Samvid Sharma’s Post

All subscription companies eventually figure out the Monthly to Annual Plan pricing trick. The trick is to price your 12-month plan to be slightly more than your average LTV for monthly users. So, if your average user stays around for 4 months, just price your annual plan at 5 months. You get to boost LTV for these users by 25%, which is a huge win for not a lot of effort. We did this at Codecademy, and it was hands down one of the most effective tactics we have ever tried. It shifted a material amount of users to long-term plans, which increases LTV, drops churn, etc. The big implication of this is that you can look at any mature subscription business and basically guess their user retention by looking at the ratio between their 12 month and 1 month prices. Netflix: Only offers monthly plans, meaning their average user stays around for over 12 months. Headspace: $12.99 for a month vs $69.99 for a year. Ratio of 5.39, so their monthly users likely stay around for ~4 months. Calm: $14.99 for a month vs $69.99 for a year, ratio of 4.67, so their monthly users probably stay around for ~3-4 months If you want to see what company in each category is probably the best at retention, look at pricing ratios

How great product managers work pre-PMF. → 1 golden rule → 5 DOs & DON’Ts → 11 critical soft skills → 6 methods to prioritize → 8 must-read product books Save it to reach PMF ↓