Experiment library
Increase annual subscription adoption · method v1
Annual plan offer
Offer an annual plan at a discount to a random share of buyers and compare cash collected, retention and contribution, not just the take rate.
- Hypothesis
- Some monthly buyers would prepay for a year at a discount, improving cash and retention enough to outweigh the discount.
- Change
- Show an annual option at a stated discount at checkout or at the first renewal.
- Who is included
- New buyers or first-renewal customers during the test window.
- Compared with
- Buyers who see the current monthly-only offer.
- Assignment
- Random split per visitor or account.
- Measurement
- Cash collected and contribution per buyer per arm over the observation window, with refunds subtracted.
Worked example
At $49 a month with 5% monthly churn, a monthly customer pays about $440 over a year on average. An annual plan at 20% off collects $470 upfront. The offer helps cash only if it does not pull buyers who would have stayed monthly for longer.
Evidence you need
- Plan, price and start date per subscription
- Renewals, refunds and cancellations
- Contribution margin assumption
Implementation steps
- Write the discount and eligibility down
- Randomise exposure
- Record plan choice per account
- Track cash collected and refunds for each arm
- Assess retention at the actual renewal timeline
Cost components
- Discount given up
- Checkout changes
- Refund handling for annual plans
Stop if
- Annual refunds above 10% of annual purchases
- Overall conversion in the treated arm below comparison by more than 15%
Scale if
- Higher contribution per buyer with conversion no worse
Does not apply when
- Products without a meaningful repeat purchase
- Businesses unable to honour annual refunds
Adapt this experiment to your business
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