Hacker News new | ask | show | jobs
by vidarh 1181 days ago
> One thing I noticed with some companies was that the yearly plan was very heavily discounted compared to the monthly one. To me that gave the impression of lacking confidence that monthly users will stick around long term, so I didn't want to do that.

It probably reflects reality, but I can see the point of showing lack of confidence in the product.

Not a language product, but Bumble (the dating app) at one point -- no idea if they still do it -- offered a lifetime membership priced at around 6 months of monthly subscriptions. I find looking for that kind of pricing can be highly instructive about a business and their competitive landscape, because presumably they'll have run their numbers and are expecting to earn more that way.

So it's not just signalling lack of confidence, but also giving away a very strong signal about the lifetime value of their customers.
2 comments
conradfr 1181 days ago
At one point my gym offered (out of the blue and only by text) lifetime membership for something like a year or two of the regular monthly price.

They folded nationwide less than ten months later.

link
vidarh 1181 days ago
That's a good exception - if someone put of the blue appears to push a big discount, it can reflect a high cost of raising capital.
link
mokkol 1181 days ago
I think it slightly works different with a dating app. In theory, if the app works you don’t need it anymore. So in their case, it is confident to offer a big discount.
link
vidarh 1181 days ago
In terms of the specific, very low, multiple you're of course right - a dating app is an extreme.

But the overall principle that you should expect the discount to reflect their estimated lifetime value of a customer unless the amount is high enough that the investment return can exceed the regular income. With the exception, as noted by conradfr, that if someone suddenly offers a steep discount it could reflect an attempt to raise expensive capital fast

Assuming you're aware of those factors, it's a useful way of gaining insight into customer retention (assuming they're competent enough to run the numbers...)

link