Simpler is better.
I express this partly as a personal preference, and partly as a lesson learned from years of a/b and multivariate testing, and a lot of random experimentation.
As a personal preference – too many choices make me tired. Optimistically, I suffer from decision fatigue; pessimistically, I get bored easily. But as a consumer, I click away to another site.
We all find various ways to complicate subscription pricing. Add a setup fee, or an extra usage charge; maybe try to squeak a few more bucks from an optional feature. It’s easy to rationalize – competitors do it; we worked really hard on this; it lowers our margins.
In a SaaS billing world, the goal is to maximize customer value – get customers, and keep them. Simplifying helps with both.
Let me give an example. In a previous life, we had (we thought) a nice simple pricing plan: $10 per month, with a $10 setup fee. Customers would sign up online, and be charged $20 ($10+$10). And then they would call to complain – we had charged them $20, not $10 – and while it was arithmetically correct it created an initial negative impression. Plus, there were too many calls to handle.
So, what happened when we removed the setup fee? First, our online conversion rates increased by over 40% – and “no hidden fees” became an important positioning statement. But second, our churn rate decreased – by eliminating an initial irritant, customer satisfaction increased. And so did revenues and customer lifetime value – and profits.
Fusebill supports flexible recurring billing plans – but that doesn’t mean you should always use them. Tomorrow we’ll talk about when they might be appropriate.