Increased price charged to WaniKani subscription

Hello WaniKani Community,

I am subscribed to WaniKani with the shortest subscription plan of 1month for 9$, and have been since November 2023, approximately, without a problem. Today I received a surprising email from WaniKani requesting a payment of 11.08$ for the subscription of the next month. When contacting the the support I was informed the following:

The reason you’re seeing different pricing this month is that we previously had not been collecting VAT on your account.

This is fairly surprising to me given WaniKani’s subscription page clearly states that my subscription plan is 9$ each month. Has anyone been billed something similar or have had experience dealing with this?
Thanks!
CosmePT

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It makes sense to me. The VAT can be upwards of 20%; 11.08 USD would be consistent with 23% tax, which is reasonable within the EU.

I’d imagine this is similar to sales tax in the US. I am looking back through my invoices and I was indeed charged a tax based on the local sales tax rate. Perhaps this doesn’t bother me because we don’t label prices with sales tax in the US, while VAT is automatically applied (on the label, not at the point of sale) for most things in the EU. If I buy $100 of goods from a store in the US, I can expect to actually pay something like $105–$110 at the register. The same applies to digital goods, and tax is not included in the price of, for example, apps or subscriptions on my phone.

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northpilot got in before me, but they’ve explained pretty much everything I was going to.

Presumably VAT would vary depending on the purchaser’s location, making it difficult to list a price on their plans page. Tax generally isn’t included in prices in the US, as northpilot said, especially for online sales. It’s not like goods in a store where you calculate based on the local tax and apply that to the price sticker.

(Edit: That being said, if they don’t ask for your location and calculate VAT in your cart during checkout when you first buy your subscription, or provide notice that VAT will be applied, that’s… a little gross. I went straight to Lifetime and and I don’t remember whether tax was calculated during checkout when I purchased it last December.)

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I understand, of course, and assumed as much. What bothers me is the fact that this price increase seems to be arbitrarily billed. That is, why was this billed now and not in my previous subscriptions? Why wasn’t this VAT consistently billed in all of my payments? I understand it may sound counterintuitive for me to complain about being charged more, in a consistent fashion, but the fact that they charge more in certain months but not others seems a bit strange…
I also question why not specifically expressing in their subscription page that VAT charges may apply. I looked everywhere and there’s no mention of VAT.

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I’d imagine this is a result of WaniKani trying to tie up loose ends with respect to laws that apply to customers within the EU. It’s probably related to recent changes like how fonts are handled:

The VAT is probably applied based on the payment method you use. I don’t know how it works in the EU, but in the US, when making an online purchase, we enter an address associated with the payment card. This is used to determine the sales tax.

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That being said, if they don’t ask for your location and calculate VAT in your cart during checkout when you first buy your subscription, or provide notice that VAT will be applied, that’s… a little gross

Also this, VAT isn’t calculated in the checkout and nowhere mentioned during the whole process. This prompted me to reach out to support and the forum here, because there’s no mention of VAT anywhere, making me assume the price is exactly 9$.

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I’d imagine this is a result of WaniKani trying to tie up loose ends with respect to laws that apply to customers within the EU. It’s probably related to recent changes like how fonts are handled:

Which is understandable, of course, but at least express it clearly before increasing the billing.

The VAT is probably applied based on the payment method you use. I don’t know how it works in the EU, but in the US, when making an online purchase, we enter a ZIP code associated with the payment card. This is used to determine the sales tax.

In EU this does not apply, regrading ZIP code. Furthermore, I have several other subscription services from the US and I have had no similar issue like this. The billing price is what is announced, without added VAT taxes. That is, if the announced price is 10$ then I always pay that price and not 10$+VAT

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Ah, yeah, so true. When companies start out, they don’t really know all the various laws and regulations that apply to them. They often have to play catch-up after they get a certain size and can afford a lawyer or accountant who points out the errors (or they get a friendly note from a regulatory body that enforces the rules they’re breaking…)

Basically CosmePT was getting a tax-free ride while WaniKani was behind on getting their accounting in order, and they ate the cost. They’re just correcting for that now.

When I buy tea direct from Japan, they don’t have a system that can pre-calculate VAT, customs, international taxes, etc., which is understandable. They do have a page where they explain VAT may be applied, though.

I would say WaniKani ought to have a notice about VAT on their page. At the same time, I think it’s reasonable to assume anything you buy will have a tax applied. Maybe it’s different elsewhere, but here in the US it has been quite a few years since online companies have been able to get away without sales tax (or using the sales tax of their own location instead of the purchaser’s). [Edit: well, maybe smaller companies that fly under the radar or have unusual circumstances. But, I’m thinking sites like Amazon, Steam, etc.)

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There must be some way this is calculated, as each country seems to have a distinct rate for VAT.


Such companies are probably accustomed to operating in the EU. With all respect to the team behind WaniKani, I don’t think the payment system is that sophisticated. Also, they are allowed to change the price. WaniKani’s terms of service state that

prices are subject to change at the end of a payment term

and

You are responsible for all fees, including taxes, associated with your use of the Service

It sounds like they didn’t include taxes in the price for the last payment term, and that’s changing for all future payment terms.


I expect new subscriptions will include an obvious indication of additional taxes, as in the US.

Thanks @northpilot @Lederhosen for the discussion :+1:

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Sure. Sorry about the price increase. I’m not a fan. I remember when Netflix was $8 a month; now it’s at least $15 (unless you want to watch ads). I am not a fan of subscriptions and I don’t pay for Netflix anymore. It seems like that’s happening to more and more services lately; in this case, it’s just taxes, which I can understand, but it’s by no means a small increase in price.

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Exactly. And having this discussion in the forum may clear up some confusion to others as well.

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27% actually… speaking from experience

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I don’t live in the EU, but that makes sense to me, though I’d expect it to be something like 11.7 (9 + 30%) instead of 11.8 (27% would be somewhat less)*. :thinking:

I do have some experience in this area, in case it helps with some explanation. Although I am not a law or tax professional, I’ve worked with them on these sorts of compliance issues in the past, rolling out changes exactly like this one with accompanying documentation and info for both customers and customer support folks – it’s definitely confusing for all involved!

While it varies depending on locality (of both company and customers!), in many cases small companies are not responsible for collecting and remitting sales tax at all. I suspect that may be where Tofugu started. Often, at a certain point though, it becomes required, regardless of where the company is based, because the revenue in (a) certain legal jurisdiction(s) meets or exceeds a set threshold.

As a concrete example, a company I worked for previously had exactly this happen in, of all places, Japan, and received a tersely-worded letter from the NTA (Japanese National Tax Agency), which came as a bit of a surprise. We scrambled to be compliant before the deadline, as revenue had steadily increased from Japanese customers over time to the point where it became our responsibility (even as a North American company) to collect consumption tax from them on behalf of the government in order to pay it ourselves directly for each sale within Japan (meaning using a credit card with a billing address in Japan). Later on Japan changed consumption tax (there’s an 8%/10% split now) which had to be taken into account as well, though that was simpler technically and more a matter for communication.

The other case where this sort of thing (tax not assessed previously now required) comes up a lot is simply that the law changes, though it was not incumbent on a merchant to collect and remit tax at all under previous law.

Especially on the internet, this is confusing and complicated. The company has to do this, but unless it is known that the entire customer base is in one particular jurisdiction, you can’t very well say, “The price is 11.08 inclusive of tax” on the website because it simply won’t be true in many cases (in the US, sales tax varies by state, and cities also often have their own as well).

Anyway, the “marketing” pages for WaniKani and its billing system likely aren’t setup to be at all dynamic for this sort of thing since it’s a relatively new development – it simply wasn’t relevant previously. For our part, when I was involved on working on this problem for another company, it was determined that marketing pages would just be changed to mention that tax may be assessed if necessary, and then internally the billing system would reflect it during checkout for each individual customer. What Tofugu does may vary based on their legal counsel, but I suspect they’re working on it – though existing customers likely wouldn’t see any changes to the checkout system that reflect the new tax situation, even if they go that route. There’s just not really a perfect solution no matter what, but especially for existing customers who in spite of needing to be charged aren’t necessarily going to see any attempts at communication since they’re probably not going through checkout on the website again (or, like me, not going to the website at all because they’re using a native app to access the service). :sweat_smile:

*But there are taxes imposed by country, municipality, other divisions, broader organizations like the EU, and in many cases more than one need to be taken into consideration, and vary greatly across even small distances… This is why I haven’t gone into that career myself. :joy:

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What happens if there isn’t enough money on the bank account? Will WK warn me or will it be “deactived” instantly until there is enough money again for WK? Just curious bc I’m not sure if we will have to put more money on the account if the price “increased”.

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That’s a really good question. The best thing would be to reach out to support directly, since it will depend on your location, and it’s best not to discuss that or financial information in public:

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True, thank you!

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I think they’re using Stripe, so it’s at least capable of being that sophisticated. In fact, the change might even be a result of changes by Stripe rather than WK, though I have no idea if that’s the case here.

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My experience with Stripe has been that it will not suddenly start billing people differently – existing payment arrangements seem to be “grandfathered in” and will continue as-is unless action is taken by the vendor – at least from having to process this type of change myself in the past…but I am definitely not a Stripe expert, and there may have also been changes in policy/functionality there since the last time I dug into it.

This stuff can be a real nightmare to navigate, but I’m sure the Tofugu folks are working on it (especially since I doubt that anything would have changed otherwise, either without them doing it or in the absence of notice from Stripe if it was on their end). :pray:

I agree: Stripe wouldn’t unilaterally change something without notice and plenty of time for testing. I worded it poorly, but I was picturing a scenario where changes to a Stripe API might trigger a need to change WK, rather than WK just deciding to start adding VAT without telling anyone. In such a scenario, there would be plenty of opportunities for missteps in the rollout, especially since there are so many test cases.

There was something similar a year or two ago where Stripe changed (with plenty of advanced notice) how certain classes of coupon codes were handled, and I think WK had some hiccups (bugs) during their transition.

Anyway, much respect to those who have to work on billing and tax software. I’d do it if it was part of my job, but I don’t think I’d enjoy it as much as what I do.

Actually, funny story: My first interview when finishing college was with a company that writes phone billing software. It wasn’t a job I was really interested in, but they seemed quite keen on having me interview with them after a chat at a career fair, and I needed the interview practice. But applicants had to take a really long psych exam before even getting an interview. I remember all sorts of really strange and dark questions on the exam. And then, when I finally got the interview, it seemed more like they were just having me meet some people that I would be working with, rather than actually asking me any questions or telling me any details about the job. It was so strange that the thought crossed my mind: Maybe I was actually interviewing with an intelligence agency posing as something mundane. Or maybe the job was so tedious and boring that they needed to make sure their prospective employees wouldn’t snap.

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