Buy 10 Months Get 2 Free?
ie. pay the normal monthly rate but if you make it to 10 months then the next 2 are free. In the same way coffee shops do.
I was thinking this could be an interesting pricing model as it allows users to still get the "annual" discount but pay monthly.
Also monthly pricing forces you to provide value the whole time. If someone churns after 6 months it is useful information. But if they already paid and just stop using the product you don't really know until the annual renewal comes up which delays that feedback loop.
Has anyone seen or used this pricing model and have any thoughts?
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I like monthly as well because of the reasons above.
I wonder if there is some other reward than monetary that could do the same job.
That's an interesting thought. Depending on the product there could be in product incentives? Free Swage? Maybe a free bump to the next "tier" of features.
Really depends on product and audience.
But swag is a good one.
Also can do 11 months 1 free month. For Annual do 10-2.
Ya, still having a further discounted rate for paying up front would be nice.
A couple of random thoughts :-
That said, I do think there's some interesting ideas if you keep digging. Particularly around churn. People tend to unsubscribe around renewal time, so making some attractive offers before or after they've decided to stop using it.
Thats a good point about coffee shops solving a different problem.
I think in the early stages, especially, most people wont be convinced of an annual membership (this is purely hypothetical). So the monthly gives them the benefit of low commitment and the free month or two at the end of the year is my saying thanks for sticking with me this far.
Early renewal discount and points system are cool too. I'v also thought of having a higher price that will help support students/low income. So people could pay more in one month or consistently which would help fund giving free or heavily discounted plans to other people. A kind of pay it forward system.
The discount for an annual subscription makes sense but if they’re paying by the month and make it to ten months they’re likely to keep going. Maybe send an email to see if they’d like to change to an annual subscription instead and receive the discount that way?
Thats a neat idea too :)
I wonder after those two months lapse and the user starts to get charged again, whether that will be like punishing them for continuing to be a customer after the 2 months elapse.
I think the gesture is very nice, but might backfire. Also, it is less than 100% straightforward. Maybe best keep it simple.
I like the idea of giving users annual rewards though. Maybe a visual badge or an exclusive feature, or even free credits that they can use to purchase features. But stopping charges and then resuming is a bit odd for me.
Thats interesting, I never would have thought of it in that way. Although I think with the right messaging/notification that could be avoided. Maybe it's every December as a "Christmas present" or on their birthday month that it's free which could be a nice touch point. But its all hypothetical :)
Also, I agree it is more complicated. I'm not sure I would use this as a pricing model but maybe go down some path of annual incentives as you outlined. It's fun to play around with these ideas of adding a bit more fun and personality though.
Thanks for your input :)
You can incentives users and acquire some at the same time, invite 3 more users (with your terms and condition, for instance successfully sign up, ... ) and get one or two months free.
Ya, I like the idea of referral incentives too. Anything to help spread by word of mouth seems like a good way to go.
We offer both monthly and yearly subscriptions for flexibility depending on how committed the user is. They only get the two months free if they purchase yearly up front. This allows us to invest the money straight away to continue growth.
Our product provides fully managed services, so if a user goes quiet we will notice in a relatively short period of time, and can reach out to them to see if they need any help.
Offering X number of months free when buying yearly is a common pricing model, especially in the web hosting industry.
Ya , if your product is fairly high touch then you would probably see dip in usage and be able to get feedback. I'm thinking in more self server products in a B2C context where the user may go quiet for many months.
In this case if they still like the product and want to use it in the near future they will probably just keep their subscription running. But if they go quiet due to not finding the product useful anymore then hopefully the cancel the subscription which provides the stronger feedback.
And, that can hopefully help drive a discussion on where the product fell short.
That's true. If you're providing a service that the user has to log in to, you can set up an automation to get notified if a user hasn't accessed their account in X number of days. That could be an option.
Ya that could definitely work. I may be cautious about not annoying people though. But some thoughtful copy can probably go a long way :)
I agree. The automation is only on our side and we reach out to our customers personally. Thankfully we're still small enough to offer that sort of personal value.
What’s the benefit to you as a business then? Annual pricing has a massive incentive for the business side because you can invest that capital now to file further growth.
Ya, I get how its nice for the business and why its a common practice and I think it can be a good strategy. But, I see the benefit being on product development and getting a faster signal of churn.
If someone cancels their subscription it's more clear information that they don't find the product provides enough value anymore. If the goal is to make the product as good as possible I would want to know this earlier than later.
Also it seems like a nice incentive to the customer. You might not want to commit to an annual subscription but this way you still get a benefit for being a "loyal" customer.
I should be clear that I'm thinking about this in a B2C context and not B2B.
This comment was deleted a year ago.
Agreed, but I guess I'm coming at this from what I would like. I prefer monthly vs annual subscriptions but get kind of bummed at the higher rate. And, I like "loyalty" incentives which reward you for being a long term customer. Like the coffee shop example above - I would still go and buy my 11th coffee even if my coffee shop didn't give a free coffee after I buy 10 but that free one just feels nice.
So it may be worse from a strictly capitalistic sense as you say but I feel like it could be better from a user experience point of view - which could lead to better monetary returns in the longer term?
This comment was deleted a year ago.