
Ask HN: Yearly only subscriptions for apps – what are your experiences? - jklp
Hi, I&#x27;ve noticed a trend recently where apps (such as Calm) would only offer a single subscription option of a yearly plan (so no month-by-month, 3 months, 6 months, etc)<p>In my head this seems like a risky move, as it removes a segment of more casual users, and also takes away other pricing &quot;tricks&quot; you can employ such as anchoring, discounts for longer subscriptions, etc.<p>Does anyone have any thoughts on only offering a only a single yearly plan, or any experiences in the past why companies might be moving to this pricing model?<p>Thanks!
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dangerface
In my experience of running hosting business people want to pay month to month
or yearly. I think we maybe had two or three customers that wanted to pay
biannually, not worth the bother.

We had large upfront costs (servers) and lots of competition so low margins.
If the customer was paying month to month usually they would stay long enough
for us to easily manage the server and keep it profitable.

But some packages had more customer churn, You will pay for you backup hosting
no matter what but a cheap server for an experiment is not going to see enough
months to be profitable.

Making these high customer churn products a yearly thing made them profitable.
Similar thinking for products that are just dirt cheap, add in the cc fees and
other costs of billing, if its late or declined, it makes much more sense and
profit to charge £24 a year for an email than £2 a month.

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mchannon
There's a reason this is standard operating procedure among gyms. They know
their target user is only going to actively use their product for a limited
time, and the subscription model is sticky enough to monetize it for much
longer.

The friction of admitting to oneself that it was a bad decision to join a gym
one doesn't make time to actually use is what keeps people from cancelling on
their anniversary date, and it's what keeps most gyms in business.

If you decide to instead only ask for monthly renewals, you make the work of
retention 12x harder, with very few actual instances where you deter paying
customers. When people check their card purchases over the course of the year
and you show up 12x vs. 1x, even if it's the same amount of money it will be
perceived as more expensive.

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WorldMaker
You also have the opportunity to better engage with people's brains' built-in
fallibility to the sunk cost fallacy, which is also a lesson places like gyms
learned a long time ago.

You see this in things like upsells for classes: a gym will send you a flyer
every couple months about exciting new classes that are only $x more thanks to
that membership you bought months prior ("just imagine if you were paying for
this class on its own somewhere else"). People like thinking they are getting
a deal, and want to make use of an existing investment they already sunk money
into, and are sometimes willing to sink more money into the existing
investment.

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skate22
I bought a personal Jetbrains 1 year license because of the 20% discount (as
opposed to monthly)

If there was only a yearly option i likely would not have bought it (but the
savings!)

3 months in I find myself using other IDEs..

Give people the illusion of a choice, don't explicitly force them

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aminmemon
I believe Calm does offer monthly subscriptions
([https://www.calm.com/subscribe](https://www.calm.com/subscribe)). Although I
do understand that a lot of companies are starting a trend of offering yearly
subscriptions, there can be many aspects as to why companies would choose to
go for such a pricing model. Any company using a subscription based pricing
model would want to make the customers stay for the maximum months possible,
basically increase the lifetime value of the customer, maybe the pricing the
product per month would be low and then the companies would have to make sure
that customers keep subscribing for every month inorder to make maximum
profits which also depends on how much is the Customer Acquisition Cost.
Another aspect would be where the company knows that customers won't be able
to see great results in a few months but the product would be very valuable on
a long run, in such cases the companies would probably give 1 month free trial
and then a yearly pricing.

I run a productized service ([http://draftss.com](http://draftss.com)) where
we create unlimited designs for our customer on a monthly based subscription.
We create multiple options for each design task that we do for our clients and
thus we have a lot of leftover designs. We have been thinking to give away all
of these leftover designs for a yearly subscription or maybe even lifelong
subscription.

