Thats the first thing they teach you at YC, always be having that recurring revenue.
You're fighting the reputation of generations of scammers who promised "cancel any time" and either weasel-worded the small print or just outright ignored cancellation requests to charge as much as possible to recurring bills.
"Fun" fact: I bought a used car, only to discover that it apparently has free XM radio. I would not be surprised if someone unsuspecting person's card is being charged for it every month.
Obviously, we want to build a product that we and our subscribers love and choose to keep subscribing. Right now we have a lot of them.
The biggest thing with the subscription is clear CAC vs. LTV. With our current model this equation works and we can profitably acquire new customers. This allows us to grow, make the product better and bring the cost down.
> The biggest thing with the subscription is clear [Customer Acquisition Cost] vs. [Long Term Value].
i.e. "recurring billing results in more people failing to cancel, because they either forget or are deterred by our 'customer retention program.'"
> With our current model this equation works and we can profitably acquire new customers.
i.e. "we wouldn't be able to profit and grow without doing this."
It seems like you genuinely care about good coffee, but what's the desired end-state? If it's "great instant coffee at $1/cup with no auto-billing," that makes sense. If it involves negative option billing, it's shameful.
No, it's not what you said. Your explanation misses the segment of customers that want the product every month but wouldn't exert a manual effort over and over again when it could be automated. Hence an increased LTV per customer with no change to the CAC. This doesn't really have anything to do with Sudden but rather subscription business economics. Automatic billing is not inherently bad; it's largely positive and convenient.
Also remember this company is not random — there's a ton of diligence involved with getting into YC as well as with VCs which they are backed.
There are definitely sets of products for which people want to 'set it and forget it'. At a basic level - electricity. I'd love to never think about my electricity bill ever. I do not want to explicitly pay for my electricity bill. Automated payment on electricity is amazing!
There are also many products in my life that I truly love and would use a lot more, but I am too lazy to buy or order them. I love LaCroix sparkling water. I would have no problem if it showed up at my house for $20 a month. However, because I'm lazy I never actually buy any - instead I get Coke at the corner store - worse for me.
Our goal with Sudden Coffee is to make it really really easy to get something you like. We are definitely not trying to pull wool over anyones eyes - we try to be as transparent as possible with this. We will never give you the run around if you need to cancel - that's just not who we are.
Closer to our hearts - a subscription allows us to actually make it an 'experience' instead of just cups of coffee. We can educate you about coffee, send you new recipes, guide you through coffee tastings - over a longer period of time. When we talk to customers at cafes - those extra moments of delight make the experience memorable - not just a cup of coffee.
That said, Kalle is also right. A subscription ultimately means we can spend less money & time on marketing, more money where it counts - on coffee, and give it to you at a lower price. I mentioned this in an earlier thread - for us to deliver the same coffee without subscriptions, we'd have to charge $4-5 per cup. However, I can also tell you that we have many happy subscribers who love that it's a subscription - it's not something that feels forced, but rather something that makes life easier.
Would really love for you to give us a try! Promise you will not be met with resistance if you need to cancel!
It is possible, using the advanced technology available today, to make on your website a button which allows a subscribed user to independently cancel a subscription that was made online.
Through this technology, one no longer has to compose a pleading e-mail to customer service. No need to take on faith the co-founder's confusing promise that they want to make it easy for you to cancel while they simultaneously withhold a "cancel" button, with no stated plans to add one.
I mean, look, if you really don't intend to make a serious amount of dough off of people being too forgetful or busy to unsubscribe from a subscription they no longer want... what's the harm?
We're just now building an in-house engineering team to make the process easier. If I had my way, you could cancel, pause, adjust timing, etc with a couple clicks. I am stating our plans to do these things :-)
I have a very different perspective. I religiously avoid auto-billing. For basic necessities like electricity and gas, I like to know how much I'm paying, and to be able to dispute the charges before I pay in case there's a mistake (this occasionally happens).
For luxuries, the periodic reminder that I'm paying $x for something prompts me to reassess whether they are worth it to me, with a default answer of "no." That may be bad for your business, but it's good for my cost of living. Since I'm not in a position to hire a servant to look after my day-to-day financial interests, good defaults matter.
Seriously though, definitely something we are not about - would love to grab beers with anyone (in SF) who wants to learn more about our company/values text us/me (650) 823-4287.
A great example of this is: meundies (oohhhhhhhh ba doop boop boop). Fresh undies come every month for like $15/mo. I've had it going for a couple of years (I think), and it's slowly replaced all of my other (terrible) boxer briefs.
Just my 0.00002 BTC.