

Ask HN: Monthly Subscription Plan vs Annual Subscription Plan? - prateekdayal

Hi,<p>We currently have an annual subscription plan for our pro accounts at Muziboo - http://www.muziboo.com/pro ..<p>I was wondering if having a monthly subscription plan (ex. $4.99/month, cancel anytime v/s $49.95/year) increases conversions. Has anyone conducted such an experiment or seen a study?<p>Also, would this depend on whether this is a B2B or B2C app?<p>Thanks!
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pvg
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.

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Travis
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.

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iworkforthem
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.

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paraschopra
Do an A/B test!

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prateekdayal
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 :)

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jaddison
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!

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pvg
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.

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prateekdayal
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

