Subscription Billing: Monthly or Yearly?

Need experience on monthly rebilling risks/reward

[lucidlogic]

Currently we allow people to purchase our subscription service with rebill periods every 3 months, 6 months, or 12 months. It autocharges a fixed price to their card, for the life of the card or until they cancel the autorebilling. This ends up being a single purchase from anywhere of $120 to $500.

Many people, I think, may prefer to pay by smaller amount, on a monthly basis. I am considering switching to that method entirely.

However, the service I offer has about 5% scammers. We are pretty good at spotting them, and can reduce chargebacks to ~0.6% of purchases. I am concerned because if I start doing monthlies, we may be exposing ourselves to more chargeback risk. Let us say someone noticed 3 months after, and issued a CB. Now for our $10-$30/month service, we get charged back the original amount, and 3 $25 fees. Suddenly that became an extremely unprofitable situation.

So, the question is of balance. Will I get significantly more customers willing to pay small monthly fees (instead of annual large blocks), that would offset potential chargeback fees, or should I just go to large annual amounts?

Anecdotal and empirical evidence are both appreciated.

[King_Fisher]

Monthly subscriptions have two problems, One is subscribers are more likely to opt out after a month or two. Some because they were just curious and wanted to
see what the program is about. At that point they don't have much invested and
even less if they can successfully do a CB.

Three months are longer is ideal. Here are subscribers who are a little more serious as they have made a larger finical commitment. In my experience they
are more likely to renew period after period.

In any event as long as you can keep losses 1% or lower your doing OK...KF

[lucidlogic]

We already offer a free trial period. If we increased our trial period from a few days, to a full 30-days, and made the subscription a year, do you think that would fare any better?

[King_Fisher]

Yes, I think that is a good idea!...KF