
Auto-Canceling Subscriptions - dreeves
http://blog.beeminder.com/autocancel/
======
dreeves
Post author here. To try to answer some questions that came up off-line:

We do try to be clear about this policy up front:

> If you stop using Beeminder, we automatically stop charging you. We only
> want your money if you're actively getting value from Beeminder!

And here's a thought experiment: Suppose you subscribe to the print version of
The Atlantic Monthly -- like actually delivered to your house (stay with me)
-- and they have a little tracker that tells them when you crack it open. If
you didn't ever open last month's issue when it's time to send the new one,
that's it, they don't send it and don't charge you again.

Even with the magic tracker, that's probably no good because you might want to
collect them. Not likely but they probably shouldn't presume you don't want
what you explicitly paid for since it has possible value whether or not you
open it. I know one startup (<http://serps.com>) with a similarly watertight
excuse not to auto-cancel subscriptions: SERPs constantly fetches and compiles
data for you. You can take a multi-month hiatus and still be accumulating
value that you'll use whenever you come back. (It also costs SERPs money each
month to do that.)

But for the rest of us there's really no way the user could prefer to keep
getting charged without any possible value accruing.

~~~
dreeves
Actually we did get one complaint already, from someone who wants the ongoing
payments as a way to guilt themself into returning to Beeminder. But I figure
that's something only a Beeminder user could ever say! And if they're serious
they should just make a "keep using Beeminder" goal on Beeminder. In fact,
that's brilliant, we should make that a one-click thing! :)

------
svmegatron
I agree with the other suggestions that this is a noble approach, but I'll
also offer a competing viewpoint:

1\. You are shooting yourself in the foot, revenue-wise.

2\. The cognitive overhead of figuring out this unexpected pricing scheme is
going to scare away potential customers.

It smacks of white knight syndrome to me. I understand that your service is
trying to help people, but I don't see how this pricing scheme adds additional
value. _If_ (and this is a big if) you managed to spin it into some kind of
publicity, then it could help. Otherwise I'd guess it's not going to turn out
at all well.

~~~
dreeves
Ah, thanks for adding the other viewpoint! My rebuttal:

1\. It may be money you're leaving on the table but you can't really say it's
money you're earning. It's like a laziness tax on your users. (And, uh, not in
a good way.)

2\. Your point about cognitive overhead I think is quite backwards. The beauty
of auto-canceling is that it's less cognitive overhead, other than the fact
that it's unusual. (I hate it when "it's industry standard" is the excuse for
not doing the right thing.)

There was another Hacker News thread about pay-as-you-go vs tiered pricing:
<https://news.ycombinator.com/item?id=5664512> . I think the cognitive
overhead of perennially re-evaluating whether you're getting your money's
worth is a big reason developers like pay-as-you-go. And the biggest reason
you wouldn't be getting your money's worth is that you're not using the
service at all anymore.

So I think auto-canceling subscriptions are the best of both worlds: simple
and predictable, you can budget for it and think about it in terms of the
value you're getting (an ongoing service) without the risk of paying for
something you're not using. How's that not clear additional value?

~~~
svmegatron
All good points, to be sure.

I disagree about a standard "you need to cancel it" model of canceling being a
laziness tax, but I can certainly see reasonable people disagreeing on that
point.

I should have explained my thinking on cognitive overhead a little more
clearly - I think the overhead of explaining it at the _beginning_ of the
subscription is what could turn people away. No disagreement from me that once
a user is signed up, they don't need to think about it as much.

I certainly wish you the very best with this billing experiment, and will be
excited to read the results if or when you choose to publish them!

~~~
dreeves
I think the part that's the laziness tax is specifically the money being left
on table -- from the business's point of view -- by using auto-canceling
subscriptions. By definition that's money that you're collecting from someone
despite them no longer using your service. For most services there's no
possible explanation for that other than laziness (or something similar like
cluelessness, or at best the user valuing their time too highly to think about
it). In one way or another, the user is paying that money because they're not
as on top of things as they mean to be. You can fix that for them with one
line of code:

    
    
        charge(user, amt) unless last_active(user) < time() - 1.month
    

You can get away with that charge and they technically/implicitly agreed to
it, but, well, it's revenue that doesn't represent value you're creating.

Imagine a friend/friend version of that business/consumer relationship. You
would not keep taking your friend's money!

Anyway, yeah, I think we're on the hook now to follow up on this in a few
months or whenever we have enough data. :)

------
bredren
This is a noble idea and drives at questions on business ethics.

Most businesses don't approach subscriptions this way. Some portion of revenue
comes from people choosing a "set it and forget it" approach toward service
subscriptions. Is it unearned revenue? The traditional take is the user has
access to the premium product. If they don't use it, that's their problem.
(i.e. a gym membership)

I think traditional MBA thinking is to optimize around revenue at any cost.
However, I think this sort of behavior has made people, (especially young
people), not trust businesses from banks to wireless carriers. I think
businesses that optimize around revenue rather a relationship with their users
are likely to lose them as soon as there is an alternative.

Clearly, it is in the best interests of the user to do this though, as a
business you should also expect to drive more long term loyalty to the
product.

I think the entry could make an argument that this will cause users to be more
loyal to you or create longer lasting subscriptions. Without data or even
anecdotal feedback that users are more likely to stay because of this choice,
it sounds like you are something of a White Knight turning away money.

From a user perspective, I'm used to a use it or lose it subscription. So, if
I am not charged, and then I all of a sudden am charged because I came back, I
might get confused. Do you do customer education at the time of the
subscription creation of this friendly charging policy? Do you notify the user
by email when they are not being charged because of a lack of activity? (This
might be a good way to actually get them back to the product, and possibly you
have measurable data to support the value of this?)

~~~
dreeves
Well said!

If there's no question that auto-canceling subscriptions are in the best
interest of the user then I feel like it's case closed.

As for customer education about the policy (repeating myself from my other
comment) we do have it in large print -- "If you stop using Beeminder, we
automatically stop charging you. We only want your money if you're actively
getting value from Beeminder!" -- but you're definitely right that we should
email the user when the auto-canceling happens. I think that could generate a
ton of goodwill and bring them back, as you say.

------
thewillcole
Love this! Just discovered that I'm paying a monthly membership to my fiance's
old gym when she hasn't been there FOR OVER A YEAR...because she moved and
(thought she had) cancelled it.

~~~
PagingCraig
That's her fault, not the gym's.

~~~
dreeves
The gym is an interesting special case because there really is value in the
commitment device of "I paid for this gym membership so it will feel really
wasteful if I don't go all month". Our second biggest competitor --
<http://gympact.com> \-- turns that aspect of gym pricing up to eleven,
charging you _more_ for not showing up (and giving you a kickback if you do).

As far as auto-canceling subscriptions, the gym could also make an argument
that they have to provision a lot of physical space and equipment based on how
many people have paid to use the space. They don't recover that cost when you
don't happen to show up.

None of this applies to most SaaS companies though!

------
fatbat
Confused. Why do a Auto-Cancel-Subscription model when they can do Pay-To-Use
model?

~~~
dreeves
Good question! Maybe we should have that as an option as well -- like pay 10
cents per datapoint you add to Beeminder. But I feel like that's harder for
the user to reason about. They don't place value on individual datapoints,
they value the, y'know, being minded, as we put it.

But, yes, any startup using pay-as-you-go is exempt from my objurgations. :)

------
seanahrens
cool, i wonder if clicking a link to the beeminder site (or simply log in)
would do the auto-resume, or if there is a specific engagement required to
make it auto-resume. noble and awesome!

~~~
bsoule
You actually have to have entered data on Beeminder in the last month to be
considered active. If you haven't, we suppress the charge. So we just do that
check every time before charging. Simply logging in isn't enough. And thanks
everyone for the kind words about this!

~~~
alecdbrooks
If I understand correctly, you are marked active if data is sent in without
logging in, say if you are replying to the emails or using Gmail Zero [0] or
TagTime [1]. So logging in is neither necessary nor sufficicent to be
considered active.

If automatic data entry is enough to be considered active, maybe you should
warn people that the data points entered automatically will make them count as
active.

[0]: <https://www.beeminder.com/gmailzero>

[1]: <http://messymatters.com/tagtime/>

~~~
dreeves
Glad you pointed this out! We could add another check (though I'm sure it will
almost always be moot) that you have to do _something_ on Beeminder that only
humans do to be considered active (either sign in or manually add data).

The more I think about it though, if you're not signing in at all then you'll
almost surely derail before long, which means your graph will freeze and you
won't be active any more, automatic data source or not.

In fact, it now occurs to me that this is an example of when it _is_ fair to
charge you for a month even if you weren't actively paying attention. It's
like my example with SERPs.com in another reply here. If Beeminder is actively
collecting data for you and storing it and graphing it then that's value that
it's fair to pay for.

If you do entirely wander off then even with an automatic data source --
unless you set preposterously unambitious goals (don't do that!) -- you'll end
up marked as inactive before long. So I think the spirit of auto-canceling is
still being honored.

------
bsoule
Also, we just implemented this slightly over a month ago, so no numbers yet on
how it is working out.

~~~
nerdmonkey
Very curious what percent of your revenue this will cost you in the short term
after implementing it. Looking forward to a follow up post about this in the
future.

