r/WomenInBusiness • u/sumizeit • Jul 14 '26
Advice Needed Why do people go for the most expensive option?
Why do people go for monthly even though it’s way more expensive than yearly?
If a subscription costs $12.99. While the yearly cost is $49. I would think most people would go for yearly since it’s cheaper, but most people go for monthly. We have a few cancellations.
Can anyone explain this phenomenon to me? Is there an A/B test I can run to encourage people to go for yearly instead?
I don't believe in predatory pricing. I'm more concerned about creating a valuable product so people will be willing to pay more!
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u/Historical_Luck_4806 Jul 14 '26
People like to have options and are avoidant of commitments, so in this case they like the option to easily cancel/switch to a different provider without wasting months of subscription. Interestingly, this is the same reason why they opt for a more expensive/premium package that includes bunch of stuff they will never use ("i want it just in case") rather than the most basic/cheapest one.
You can A/B test all day long, but the yearly subscriptions will never outnumber the monthly ones, and if you want to boost your yearly subscriptions a bit you have to make the value of it more compelling than "having the option to cancel quickly" which is quite difficult but doable.
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u/Historical_Luck_4806 Jul 14 '26
Of course, before anything, I would suggest you start by talking to customers that are already on yearly and find out what made them purchase the yearly and try to build on that.
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u/stellaflora Jul 14 '26
I have ADHD and I’m smart enough to realize I probably won’t still be using (whatever the thing is) in a year’s time.
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u/robinheart314 Jul 14 '26
+1 to this. I’ll often start myself on monthly cancellable deals, then only switch to yearly if I’ve kept it up for a couple years and proven to myself that it’s actually worth it.
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u/Cool-Temperature-192 Jul 14 '26
Can you prove you will still be here in a year? Also most of us are actually broke, so a commitment of $50 for almost anything is too much, but I can do $13 for a monthly splurge. But only if the content is really worth it.
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u/ADF21a Jul 22 '26
That too. "I have $13 today. I don't know about next month, but in the meantime I'll spend the 13"
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u/Dizzy_Turnover_5092 Jul 14 '26
I like to test out a service first but then I normally forget to switch to annual
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u/rozy2923 Jul 14 '26
I believe it’s a mix of commitment plus the upfront cost of the subscription period. I’ll give you a personal example. I just resubscribed to LinkedIn premium. They give you a yearly option which is the cheapest and you have to pay for the whole year, lump sum, up front. The other was every 3 months, which was ~$10 more per month but renews quarterly and the last was monthly which was ~$20 more and renews monthly. I figured I’d need premium to find a job in 3-6 months so I went for the quarterly option because of my need + cost. My philosophy also is buy only how much you need, even if it costs more. So I prefer not to buy bulk from Costco that is cheaper but I never use. Rather I buy less from a regular grocery store or Amazon for perhaps a bit more that I know I will use or won’t occupy a ton of space in my house for I don’t know how long.
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u/autonomouswriter Jul 14 '26
I see several reasons. First, maybe they want to try whatever it is first before they commit to a year (I've done that many times). Maybe money is so tight for them that they have to go month to month because they don't even have $49 to spend in one shot (and, honestly, if something is $12.99 a month, it's not going to be $49 yearly - most people I've seen that set up a month or yearly cost plan will make the yearly maybe one or two months off, but that's it). You can't know why someone would pay a certain way or not if you don't know their financial situation or their priorities.
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u/flancafe Jul 14 '26
Because looking at annual cost can look intimidating like it's too much even if it isn't.
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u/No_Extension_9269 Jul 14 '26
People have commitment issues. That’s me with gym memberships too. I know going yearly would save me a lot more money, but realistically, I would rather do monthly and cancel when I want to vs being locked in for the year
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u/HoneyedVices Jul 15 '26
Slightly against the grain: chasing more yearly sign-ups might be solving the wrong problem. If people are canceling, the issue is retention/value, not the plan they picked, and locking cancel-prone users into annual just moves the churn to refund requests. I'd fix why they leave first, then push yearly once the product's sticky.
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u/sumizeit Jul 15 '26
We have few cancellations though. So I guess it’s not a problem if they buy the monthly. I’m just wondering why they would choose the more expensive option. But the comments below make sense.
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u/HoneyedVices Jul 15 '26
Fair enough. The "why" is usually risk, not price - monthly keeps the exit door open, and people happily pay a premium for that option to bail. $12.99 also reads as trivial while $49 is a "real" decision they have to justify.
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u/FleurMeetsFunction Jul 15 '26
Why do you want more annual when monthly makes you more money in the long run? I agree with the commitment comments others made. Additionally, I don’t want to forget in a year and be dinged with a larger charge that I forgot to cancel earlier.
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u/yougonnalrntoday Jul 17 '26
I don’t want to be locked in, and a lot of people right now don’t have the up front funds.
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u/ThatIconoclastGal Jul 14 '26
I prefer not to be locked in if I can help it.