What is the best pricing model for the upgrade of a subscription-based web service?

Answer by Ellery Leung:

Here are some of my ideas on your questions:

I am not fully understand your question, so here I put an example here to illustrate:

Assume that a customer subscribes for a Monthly service. 

  • Monthly plan: $10,
  • Annually $100 ($20 Discount). 
  • This person subscribes for 4 months already (spend $40).

  1. How should I calculate the deduction from the price of higher plan? >> The without any discount or so on will be $60 ($100 – $40).  However, you may want to thanks them by providing a special offer for people who spend 3 months or more on your service by offering $50 (instead of $60) for 8 months (Annual 12 months – 4 months usage) service.  UI?  I am not sure, maybe you can ask your web designer to think about it.  Normally I will setup an autoresponder to people who spend x months on your service to offer $y discount.
  2. You can TEST.  Again, if you want your customer to renew/restart using your services, offer something valuable to attract them to do so.  It does not limit to price inducement.  For example, if you offer SaaS service, you can give a book, or free 24 hours customer premium support, or additional months offer.  We do not have crystal ball, you know only when you do a small test.
  3. Again you do a test.  The suggestion is quite similar to #2 so I would rather not repeat here.  Test it and you would know.

Hope it helps.

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