Just curious to know if anyone has seen any of the outcomes of this method.

Found that the extremity of pricing between Yearly and Monthly subscriptions for SAAS offerings has grown in the last 6 months. Some services will do something like $18/mo @ yearly renewal or $32/mo @ monthly renewal.

Maybe more of a consumer habits discussion. I’ve had a gut feeling lately telling me that I’m not getting a discount for billing yearly, I’m getting a tax for billing monthly as a consumer.

I understand there isn’t a great real difference between the two, but curious to know if there’s any research on what the line is on pricing when it comes to perception from consumers.

  • AdaptableRapidity@alien.topBEnglish
    1·
    1 year ago

    I think it depends on the type of customer. Monthly subscriptions offer more flexibility and are great for customers who want to test out the product for a few months. Yearly subscriptions are less expensive but the customer has to pay upfront so they are more geared towards customers who have already tried the product and want to commit.

  • NewEnergy21@alien.topBEnglish
    1·
    1 year ago

    I think ProfitWell is a company whose whole business model is to provide data on this sort of churn behavior of customers

  • eandi@alien.topBEnglish
    1·
    1 year ago

    No one wants to do monthly really, you just have high churn and tire kickers. You price high to encourage them to just go to do annaul which also proves some ability to command a budget. This way you also only have to earn a renewal once every twelve months and not 12 times a year. You also deal with credit card bounces and cancellation, or worse-yet, 12 cheques a year.

    You put way more work into an monthly customer compared to an annual if all other aspects of the accounts are equal, so they cost more to deliver service as well. If companies offer both someone has done the math on where it makes sense balancing churn, conversion, upsell/expansion, cost to acquire, and cost to serve/COGS.

  • YourAverageExecutive@alien.topBEnglish
    1·
    1 year ago

    All based on customer life time value, customer acquisition cost, and bunch of other standard SaaS kpis. Basically, customers are worth more as an annual subscription and tend to be much more likely to renew.