preference, mainly because some (like Stripe) have dynamic pricing based on the type of service, while others (like Lemonsqueezy) have a percentage and a small fee.
The one that immediately lost it, was Gumroad with a whopping 10% of each sale. That's a partnership deal, where they only do payments and you do the execution. With Stripe not being a merchant of record, we looked at Paddle and Lemonsqueezy, and decided that a lower % was more meaningfull for SaaS as you can get increasingly high rates.
While the complete picture is important, we are mainly looking at what is important for us when we charge subscription fees to customers.
When charging customers for a subscription, you want to:
- Focus on your product to keep improving it
- Don't waste time doing taxes
- Have the most important payment options available
- Be able to do marketing
- Work with affiliates to do marketing for you
- Don't pay too much for the service
To be able to focus on your SaaS product, you must not spend to much time on integrating with a Payment processor. That is why you want to use a Payment processor that has extensive documentation, an official SDK or an easy to use integration available.
Supaboost comes included with payment processing integration, that way you can focus on your product. Using Supaboost saves you the hassle of integrating with a payment processor, and gives you the opportunity to build, maintain and expand your SaaS.
With three out of four options being Merchant of Record, let's look at the benefit. Let's say you have a North American company, you are obliged to do taxes in that country. Let's say you sell something in the Netherlands, you will have to deal with VAT (EU).
A merchant of record handles the international part, so you can focus on your own taxes. This means that you only have to do revenue tax and possibly salary taxes. (Of course this depends on your country of origin)
With that said, we value a MoR (Merchant of Record) highly in our scoring.
In SaaS, or in general for IT business, you can pay with credit card. This for us is the most important scoring metric. All others can be up for discussion. SO that means that having other methods to provide credit card payment, is a nice added bonus.
With SaaS you want to focus on subscriptions, and not on one-time payments. Having a credit card, Google Pay, Apple Pay or others available makes it much easier to sell your subscriptions.
As you gain users and leads, you have to be able to communicate with them. Some payment providers allow for this option, as you already have the users/contacts available in your application.
Some provide email, some provide export of users. As long as you are able to do something with the data you acquire, then you set yourself up for proper business.
Because you want to focus on product, there is also a good chance that you would value affiliate marketing. This methods provides others with the possibility to make some money, by advertising your SaaS.
Not only will this improve traffic to your application, you will also be able to improve profit.
The final most important topic is fees that you pay for the services. With selling multiple subscriptions to multiple users, you want to make sure you don't pay too much.
As we have seen from the image above, the fees can be as high as 10% of your total sale value. Add on top charges for potential affiliates, and you will quickly see that it can get quite expensive.
We decided to implement Lemon Squeezy as our main payment processor, based on above scoring. Not in the last place because they are working hard to continuously upgrade their application, the ease of integration with multiple fraemworks and speed of their payment pages. On top of that, Lemon Squeezy is super easy to use, by adding new products, removing old products, updating existing products, etc.
With Lemon Squeezy being a Merchant of Record, just like Paddle and Gumroad, you are easily able to remove the effort your need to do your international Taxes. Especially as the tax is already deducted from your totals.
One big advantage of Lemon Squeezy is their affiliate program. You can find people and companies willing to advertise your store, in exchange for a percentage of the sales. This way you can get other people to promote your products for you.
All in all, we found that if you want a low effort, high reward payment processor, Lemon Squeezy would be the perfect fit. On top of that, they have reasonable prices, especially if you charge a higher fee.