Steve the bastard

Posted @ 09:38 AM on May 16, 2008

"Eli pays for a CRM subscription for $120/month", should that be $120/year?

Dave Navarro

Posted @ 10:48 AM on May 16, 2008

On top of that, if they're not using it regularly ... will they renew after a year? Likely not.

Bill often, remind them of the value of the subscription often-er.

I paid $1K for a software package ... do I use it? Hell yes I do.

jill

Posted @ 12:59 PM on May 16, 2008

Good point, My husband is about to launch a new online application for marketing materials (branddoozie.com), and figuring out the best way to go about the pricing took a lot of brainstorming, a monthly subscription is the way we decided to go, but I will pass this post on to him to read

Andrew @ Trizle

Posted @ 07:24 PM on May 16, 2008

Steve, you're right. Just corrected it. We need editors around here, man.

Andrew @ Trizle

Posted @ 07:28 PM on May 16, 2008

Yeah, exactly Dave. We have a 6-month free trial to a subscription package, but we haven't used much of it yet. Once we start paying, you know we'll really get much more out of it.

Andrew @ Trizle

Posted @ 07:32 PM on May 16, 2008

Hey Jill,

Love your husband's concept. Pricing has a whole science behind it, and there are many more great tips you can find out there (e.g. pricing your product that ends with a 9 psychologically tells us we're getting a good deal -- because of the symbolism of 9 with sales items).

Noobpreneur

Posted @ 06:24 PM on May 17, 2008

Hi - I always thought that $120 upfront money is good, as I prefer the money now than later :D

However, your have a sound argument there - you're rite - peeps do forget about you if you have a year-long subscription.

Good one!

Mike Smith - Bootstrapping Blog

Posted @ 02:32 PM on May 18, 2008

Yeah, I bought hosting for an entire year (with a huge discount) and ended up not using it after 4-5 months and just let it run out. I also purchase hosting on a monthly basis and I make sure I'm constantly using it. So yeah, monthly is much better then yearly.

Brian

Posted @ 01:44 PM on May 21, 2008

Good post. There are 2 sides to this, however. A customer that pays the $120 upfront is worth more in terms of revenue (taking net present value into consideration). $120 today is worth more than $120 amortized over 12 months.

On the flip side, there's a greater chance of retaining the customer after the initial 12 months with the $10/mo. option.

David @ PostcardPerfect

Posted @ 12:43 AM on May 29, 2008

Andrew,

I'm not sure if I agree with this. It makes sense, but at the same time it's easier for a prospect to rationalize $10 a month than to swallow the whole $120 at a time. So, even though the renewal rate may not be as high - I suspect the monthly rate will earn more initial business.

Regardless, it was an interesting post. Thanks for the thoughts.

Andrew

Posted @ 04:28 AM on May 29, 2008

@Brian: cash is definitely king. So charging your subscription rate gets the proverbial: It depends. If you don't have sufficient cash (especially in the early years), it's probably better to go with the upfront first.

You can also compare inflation to the subscription rates for each subscription, and see which one works out better (I'm guessing the latter, but again, it depends on your offering and a bunch of experimenting if you have a good sample size)

@David: I think we're following along similar lines, although I might be missing something? :)

David @ PostcardPerfect

Posted @ 11:53 AM on May 29, 2008

@ Andrew - Are we? I thought I was disagreeing with you. : )

I suppose it really depends on the product, customer profile, etc. You are right in your comment to Brian - testing is the best way to go.