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This makes sense, if someone isn't using your service for a month, chances are good that they are going to cancel soon. Maybe they'll keep on paying for another
by dirkc 2y ago
This makes sense, if someone isn't using your service for a month, chances are good that they are going to cancel soon. Maybe they'll keep on paying for another few months, but if they're not using it, they're not getting any value from it.
So rather than getting them to cancel, pause their subscription. You don't have to deal with cancellations, and if/when the user does return, you are one step further than you would be with a new subscription.
Furthermore this generates goodwill, and I'm guessing goodwill has some % that converts to conversions and lower churn.
- fnord123 2y agoMore importantly you can tell investors you have even more accounts than you do and your churn rate is very low.
- thih9 2y agoPlus, you get to stay in touch and advertise via a monthly email: “You didn’t do any searches so we’re giving you next month for free, here are all the cool things you could do:…”.
- JimDabell 2y agoYou can do that, but if they don’t interact with your email either, you may be better off not doing so. You get worse delivery rates if you constantly send email that gets ignored.
- freehorse 2y agoThey send by default an email every month when the payment time is approaching, so I assume they may just send the same email and state that the payment amount is covered by the previous month. They have really good practices at that.
- fl0id 2y agotbh, these e-mails can also prompt unsubscribing. because then I actually remember that I am still subscribed to that thing.
- ldoughty 2y agoYet Kagi is one of the very very few services I've seen that sends a monthly reminder that they are ABOUT to charge you... And you have time to stop it. Typically I only ever see something like that with shipped goods where they might have to deal with a return + cancellation
- 7thaccount 2y agoThat's really nice sounding and comforting. I've been a little on the fence, but Google has become such absolute garbage lately that I've had to frequently use Bing in order to find something that should be one of the first results. This may just be a better model.
- thesuitonym 2y agoKagi is so much better. You should just try one of the lower tier subscriptions for a while and see what it's like. Just for warning, you'll still want to use Google as a backup for hyper local results, but generally the experience with Kagi is much better.
- pbronez 2y ago> you'll still want to use Google as a backup for hyper local results And can do so by adding !g to a Kagi query, just like on DDG. You know, I once ordered takeout from the other side of the country because I had too much privacy on my search engine...
- magnusmundus 2y agoThat's funny. I'm curious now, do you live in a microstate, or an island? Or was it a case of an overly eager delivery platform?
- eviks 2y agonot unless said investors demand better metrics like active user count...
- lostlogin 2y agoOnce you are navigating these waters, it might pay to ask for a definition of ‘active’.
- mathw 2y agoThis is the point where you realise the investors were, like most times, a mistake. I don't know if Kagi have any investors or not, but I am kind of hoping the subscription model means they don't need them.
- ffsm8 2y agoTechnically, they do https://news.ycombinator.com/item?id=36517149 https://news.ycombinator.com/item?id=36517149 But as the comments pointed out, the invested money is "only" ~700k, so they're likely not such a mistake as you're imagining
- dgacmu 2y agoNo need to really - users + revenue is enough to figure it out. And you want to see revenue anyway. (I'm one of those small investors in Kagi.)
- comprev 2y agoI've seen the opposite of this at a startup once in the streaming music industry. We _knew_ our "free trial for a month" was being abused by 500k+ users because the sign-up flow neither required a valid payment on file or email validation. In fact there was an entire industry built around generating false throw-away accounts. The company used stats including non-paying users to demonstrate demand for our service was high, even though we knew they would highly likely never spend a cent with us.
- scott_w 2y ago> More importantly you can tell investors you have even more accounts than you do and your churn rate is very low. I know you're being a little facetious but it is actually a benefit. Many companies have implemented subscription pausing to reduce churn. The reason is pretty straightforward good business: it's easier to reactivate customers who lay dormant for 1 or 2 months than it is to let them churn and have to re-sell the product to them from scratch.
- jgalt212 2y agoFair enough, but as far as your investors are concerned you're changing the definition of churn. I'm sure if they ask, they'll be provided with "pause" metrics, but such data will never see the light of day in any marketing materials.
- AdamN 2y agoA thoughtful investor will be more interested in paid active users and cohort analysis of retention (in terms of actual usage) rather than subscription numbers/revenue in absolute terms. Engagement can always be monetized better in the future.
- dumbfounder 2y agoAnd they don’t usually ask for number of subscribers, but number of paid subscribers. Startups have played enough games with this that investors should be able to hone in on the right numbers.
- scott_w 2y agoCorrect, your churn would be artificially lowered, so you'd probably want to define a point where a "paused" subscription is effectively inactive and count that against churn. It would still show in other metrics, however, as you'd have monthly active users (or accounts), which would take a hit. You'd also see a drop in MRR when an account is paused. Bear in mind I'm assuming a business that wants clear, accurate metrics so the executive team know what actions to take; not simply a business looking to scam investors out of money ;-)
- OskarS 2y agoA huge benefit to companies with subscription services is that people forget they have them and keep paying for Ancestry.com or whatever for months (what? no, of course that never happened to me...) after they've stopped using it. Kagi is voluntarily giving up that benefit. This just seems like a consumer-friendly move to me, not sinister at all.
- andai 2y agoI somehow ended up with two simultaneous Audible subscriptions in different regions. It seemed like a coin toss which one the website would send me to. I only found out because I canceled one of them, and then still got billed. Support was very understanding and refunded the double-sub period.
- boringg 2y agoAns any difference in pricing is made up for it by increasing rates to cover the lost revenue that wasn't automatic. And people are happy they don't pay in non use months but the company still makes the same momey.
- Jentifgq 2y agoguess we'll have to switch back to ARPU now...
- Seb-C 2y agoAFAIK, Kagi is 100% bootstrapped and do not owe anything to any investor.
- abound 2y agoKagi has taken some investment, mostly from its users: https://blog.kagi.com/safe-round https://blog.kagi.com/safe-round Disclosure: I work at Kagi
- tigroferoce 2y agoThen thank you for the service. I'm using Kagi since a few months and I love you guys!
- ajkjk 2y agomore importantly it's kind to the users (historically not so important to companies in practice, but it sure ought to be)
- simonebrunozzi 2y ago> We have implemented this for the simple reason of being kind to our users. Sometimes the simplest explanation is also the correct one.
- mercwear 2y agoThis will come out in due diligence if the investor is not just throwing money at whatever moves.
- yreg 2y agoIf the streaming services did this, I would probably have a lot more of them.
- BossingAround 2y agoIf the streaming services did this, I'd probably have pretty much all of them. Then, instead of paying monthly, you essentially have a tab open with everyone, and you pay for whatever you stream. Indeed, this would make me way less annoyed at the thousand and one streaming services popping up like mushrooms after a rainy day.
- scott_w 2y agoI... really like this idea. It's an interesting problem and something that a challenger service could possibly use (assuming they can resolve potential cash flow issues around content licensing). From an incumbents' perspective, it's less desirable since the fact I already have Netflix, Crunchyroll, Amazon Prime, Apple TV makes me less inclined to add Disney+ or a new service to my list of monthly outgoings.
- joseda-hg 2y agoThere's a separate cash flow problem on doing this, a big chuck of the expected revenue comes from people that setup the subscription and forget about it I tend to care lot less on keeping something like dropout even if I don't use it all the time (I like to think I contribute keeping it afloat, and watch it whenever), but I cancel other subscriptions a lot more aggresively (I've unsubbed/resubbed to Gamepass plenty of times specially when playing random stuff with friends, there's something nice of the exploratory playing you do when you don't need to care who has bought which game) On the pattern I use dropout, they'd get a month or two of revenue out of me (Binge a couple of their limited runs and catch up on their staples) and zilch for the rest of the year even if I'm a happy customer
- ethbr1 2y agoIt's an interesting point, because it gets to when streaming services' content costs are paid. Are they upfront? Or do they pay per view royalties at the end of a streaming period? Or likely mix of both, varying by each piece of content terms? Hypothetically, if a streaming service structured most of their obligations in the form of post-view true-up's, they wouldn't have any problem doing this. And could make bank on the float between customer payment (first of month) and paying for their content (end of period).
- ant6n 2y agoI dunno. The thing is, Kagi isn’t really that much better than Google. When they still had a free tier, I tried it every once in a while, and it quickly wastes a lot of searches even while just entering queries, and then the chance to find something better than Google is mediocre. Perhaps a prepaid model might make more sense, especially if it’s designed not to blow through queries quickly and transparent about how many searches were actually done. Compare to ChatGPT, which is much more expensive, but the value relative to Google is pretty obvious.
- pfix 2y agoFrom kagi.com: > No ads. No tracking. No compromise. Just deep, powerful search. So you are not paying for better search but for no tracking and no ads. If you don't care about those, you're not kagi target audience.
- lostlogin 2y agoI get better results. I block the shit (a user preference with some good easy options), I up rank my favourites and pin Wikipedia. I’m happily paying for a family plan.
- sillyfluke 2y agoOh yeah, in this political climate I'm definitely going to voluntarily tie my and my children's search results to my credit card. As long as people continue to gush about how amazing this service is, I'm going to gush about how ridiculuous this proposition is.
- gkbrk 2y agoYou think Kagi tracks you, to the risk of killing their business, but Google doesn't track you or collect data about your searches?
- sillyfluke 2y ago
- allan_s 2y agoIs there a lot of feedback from companies that have switched to similar model ? (how much it improved churn, customer lifetime value etc.)
- WiSaGaN 2y agoYou are really underestimating how many users just forget they have such unused subscriptions, and how much of subscription based company monthly revenue is those that are not used at all.
- Lutger 2y agoThere are lots of benefits for sure, but you have to weigh them against the users who can't be arsed to cancel their subscription and keep on paying. You'll miss out on those.
- RALaBarge 2y agoThat is what this effort is aimed at: sleezy status quo
- robertlagrant 2y agoI think this is maybe a bit simplistic. People forgetting to cancel means the price can be lower per-person. It's a little bit like how insurance is priced.
- wholinator2 2y ago_Can_ is doing some heavy lifting. I mean, I'm not in the boardroom, but when was the last time a subscription got cheaper?
- indymike 2y agoForcing people to pay for something they are not using is a time bomb. This is a good thing and we should all be looking at how to do this.
- startupsfail 2y agoHey Google, I want my $2/month for 100GB subscription back. It had disappeared and only $20/month for 2TB plus subpar AI that I don’t use remains.
- verdverm 2y agoI'd prefer a pay-as-you-go / per API call / search pricing model... to something that if I use it just once, I pay full price for a month. Same rationale for AI in my IDE, I'm waiting for the pricing models to change
- dghlsakjg 2y agoThere are any number of plugins for all of the popular IDEs/text editors that let you use metered AI usage using an API key. For VS code compatible plugins checkout Cline/Roo or just search for AI in the extensions.
- verdverm 2y agoPlugins will never match the possibilities of a deep integration. Those who build or fork VS code want the monthly fee because they make way more per customer
- merlinnn 2y agoThe downside is that price per unit will increase as minimum unit size goes down. You're essentially buying at a "retail" price whereas the monthly bundle is wholesale. But the tradeoff would be worth it for sparsely used applications.
- verdverm 2y agoI pay $0.01 per MB on my phone data plan until I reach the unlimited plan value, then everything is free I don't think you can guarantee that the price will go up. If I look at the API costs today, they do not have a sliding scale
- MarcelOlsz 2y agoI'm still waiting for a $150 refund from pieter levels from his crappy ai interior site, didn't log in once.