saas subscriptions listing incuding or excluding tax/VAT?

Question

I'm looking for guidance from a UX standpoint whether to show a saas subscription price including or excluding tax.

I'm mainly targeting B2B but it's useful for individuals too. I'm based in EU and expecting most customers coming from the US. Therefore, these customers would not have to pay tax.

For that reason, I'm thinking of showing my subscription price excluding tax, since this will be the actual price paid for the majority of users. Somewhere I seem to have read once that it's common in the US to display prices ex. tax.

Based on customer supplied info in the checkout-flow, I may need to add tax for EU customers and EU-businesses. As long as I'm clear upfront with this, it's probably okay.

What do you think?

Answer 1

In the USA, people are used to taxes, etc. being added at the end of a transaction, so this is what they'll probably expect. For example, if you buy a coffee in Starbucks, they'll add sales tax on at the till.

In the UK, the convention is that B2C shows prices including VAT and B2B shows excluding VAT. VAT is largely irrelevant to businesses, as they claim it back anyway, so the actual cost to them is (almost) always ex-VAT.

Given your scenario, it makes sense to display prices ex-VAT and then add an explicit line-item at checkout for any EU customers who will be subject to the VAT.

As an aside, I believe that some payment processors will take care of all this for you.