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Ask HN: My startup has more annual subscribers than monthly. What to make of it?

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Re: Ask HN: My startup has more annual subscribers than monthly. What to make of it?

#131

Post by tough »

nextaccountic wrote: post #101
throwaway_23124 wrote: post #74

Earlier quoted context omitted.

I absolutely don't plan to change any existing subscription; everybody always gets grandfathered in forever. The early adopters' invaluable feedback + potential bad rep from raising prices is reason enough. I'm mostly looking for advice on how to price things for my future customers :) >2 months off for paying annual pricing is a very good deal for someone who plans to use you product on the long term. I too pay for…

> how do I monetize this stickiness to extract maximum value from future customers? Don't. Focus on acquiring more customers instead.

Or do it but without screwing current customers, use them as your free marketing force giving them even more discounts to honestly give you good reviews / recommend to their friends with a referral program. Instead of putting that money into adsense of fb ads, put into your current loyal customer base to help you grow it organically.

Worked for PayPal, Uber, AirBnB, etc..

Re: Ask HN: My startup has more annual subscribers than monthly. What to make of it?

#132

Post by jimkleiber »

user5994461 wrote: post #116
jimkleiber wrote: post #109

Earlier quoted context omitted.

I've often thought about giving a one month option and a three month option (quarterly) and yet I haven't really seen this in SaaS... do you think there might be some people who would prefer to only worry about it once every three months?

It's the worst thing you could possibly offer. Customers will notice a "large" bill every three months. It's just infrequent enough that they don't remember what it was from 3 months ago. It's just large enough that they really want to check where the hell is all that money going to. Customers will investigate and that can only result in cancellation. A monthly subscription is designed to be easily approved by a midd…

I found this really helpful, thank you!

Re: Ask HN: My startup has more annual subscribers than monthly. What to make of it?

#134

Post by dumbfoundded »

orasis wrote: post #100
dumbfoundded wrote: post #12

If it's not broken don't fix it. I would focus on the top of your funnel to increase sales. Also, you want to have more annual subscribers than monthly. It's almost certainly more profitable. You're essentially giving up 1/6 of revenue in exchange for guaranteed 0% monthly churn. A simple estimate of what your breakeven monthly retention is: 98.5% = (5/6)^(1/12). So if you're losing less than 1.5% of your customers m…

I sooo disagree. Mispricing could be leaving massive value on the table plus increased margin can allow you to pay more for user acquisition.

I don't really see any evidence that there is mispricing. Pricing is complicated and sure if you raise prices, maybe you make more money or maybe you kill your LTV while exposing yourself to potential undercutting from competitors.

In a growth business, raising prices is usually the last thing you want to do to make more money. If pricing is broken, the costs only accumulate until you fix it while if you build value for users (and increase retention), you get returns on that in perpetuity.

Obviously any advice is meaningless without full context but focusing on pricing is usually a sign of a business that can't find any other way to grow. Or that the unit economics were wrong. Unit economics are usually not a problem with SAAS businesses with a $0 marginal cost.

Re: Ask HN: My startup has more annual subscribers than monthly. What to make of it?

#135

Post by noodle »

throwawayboise wrote: post #59

If it's B2B, it's easier for business customers to get a once-a-year expense paid than to get authorization for a monthly charge to a corporate card. Many organizations don't like having their corporate card numbers enrolled in open-ended recurring charge plans.

This is entirely dependent on the business and the pricing of the product. Monthly SaaS was basically crafted in order to bypass the procurement process, to make it easier for business customers to buy software on the corporate card. Part of pricing a b2b product is to understand the procurement process as well. A lot of b2b products have price breaks built around common procurement limits (i.e., 249/mo and 499/mo because common customer single transaction procurement limits are 250 or 500)

Re: Ask HN: My startup has more annual subscribers than monthly. What to make of it?

#136

Post by smsm42 »

I always use annual subscription if I plan to use the service long term. Less clutter in my accounts, less things to think about. And if I get 15% off it's even better. In fact, if I plan to subscribe I always calculate the annual price anyway - if it looks too high, then the monthly is too high too. It's the "dollar a day" trick - once you realize what is being sold to you is $360+/year or so - you may look at it differently. I don't know the nature of your service but if it's such that people are likely to use it for more than a year, I don't see what's strange in them preferring a better deal.

Think before you raise your prices though. Price, once paid, becomes an anchor. People would ask - he's asking for more, what extra services we're getting? If the answer is "nothing, I just feel I underpriced it and now I want more money", people would feel you're being unfair and bail, even if the original price was completely arbitrary. Once they paid it, it's now the fair price for them, and changing it requires "fair" explanation - even if the new price is as arbitrary as the old one.

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