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Comment by znpy | Hacker News Reader

Two things:

1. you could keep you customers happy by changing nothing.

2. if you have a money-back policy on your annual plan (eg: pay in january, cancel in june, get ~50% back on what you paid) that effectively means that you're giving a discount for an only apparently sure earning. I'd give a look into that.

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Number 2 is actually pretty common. Maybe not as an advertised policy but if you write to cancel reps will often give a pro rates refund.

This may happen more in businesses which figure you may be back someday.

I would go further and expect number 2 to be the norm. If I pay for a service and I'm allocated and the service is up and available for 6 months and I have 6 months left I would expect the refund to be 6 months and not from the beginning of the contract. They've already spent the money and you've already earned the money at that point.

But then it doesn't make sense to have the yearly subscription (and 12 months of contract duration at a time). Then you can just have the monthly subscription.

Charging someone’s credit card 12 times a year has a definite cost. Having the funds ahead of time is also worth more than earning the funds one month at a time.

I think you are approaching it from a different place than I am. If I get into an annual contract I have the expectation that I would be paying the full amount up front to secure the discount and that I would be utilizing the full amount of the term. If after six months I stop then that's for some new reason that was not there in the start. At that time I would expect a rebate for the services that would not be rendered. I could be a six month customer or a ten year and six month customer and have the same expectation. Things change.

What I've seen that can be effective is to not have a pro rated refund but have the ability to pause the account. This means that the discount for the 1 year commitment still makes sense but shows that you're willing to work around the customer's life or issues.

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