One Time Payment VS. Monthly

33 replies
I own a few sites that offer one time payment options and monthly options.

However I've had people tell me that I'll make more money if I just charge a one time payment.

So what do you prefer and think is better for business?

Charge a one time fee or charge a monthly fee?
#monthly #payment #time
  • Profile picture of the author JoshuaZamora
    I think doing both is great..Many marketers sell a one-time fee product on the front end and then on the thank you page offer a OTO to a membership site at a discount
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  • why not offer both?

    many places offer monthly payments or a percent off for the big payment up front.
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  • Profile picture of the author webfighter
    As a customer, I prefer a one-time fees. Monthly payments are only justifiable if you're adding something of value to your product time and again.
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  • Profile picture of the author Keithsco
    think what you would like to have to do. pay once or keep paying forever
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  • Profile picture of the author ewenmack
    Originally Posted by butch04 View Post

    I own a few sites that offer one time payment options and monthly options.

    However I've had people tell me that I'll make more money if I just charge a one time payment.

    So what do you prefer and think is better for business?

    Charge a one time fee or charge a monthly fee?
    Can't give you a definitive answer to your question
    without knowing your business type.

    I know from personal experience that having a business
    where you have the customer locked into some form
    of recurring fees is the best.

    It builds stability and predictability to your business.

    At the start of every month you have money
    coming into your bank account.

    Wheras you have to start every month hunting down the sales
    just to meet your monthly expenses.

    The dream business is website hosting as it's a monthly fee
    and you have very little costs, especially if you are a reseller.

    Thats a whole seperate subject by itself.

    All the best,
    Ewen
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    • Profile picture of the author Dahlia Valentine
      I've been running a jewelry supply business for a little over 9 years. Every month I pay for my shopping cart and I pay for a subscription to Terapeak for eBay market research.

      If I love what you're offering, and you're providing me with content/service that I need to get more customers and make more money, I'm perfectly okay with paying a monthly fee.

      In my mind, a product/service that's sold on a recurring payment basis must be a better than one that requires a one-time payment and nothing more.

      My logic is that if I'm paying for the service on regular basis, it's going to be updated and I'm going to continuously learn something new. In that case, I would rather keep on paying for something that meets my needs on a consistent basis, than have to continuously search for a replacement.

      If your product/service can truly deliver on those terms, then I say keep doing the monthly payment thing. If your product/service is something that could become an integral part of a customers business, then keep doing the monthly thing.
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    • Profile picture of the author butch04
      Originally Posted by ewenmack View Post

      Can't give you a definitive answer to your question
      without knowing your business type.

      I know from personal experience that having a business
      where you have the customer locked into some form
      of recurring fees is the best.

      It builds stability and predictability to your business.

      At the start of every month you have money
      coming into your bank account.

      Wheras you have to start every month hunting down the sales
      just to meet your monthly expenses.

      The dream business is website hosting as it's a monthly fee
      and you have very little costs, especially if you are a reseller.

      Thats a whole seperate subject by itself.

      All the best,
      Ewen
      My business type is marketing.

      All my sites give people away to market their products online.

      Some of them I charge a monthly fee to continue to use my
      service while some sites I charge a one time payment.

      I do agree with you on the hunting for sales part. I'm not a big
      fan of waking up and wondering where my sales will come from
      today, and love seeing the renewals come in from the monthly's.
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  • Profile picture of the author John Lenaghan
    Originally Posted by butch04 View Post

    However I've had people tell me that I'll make more money if I just charge a one time payment.
    That's going to depend on your conversion and stick rates. All things being equal, you'll generate more revenue initially with one-time payments than with recurring payments (assuming they're significantly higher of course) but your conversion rate might tank if you go to strictly the one-time payment.

    And you'll make more with recurring payments if the members stick around long enough to pay you more than the one-time payment amount.

    There's no "one size fits all" answer to that.

    Originally Posted by butch04 View Post

    So what do you prefer and think is better for business?
    Again it depends.

    Personally, I prefer one-time payments for some things, but if it's something that is going to need ongoing support or updates, like a software application, I'd rather pay a recurring fee so there's a reason for the vendor to keep at it. I've had lots of one-time cost tools that died on the vine because they stopped getting updated.

    As for being better for business, recurring payments are easier to plan for but again it depends on the conversions and stick rate.

    John
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  • Profile picture of the author Orator
    I don't prefer either or, it's simply a matter of what the business is. If your writing a weekly newsletter on the latest IM techniques, then a monthly subscription is a good way to run your business then a one time fee.

    If your selling a piece of software, that a flat fee is a better way to go. It's just a matter of tailoring your approach to fit your bussiness.
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  • Profile picture of the author ntemple
    IMO, it depends completely on what type of product / service you're offering.

    The method I'm moving to (software sales) is one time fee for 1 year access & updates, then a discount to renew for the next period. That seems to strike a good balance between the two extremes of 1 time & monthly.

    What I'm finding is that most people don't renew immediately, but a good percentage will come back after an update is announced and go ahead and "buy in" for another year or 6 months. I've seen this work with a lot of recent software vendors.

    I'm sure a similiar method could work for any digital product that you update a few times a year.

    As always, the only real way to know is to test your particular offer against your market.
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  • Profile picture of the author jazbo
    I actually use both. I have downloadable products. I then also have two types of membership, content, which allows access to exclusive content, tips, link packets etc, and a full membership with access to a helpdesk for members to get mentoring from me.

    So it's taking trying to create different products/options and offers so as to offer broad appeal. Never limit yourself to one payment path.
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    • Profile picture of the author Dave Rodman
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      I get annoyed with the monthly fees unless you're actually delivering pretty outstanding value on a monthly basis. There seemed to be a trend last year of going from a One-time fee to a monthly fee on certain products. The problem was that the products were ones that didn't justify it.
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  • Profile picture of the author Kate C
    One time payments are definitely a better deal. If your sites offer training, the customer pays upfront and then you drip the content over a period of time so they do not decide to cancel right away.If you charge, say, $9.95 a month, a person can choose to cancel after one or 2 months and you will get less than $20 from them, if they do not refund as well. If you charge a one time fee of $47-$67 or so for 6 months or a year, they will most likely stay till the end of the course and they would not refund.
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  • Profile picture of the author packerfan
    I think it depends on what you're offering. Can you provide extraordinary value you your customers over the long run? If so, a subscription service is likely to make more money. Think of a service like netflix. If you have a great product, but can't keep delivering that value, then simply price appropriately upfront and profit that way.
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    • It really depends on what type of product you're selling because you have to logically justify the ongoing monthly cost to your client. If you manage to do that and are getting conversions, it will certainly be worth it.

      Just giving sites away? Then try to tie in monthly payments like this:
      - different type of templates, designs, types (squeeze/lander/blog/etc.)
      - outsource a WP plugin that will need constant improvement and update, therefore ongoing fee
      - some type of related service that would increase the value of your sites, for example offer continuous SEO services etc.
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  • Profile picture of the author BlondieWrites
    It would depend on what you are offering and what you can provide or not provide on a monthly basis. Obviously, if someone paid a monthly fee, the person would expect something for what they paid each month.

    If you can't provide something each month to make a monthly fee worth it, it would be better to go for a one time fee. With a one time fee, there's no pressure to have new content or material each and every month for the subscribers.

    Both have their perks.


    Cindy
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  • Profile picture of the author chiwawa
    I think one time payment is better instead of paying monthly.
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  • Profile picture of the author Richnana
    I think monthly payments are more for the program owner than the customer. In many cases there is an obvious price break for the customers. But residual income is always the best way to manage your budget and perhaps that of the customers. As other have said., Offer your customers' a choice
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  • Profile picture of the author Paul_Evans
    Hey Butch,

    Right now I've got 6 different continuity programs in play. Different niches and different dynamics.

    But in general this works pretty well (hypothetical #s)...

    1. Find your stick rate. Let's say it's 5 months on average @$20 a month, so $100

    2. Offer a year for $197 and you'll have decent conversion. A two pay of $97 will be solid conversion. And a 1 pay of $147 the greatest conversion and on average you make a few dollars more than you would have.

    3. A month after #2, offer lifetime (or whatever term is allowed nowadays) access for another $197 and include a bonus valued at $197 or above.

    Another scenario to think about is market attention span.

    In internet marketing for example it's short. People get jazzed for a week or two and then move to another "magic bean."

    That's why you don't see a ton of the big names doing continuity. They know the numbers and know it's MUCH easier to get $2K at a pop than $2k in continuity over time. They know most will not consume more than 25% of the course work and only 5% will actually take progressive action.

    They key to long term continuity success has already been mentioned... delivering consistent, quality value when you promised. And as long as the market has a long term recurring need, monthly payments will do well.

    If there is a short term recurring need or short term attention then an upfront payment is more profitable.

    Peace,
    P
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  • Profile picture of the author fated82
    I say both. Your goal in IM is to increase the lifetime value of your customer. What it means is that you should start off with selling a one time offer products, say $17 or $27 and thereafter, promote your higher value products such as eCourse for $47/mo or even better, coaching for $97/mo....

    In regards to membership, try to go for the Fixed Time membership model. People don't have the tendency of paying again and again UNLESS your product is of very very good value....

    But people tend to pay for 3 months, 6 months or even 12 months as long as they feel justified that they learn something and can see the end in sight.
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  • Profile picture of the author Tim_Carter
    Yes do both.

    I have a free section, a one time payment section and a monthly payment section with two different levels.

    This works excellent because people can join for free and get a feel for my video style. Some of them upgrade to one of the other packages.

    Sometimes I offer the free members an incentive to upgrade.

    Sprinkle some OTO's at signup at any level to upgrade to another level at a discount.

    This has proved to be very successful for me.
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  • Profile picture of the author butch04
    Hi Everyone,

    Thanks for the comments and suggestions.

    I think I'm going to start my new site off with a OTO of a yearly fee at a discount rate. I'll probably aim for $77 or $97 (not sure yet).

    Then in the actual members area any free members will be able to upgrade to a yearly price at higher cost if they like the free content I give them.

    I do plan to add content to the site. I'm not sure how often as the content will be advertising sites I find, use, and prove they work. Once I prove they work I'll add them to my site so it all depends when I find a new advertising source. Plus everything will be video so I think that takes more work then just typing something up.

    So with that said is $77 or $97 a year to much to little?
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    • Profile picture of the author Devid Farah
      It really does depend on the value of what you are offering.

      Many people hate monthly payments just as much as they hate the two year contracts from cell phone providers. They just don’t like the idea of being locked into something for a long time. However, if what you are offering is worth the monthly cost then they will be more than happy to pay for it.

      Over the long run, monthly payments will make the most money because you have a continual stream of income.

      However, one time payments will have a higher conversion rate.
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      • Profile picture of the author ntemple
        Originally Posted by Devid Farah View Post

        Over the long run, monthly payments will make the most money because you have a continual stream of income.
        There's simply no way around testing to find how long you can keep members.

        A $297 "one time" fee will bring you in more $$ than $97 a month, UNLESS you can get your subscribers to stay around longer than 3 months.

        (In my research, 3-4 months seems to be typical for most content-based membership sites)

        But if you CAN get them to stick around .... you're in the money.

        Unless you are updating content monthly, or providing a locked in service, you really can't charge monthly and expect to keep subscribers. If your content is updated "whenever", you'll probably need a "whenever" pricing model.

        Just my 2$
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        • Profile picture of the author Devid Farah
          Originally Posted by ntemple View Post


          There's simply no way around testing to find how long you can keep members.

          A $297 "one time" fee will bring you in more $$ than $97 a month, UNLESS you can get your subscribers to stay around longer than 3 months.

          (In my research, 3-4 months seems to be typical for most content-based membership sites)

          But if you CAN get them to stick around .... you're in the money.

          Unless you are updating content monthly, or providing a locked in service, you really can't charge monthly and expect to keep subscribers. If your content is updated "whenever", you'll probably need a "whenever" pricing model.

          Just my 2$
          Hi ntemple,

          You are looking at it over time, not by percentage.

          For example, a customer would have to stay a member for three months to equal what one person paid.

          But try looking at it this way.

          What percentages of people are willing to drop $297 for anything?
          Very few.

          What percentages of people are willing to spend $97 even if they opt out after one month?
          Not a lot, but I’d like to think that it would be significantly higher than the first percentage. It’s a number game.

          All you need is three people to sign up and you’re making just as much as the big sale, and even better if they stay on then the money will keep flowing in each month. You also have to consider the people who just simply can't afford a huge payment, but can manage smaller monthly payments.

          There is one way to test it: test it.

          Build a membership site, but also offer a onetime payment. See which method works out the best, and then adopt it. In fact, it just might be smarter to use both. I've seen several companies use this model. They offer a onetime payment option that gives full use of the program, but they also offer a membership option which is cheaper. Overall, using both just might be the best option.

          However, I would like to see someone do an official study on this topic.

          But I agree with you wholeheartedly when you say that you have to have really good content in order to use the monthly option.


          All the best,
          Devid
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          • Profile picture of the author ntemple
            Originally Posted by Devid Farah View Post

            Hi ntemple,

            You are looking at it over time, not by percentage.
            [snip]

            There is one way to test it: test it.
            For my primary market, I've found that the higher price (one time) gets a higher percentage of buyers than the lower priced, monthly option - people just don't want another bill (or that's how I'm reading it from talking to a few people).

            Where we really do agree: test it. There's just no way to know, otherwise.
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  • Profile picture of the author Dylan K
    Originally Posted by butch04 View Post

    I own a few sites that offer one time payment options and monthly options.

    However I've had people tell me that I'll make more money if I just charge a one time payment.

    So what do you prefer and think is better for business?

    Charge a one time fee or charge a monthly fee?
    depends on the product, if it requires recurring updates it requires recurring payments.
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  • Profile picture of the author NerdGary
    Personally, I think the "monthly payment" gig is over...

    People do not want to have these types of payments... unless what you are offering is so amazingly unique (im not talking about ebooks) and you MUST have a huge reputation on the internet or be a well known industry leader to be really successful with monthly payments.

    But then again... why dont you split test it... see which one works.
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  • Profile picture of the author Boricua
    Originally Posted by butch04 View Post

    I own a few sites that offer one time payment options and monthly options.

    However I've had people tell me that I'll make more money if I just charge a one time payment.

    So what do you prefer and think is better for business?

    Charge a one time fee or charge a monthly fee?
    Offer monthly fees and then an irresistible one-time payment offer that not even you could reject. It works quite fine.
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  • Profile picture of the author Tim_Carter
    Yes testing is the key.

    You can only charge monthly if you add monthly content.

    Fifty of my monthly subscribers have been paying me since May 2007. So if your offer is right people will stick. If not obviously the monthly charge isn't going to work for your type of offer.
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  • Profile picture of the author ShaneRQR
    I follow a simple rule to determine this:

    Products that have running costs, I charge for monthly, products that don't have running costs I charge a one-time price for.

    So, in general: downloadables and info products = one-time fee, services and web-apps = monthly fee.

    I do keep my info-products up to date, free of charge.

    I have to say that the purely economic side of this doesn't interest me much. Could I make more by splitting up my info-products and dripping them out over time and charging monthly? Maybe.
    Could I make more by charging large one-time fees for services and hope people stop using them before I run a loss? Maybe.

    But the model above just makes sense to me and is, in my eyes, the fairest deal to offer my customers.
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  • Profile picture of the author alcymart
    You don't give enough info for me to give you an informed suggestion. What product? Do you own the product? What payment gateway would you use? Do you already have a customer base? What niche? etc...

    Take care,
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  • Profile picture of the author calleo
    I would offer both. The 1 time payment however is great from a business perspective because you can take the cash & invest it & get a return on your money. You can do the same thing for the monthly but the time frame is shorter,
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