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.
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.