- Option A: "Price it at $10/month!"
- Option B: "Price it at $120/year!"
Does it make a difference?
You bet your bottom tidy ass it does.
- Peyton pays for a CRM subscription for $10/month.
- Eli pays for a CRM subscription for $120/year.
- Peyton uses the software more throughout the year because he's constantly reminded of that $10 monthly bill.
- Eli would use the software a bunch at first, but then gradually uses much less of it because the $120 bill becomes a distant memory.
- Therefore, Peyton would much likelier renew his subscription because he sees more use out of it.
That's according to Harvard's John Gourville and his research peeps:
- People are more likely to consume a product when they are aware of its cost - "when they feel 'out of pocket.'"
The less customers know about your charges:
- the less they'll invest time into your product
- the less they'll understand how enthralling your product really is.
- and, the less likelier they'll renew.
Posted on May 16
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