I have a great anecdote and I swear it happened: back when I worked at BigCo, we needed CrazyEgg for a project. I put in a reimbursement request for CrazyEgg Hobbyist, $9 a month. My boss read the paper request and redlined us up to Enterprise, $500 a month.
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Easiest two variants on annual discounts: a) Do them, but also send people an email after they've activated (achieved material use of software) saying "Hey want free money? Upgrade to annual; save
$X." b) Do them, but also send an end-of-year promotion email about them.Show this thread -
The incentive for the end-of-year promotion email is (for relatively small businesses) booking the expense before end of year saves them a bit of money on taxes and (for relatively more sophisticated businesses) "Your budget: use it or lose it. Why not use it?"
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"Patrick, are you assisting people in defeating their purchasing departments?" *cough* Never. *cough* Really: $249/$499 exist as price points specifically to do security research about the bounds for no-signature-required p-card limits while allowing $10k+ software sales.
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(In related news, enterprise purchasing departments and enterprise sales are basically in an uneasy state of codependent evolution with each other. Their iterated game is ultimately prosocial, and neither can exist without the other, but they have to be tactically adversarial.)
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End of conversation
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“Good for churn” — agree, sorta. Terrible for churn *prediction* because you have less data and probably aren’t tracking who *can* cancel that month. Likewise, fear the months (typically November-January) when all your discounted annual subscriptions are due for renewal
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Just to add I read the same sentiments from stratechery who analyses his own revenue and churn. So the less churn effect is true even if you are strictly speaking not selling software. It works as long as its recurring subscription
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