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Ask HN: Monthly Subscription Plan vs Annual Subscription Plan?

• paraschopra 17y ago
  Do an A/B test!
  • prateekdayal 17y ago
    Hi Paras, Since there is a little more than just changing a couple of elements on the page (code for renewals, support costs etc), I want to get an opinion before I dive in. I am sure I am not the first one trying to get an answer to this problem :)
    • jaddison 17y ago
      I would completely echo the original comment - set up your renewal codes and whatever else to do a split test (a/b or multi-variate) - that is the surest way to get the most correct answer for YOUR audience/market. What works for someone else MIGHT work for you, but then again, it might not - and that is a big risk to take. When it comes to pricing and pricing frequency, you can do nothing better than to trust your own customers - they'll respond differently to you than someone else's customers to them. Split test it!
      • pvg 17y ago
        One problem with that is you're not dealing with UI preferences but people's money. Users might respond negatively when they find out pricing options available to some were not available to them and they, for instance, ended up with a subscription plan that's not entirely to their liking.
        • prateekdayal 17y ago
          Also .. one more point is that I don't want to necessarily have only monthly/yearly plans. I think its best to have both with some discount if you pay yearly. Again this is just something I have seen on most sites and not experimented with personally
    • paraschopra 17y ago
      Agreed, there can be some hassles. But your audience is very different. What works for software subscriptions might not work for music subscriptions (in your case). My hunch says that you will see decreased sales with monthly $5/mo sales as you have a community where a person needs time to seep in and he would rather prefer to take one time (annual) hit than month-after-month hits. Read Predictably Irrational for details on how monthly v/s annually affects customer psychology. But then it is just my hunch (which is usually very wrong). You can start with a simple survey on checkout (if they prefer monthly) or ask your existing paid subscribers if they are willing to switch.
• pvg 17y ago
  I think it depends more on the complexity (conceptually) of the product and the cost. A user might be more inclined to commit for a shorter trial period and test the usefulness of the premium features - for consumers, 'cost of a latte' seems to be a much easier decision to make than $50. There are also other parameters you can tweak, the first one that comes to mind is the utility of the free offering, especially for a community site - more users means more network effects, more community participation and more opportunities for conversion. Right now your free offering seems to be drastically more limited than the pro account and that might be something you could play with.
• iworkforthem 17y ago
  It is best to have the 2 options available. Monthly a bit more ex. so that users can use and terminate anytime they want. The yearly option for your hardcore fans, of course, it should be a bit cheaper. So far this work really well for me.
• Travis 17y ago
  I'd recommend testing your hypothesis. A pure split test (A/B) doesn't quite seem right, because it'll be more difficult to compare w/o doing some sort of multivariate regression. I'd suggest this: peel off a small segment (10%, 20%) randomly out of your user base. Give them the option for monthly / annually. Compare the revenue from that group to the revenue from your control group. Even if you do anger a few of your customers, or the monthly plan costs you a lot of sales / revenue, you've only done it with a small section of your audience. The only downside to this is that you might find some customers prefer the monthly plan, even if you only want to offer the annual (after testing, you find that annual is more profitable to you). Each site is different. Each customer base is different. This seems to me like a situation where you should collect data, rather than look for high level advice.