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We got 1000+ Lifetime Users (Pay once, use it forever promo) Is that too many? Are we now stuck with too many users who will use the service

So, after a fairly successful launch at Product Hunt, we decided to offer a promo for a Lifetime deal for $49 one-time payment. The promotion has been going on for a few weeks and we're now with over 1000 users.

They're active and engaging, giving us lots of feedback and suggestions, but should we end the promotion? Has anybody had any experience with that or know of a good threshold or free users x paid users ratio?

FYI, It's a survey application, but a little different than what's out there. We use chatbot format to show the questions. If you're curious (no pun intended): https://www.curiouskaren.com

  1. 6

    I would kill it. I don't know anything about your service (sorry!) but you really want MRR or you're not really building anything, selling something you'll have to support for a long time.

    There's only two statistics that matter in a startup: CAC (Cost of customer acquisition) and LTV or lifetime total value.

    Every customer you acquire has a cost, whether time or money. You want this to get lower over time, but if you keep selling lifetime access, your demographic will get harder to sell into. First you market, then you sell, then you support. Plus you have your sunk costs. Customers are expensive!

    You want to progressively increase your LTV, either by keeping them subscribed longer, selling them additional services, or both. Selling $49 lifetime plans murders your LTV.

    Remember, there's only three ways to make more money from your customers: get more customers (expensive), charge them more (better), sell them more stuff (best).

    1. 2

      I say this with the utmost respect! But I think this is terrible advice.

      1. 3

        Do you have an actual reply, though? It's not entirely clear why you hate what I said or why anyone should care that you feel this way.

        Let me be clear: I'm dismissing you because I made 5 discrete, solid, battle-tested suggestions, and you wrote them all off with a wide brush without bothering to clarify which point you took issue with.

        I've now built three companies, and two of them were extremely successful. I learned even more from the third. My advice is highly influenced by the folks behind Basecamp, who once wrote on Signal vs. Noise at length about how a lifetime plan is actually a hidden but devastating form of technical debt you can never get rid of.

        The reasoning is that offering a lifetime plan to your first customers seems like a really swell gift and a great way to find your first customers and prove that they really believe in what you're offering without having to build your subscription billing module.

        Meanwhile, in actual reality, if people really need what you're selling them they won't feel slighted if you don't offer them a lifetime plan. In fact, if you make it too cheap a sophisticated buyer might well assume that you're one of those 90% of startups that isn't going to be around, possibly because they don't value their product enough to charge a price high enough to guarantee they can exist for 100 years, so why make the switching effort?

        And the worst part is that soon, you do have to build out that subscription billing module sooner than later... except now you have to deal with the fact that you have two kinds of customers, where one kind is <1% of the other and they will never fit cleanly into a monthly SaaS billing structure. In other words, your tech is going to pay dearly for your early business decision until the end of time.

        It's not just your tech, either: once you grow big enough to have lawyers drafting ToCs, once you have investors, once you have shareholders, you will always have to break out these two groups of customers onto seperate line items, and it will be a pain in the ass. Forever.

        There's absolutely nothing in the customer development or JTBD processes that requires founders to offer lifetime plans, so the entire premise of your detailed rebuttal is of questionable value.

        Is LTV of LTDers lower? Of course! And...???

        See above.

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          1. 0

            Who said anything about shutting down the company? I even started off by saying that I don't know anything about the company.

            The OP asked if they should end the promotion, and I said to kill it. Hopefully others will read what I've explained and decide against offering LTDs in the future, too.

            If that's hate to you, you're intellectually disingenuous or you have extremely thin skin because I couldn't possibly have phrased that with more deference.

            Are you trolling me? Serious question.

            Surely you understand that you can't preface an unqualified "this is terrible" with "with utmost respect" and expect zen. At least end with a compliment so you're going full shit sandwich.

  2. 6

    Double check that the 1k users are actually using your service. I've had experience with this and found more than 90% don't actually use it.

    While this is not guaranteed, Consider that a LTD would last around 2 years. After 2 years your users are most likely gonna forget about it. (Happened to me and brain.fm personally.)

    LTD buyers, in my experience, who are power users, become your advocates. Once you end your LTD, I'd get a note to all the active users and give them something to help you promote a new deal. While percentage wise this may look bad, you should get some pretty cool people who love what you're doing for them. Something like 0.1% of your users will be power users.

    1. 1

      I wish I had gotten that brain.fm deal. Now I am stuck to a lifetime of paying early :)

  3. 3

    Anyone who says kill it should first understand your business and cost structure...

    Whether you’re selling lifetime deals or monthly plans... in the end what matters is the Lifetime Value.

    If you previously earned a total of $35 per user in lifetime value, you’re killing it right now.

    As someone else mentioned... a part of your users will become your biggest advocates. Listen to them. Create new features. But above all, create an affiliate program and have them promote your business once the lifetime deal ends.

    Launch a new lifetime deal once you added a lot of new features. You can really benefit from this deal flow if you look at cash flow. We earn $15 a month per user. So we need to wait 3 months before we make the same amount of money you just did.

    You could do that every 2 months and make a shit ton of money :) increasing your prices as you go :)

    You can hire someone to help build your product. You can rinse and repeat this process over and over until you see diminishing sales.

    I would however increase your prices right now :) but don’t end the deal. Just tell people you’re increasing prices in 24 hours to $69. And do it :)

    1. 2

      ^This guy startups

      Exactly. Patently absurd advice in this comment section. "You aren't a billionaire in 48 hours? KILL IT!!"

  4. 2

    You got 50K in the bank and a 1000 users. Focus on the ones that love you and make it such that your product becomes hard to live without. [1]

    The mistake you're making is judging a cake while it's in the oven.

    You're still working on the product. Is LTV of LTDers lower? Of course! And...???

    Who gives a shit. Even if you had 10 users that were a net loss, it's still worth it because they're giving you something way more important than money in the early days which is feedback on how your product should be.

    [1] https://www.younglingfeynman.com/essays/livewithout

    1. 1

      When they are giving feedback though, take into account that the feedback from those paying $49 for a lifetime is likely to be very different to feedback from those paying $49 per month.

      The most valuable feedback is that from your future target customer, so if your path to success is MRR then begin charging monthly ASAP!

      1. 2

        That point is moot since they're all the users you have right now. So you have to make the product great for them. It's also a bit misleading since the difference, if any, will be negligible.

        The people that bought the Apple 2 are different than the people that are buying the 2020 Macbook Air. But without those people, you wouldn't have that 2020 MacBook.

        I worry we're getting caught up in the minutia of "well, it's complex" and "well, it depends" because that's always true. It's also not helpful.

        It's better to have an actionable statement that's somewhat incorrect but powerful than one that's perfectly correct but powerless.

        1. 1

          Hmm I actually strongly disagree. Just because they're the only users you have, doesn't mean you should listen to them and let them inform your product strategy.

          Simply put: if a user is not the right fit for your product going forward, then you should not be utilising their feedback. A free or $49 lifetime customer is very different to a recurring revenue customer – I can say that from experience.

          If you're planning to be forever $49 and target that market. Sure – take it on board. Otherwise, begin searching for MRR and speaking to prospective customers.

          The revenue is useful – but at this stage, anyone on a LTD plan is a liability.

          1. 2

            Severely disagree with that. Sure in a perfect world you'd have the perfect business model day 1. But that's a utopia fallacy. In the real world, where I live, you iterate. You start with what you have and you keep iterating. Besides... you have absolutely NO good reason to assume that these are bad users. So it makes even less sense not to listen to them. If you aren't gonna build based on your current users, who exactly should you use? Hypothetical future users? Investors? Your gut instinct?

            Otherwise, begin searching for MRR and speaking to prospective customers.

            Weird comment since that's clearly not mutually exclusive and I suggested that in one of my very first comments.

            1. 1

              100% build on hypothetical future paying users, yes. They're the ones you need to make the business a success – free users/LTD users are just a liability at this point. They're not going to bring you any additional revenue and are not going to make your business a success.

              I've always felt in the early stages it's way more important to speak to the users where you're going, not where you've been.

              But anyhow, fine to disagree. That's the beauty of business. Our strategy might not be right and appreciate others might have more success doing different things.

              1. 1

                That's incredibly bad advice and probably dangerous too. The number 1 reason startups fail is that they end up building something based on false assumptions. That's what started the whole lean movement. You need to find out what people will actually pay for asap and the only way to do that is by iteration.

                1. 2

                  To be clear. I'm not saying don't iterate. I'm not saying make blind assumptions.

                  That hypothetical future customer you can do tons of research about in order to shape a complete product, you can reach out to those paying for competitors on a recurring basis.

                  So I agree you should iterate your product, not abandon it. We just disagree on the value you should place on feedback from users who don't fit your revenue and customer profile.

  5. 2

    I would say from the positive note, that validates your idea plus gives you a good initial amount to improve your service and market it. In my opinion, don't expect that most initial users would be using your service in 1-2 years time, so double down on marketing and iterate a bit in the process if necessary. Good luck!

  6. 1

    It is tempting to say that you should do x or y, or that +1000s lifetime users are too many or too little. However, I don't think you provided enough info for that judgement.

    As a pricing expert, here's a brief of what I'd do:

    1. Double check the numbers
    • How much is the LTV for all pricing tiers (for single-survey and subscription users)? How much is the CAC for them?
    • Does any of the tiers present a viral / referral behaviour? If so, by what factor?
    • In terms of usage and engagement, how is each tier performing?
    • How much are the conversion rates of each of the tiers by acquisition channels?
    1. Make sure to know the competition pricing positioning
    • What are the alternatives the customers consider?
    • How do the competitors price their offers? And how does my offer compare to them?
    • Does any of the pricing tiers greatly stand out from my competitor's?

    Perhaps, I should not kill the promotion after all: maybe I should boost it. Or even, increase its price. Maybe, I should condition the promotion to additional factors, like referral. Or no, who knows, you are leaving too much money on the table with zero secondary returns and the best alternative is to put an end to it.

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