When you offer subscriptions in your business, you want everything to run smoothly. Stripe is a popular payment platform that helps you do just that. But when it comes to fees—especially with trials, proration, and refunds—it can get a little tricky. Don’t worry, we’re breaking it down for you in a fun and simple way!
What Are Stripe Fees?
Stripe charges a fee every time you collect a payment. This fee is usually:
- 2.9% + 30¢ for each transaction (for most U.S. cards)
- May vary depending on your country and payment method
These fees are taken before the money hits your account. That’s important!
Let’s Talk About Subscriptions
Subscriptions are recurring payments. Think of Netflix or Spotify. Instead of paying once, your customer pays every month (or week, or year).
Stripe helps you manage this easily. But with subscriptions, a few special things come into play:
- Free trials
- Proration (when people change plans)
- Refunds
Free Trials: Are They Really Free?
Let’s say you’re offering a 7-day free trial. Your customer signs up and doesn’t pay anything… yet.
Stripe charges no transaction fees on free trials because—well—no money has changed hands!
But once the trial ends, Stripe will collect the first subscription payment. That’s when the fee kicks in.
Example: You charge $10/month. After the trial ends, Stripe collects $10 and takes $0.59 in fees (2.9% of $10 + $0.30). You get $9.41.
Good to know: You can collect payment info upfront, even if it’s a free trial. That way, the charge happens automatically when the trial ends.
Proration: Making Fair Adjustments
What if someone upgrades or downgrades their plan halfway through a billing cycle?
Stripe can automatically adjust the cost. This magic is called proration.
Let’s break it down:
Example: A user is on a $10/month plan. Two weeks in, they switch to a $20/month plan. Instead of charging the full $20, Stripe figures out the fair difference. You get charged (and pay fees) based on that adjusted amount.
Why does this matter?
- The amount billed might be weird (like $6.32)
- Stripe still charges its normal fee on that amount
So, while proration helps your customer, it also affects your Stripe fees—because the fee is always a percentage of whatever amount was paid.
Refunds: Where Fees Get Sticky
Refunding a customer? Stripe makes it easy. But here’s the catch… they don’t return their fees.
Wait, what?
Yep. If you refund someone, you still pay the Stripe fee for the original transaction. That means you actually lose money when you issue full refunds.
Example:
- Customer pays $100
- Stripe fee = $3.20 (2.9% + 30¢)
- You refund $100
- You don’t get the $3.20 back
- You’re out $3.20
Solution? Consider partial refunds or making terms clear upfront to reduce refund requests.
Managing Subscription Gracefully
Now that you know how it all works, here are tips to help you save on Stripe fees and keep subscribers happy:
- Set clear trial terms – Make sure customers know how long a trial lasts and when billing starts.
- Encourage annual billing – Once-a-year charges = fewer fee events.
- Add cancellation options – Prevent unhappy customers and refunds by making exit easy.
- Test proration rules – You can customize how Stripe handles upgrades and downgrades.
- Keep track of refunds – They cost you more than just the original price.
Wait… What About Disputes?
Good question! Disputes (aka “chargebacks”) happen when a customer tells their bank they didn’t really make a charge.
If that happens:
- Stripe returns the money to the customer
- You may lose the money and get hit with a Stripe dispute fee (usually $15)
That’s a double loss!
So, include clear billing labels, contact info, and a refund policy to help you win disputes before they happen.
Best Practices
Want to make these Stripe fees work for you? Here’s how:
1. Use Stripe’s built-in tools
They offer features like:
- Smart billing logic
- Trial period options
- Custom proration settings
2. Analyze your MRR and ARR
That’s Monthly and Annual Recurring Revenue. Know what you’re earning—and losing—mid-month changes can hide a lot of fee leakage.
3. Offer upgrade incentives
Encourage mid-cycle upgrades to push up revenue (even with fees).
4. Educate your users
A little knowledge goes a long way! Let customers know billing dates, refund rules, and how plan changes work.
Fun Math Time
Let’s really understand how fees work over time. Suppose you have 100 customers on a $20/month plan.
- Monthly revenue = $2,000
- Stripe fee = 2.9% + 30¢ per customer
That’s:
- ($20 x 2.9%) + $0.30 = $0.88 per customer
- $0.88 x 100 = $88 in monthly fees
You keep $1,912. Not bad, but that fee pile adds up over time!
Final Thoughts
Stripe’s fees might seem small, but they matter—especially with subscriptions. Whether it’s trials, plan changes, or refunds, each affects your bottom line.
Understanding how these impact you helps you plan smarter.
And your smarter plan? That’s more money in your pocket. 💰
Use Stripe’s tools. Keep your customers informed. And always keep an eye on the fees!
