Ask HN: Is Providing an Annual Subscription Option Worth the Trouble? | Hacker News Reader

Ask HN: Is Providing an Annual Subscription Option Worth the Trouble?

5 pointsdavemabe4 comments

I have a subscription based web service that offers monthly and yearly subscription options. I've found that a surprisingly high percentage of the time the annual subscribers simply forget that they've signed up for a subscription by the time the first year of the subscription comes up and it's time to charge them for a second year. Most of the time they're shocked and angry that they've been charged even though they agreed to the arrangement.

This happens so often that I've thought about scrapping the annual option altogether. I've also thought about sending them an email before the charge occurs as a reminder.

Has anyone experienced this and found a decent solution?

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We have the same setup. What we do is to send an e-mail every two weeks before the rebill, with a reminder that it's about to happen, and that if they want to cancel, they need to take care of it before <%= rebill_date %>.

Even with that reminder, we still get occasional e-mails from people who didn't see the e-mail, don't have access to that e-mail address anymore, or, for whatever reason, didn't unsubscribe in time. We just refund the charge and delete their subscription.

For what it's worth, we also get e-mails from users who comment on how much they love the app, how they use it all the time, and how happy they are to sign on for another year.

If you want me to get into the details of our code, let me know.

Monthly automatic renewal is a convenience for your subscribers. Annual automatic renewal probably isn't. It can obviously create ill will and doesn't give you as much flexibility to increase subscription rates.

Opt-in for long term subscriptions would appear to be more subscriber friendly and avoid some of the issues mentioned. Offering multi-year subscriptions could provide even more cash upfront without the brand risks associated with automatic annual billing.

Opt-in communications would likely be no more resource intensive than implementing email notices about an automatic annual charge. My gut tells me that, "We hate losing you as a customer" may build more goodwill than "it's in the fine print."

Based on your post, customer service resources are being diverted to former customer service. And there's no money in that. Good luck.

As mentioned by charliepark I think a reminder e-mail and a very forgiving refund policy seems to be the best way to do things from a customer relations standpoint.

On a business side of things do you have data on what the average retention rate of a customer is? If your average retention rate for monthly customers is >1 year maybe it's not worth it to even have the yearly subscription from a revenue standpoint. That being said if the yearly subscription retention rate is higher you should definitely keep that option available.

How much time are you spending on these people? If they've forgotten about the charge, they're not likely to be customers anyway, so inconveniencing them slightly in favor of active customers who are actually interested in paying yearly might be worth it, especially if you implement the e-mail reminder.

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