
Ask HN: How do you set lifetime pricing for your products? - gnicholas
We have a product that is charged via annual subscription. Some customers have asked for lifetime pricing, so we&#x27;re considering adding this option.<p>But we&#x27;re not sure what the right multiple should be. It has to be low enough that the customer thinks they&#x27;ll save money in the long term, but high enough that the benefit of revenue acceleration outweighs the potential lost revenue.
======
WorldMaker
A magic number multiple I've seen a lot is 5 years.

It's a relatively low number, so even if we don't know the exact reasoning for
why that particular number is somewhat common, it's a useful benchmark to
consider.

Some things that are useful to consider is your own time horizon before asking
others to consider theirs. What is the expected lifetime of your product? Do
you think you may even be around in 5 years? 10 years?

It doesn't make sense or seem fair to sell a lifetime subscription for 10
years if you expect the product to not exist in 5 years time, or even just if
it may be surprisingly different in 5 years time if you have an expectation to
pivot.

A lifetime subscription should show some commitment from you as well: how long
do you plan to exist, how long do you plan for your product to exist, how long
do you expect to service/maintain the product?

It can be a strong statement to say: we expect this product to be around in 10
years and we're going to give you the equivalent to a 50% discount if you want
to pay for 5 years upfront and get a lifetime subscription.

10 years is a big commitment. Even 5 years can be a big commitment for many
projects. The lifetime pricing should reflect the time commitment you expect
for your product as much as it should reflect what you think the market of
your customers that are interested in the offer might bear.

~~~
gnicholas
This sounds about right. We were thinking that something between 3x and 7x
probably makes the most sense for us. Our main tool is a Chrome extension, and
we expect that many people will still use Chrome in 10 years.

Even if our company does not exist at that time, our Chrome extension will
still work on many websites, assuming HTML does not change too quickly.

If we price a lifetime subscription at 5x the annual charge, I expect that
most of our customers will still choose annual pricing. This means we'll still
have very good economic incentives to keep updating and maintaining the
product.

------
gnicholas
One related question is: what percent of customers typically choose a lifetime
pricing option?

Is this just an option that is presented (1) for the few customers who
actually prefer to pay a much larger up-front cost instead of an annual
subscription; and (2) as a mental anchor that makes the subscription pricing
seem much more reasonable? Or would many people end up choosing the up-front
option?

If it's mainly there for those who strongly prefer up-front, and to offer a
mental anchor, then it would make sense to set the multiple high. But if it
might have mass-market appeal, then perhaps a lower number would perform
better, due to elasticity of demand.

