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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 a

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 monthly then this would be unprofitable.

orasis 6y ago
I sooo disagree. Mispricing could be leaving massive value on the table plus increased margin can allow you to pay more for user acquisition.
- astrocat 6y ago
  Your approach sounds like the mindset of chasing growth instead of sustainability. Short term gains over long term value.
  - orasis 6y ago
    Quite the opposite. As a niche becomes saturated with competition, user acquisition costs rise to approach the level of the highest margin player. If you want to have a sustainable business it behooves you to have better optimized margins than the competition.
- dumbfoundded 5y ago
  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.
EveYoung 5y ago
But it could be an opportunity to improve, as well. I would start by investigating how customer segments are converting. One hypothesis could be that you have more annual subscribers because more uncertain users are not signing up at all. Maybe the monthly plan is too expensive for testing or the messaging is unclear.

orasis 6y ago

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

astrocat 6y ago
Your approach sounds like the mindset of chasing growth instead of sustainability. Short term gains over long term value.
- orasis 6y ago
  Quite the opposite. As a niche becomes saturated with competition, user acquisition costs rise to approach the level of the highest margin player. If you want to have a sustainable business it behooves you to have better optimized margins than the competition.
dumbfoundded 5y ago
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.

EveYoung 5y ago

But it could be an opportunity to improve, as well. I would start by investigating how customer segments are converting. One hypothesis could be that you have more annual subscribers because more uncertain users are not signing up at all. Maybe the monthly plan is too expensive for testing or the messaging is unclear.