One Big Decision

I’ve been thinking about MRR (monthly recurring revenue) versus ARR (annual) and the psychology of those two things. It’s pretty clear that businesses love the idea of recurring revenue, and given a choice between a subscription or more initial outlay, they’ll take the subscription every time. Theoretically, paying monthly for a service should be 12 small decisions and paying annually (or once) should be one big decision. Except it isn’t, is it? Paying monthly for something is one small decision followed by nothing…inaction. That’s why businesses prefer subscriptions - because they turn initial interest into regular money, rather than one-off money. Then they’re banking on the fact that you don’t want to re-evaluate all your subscriptions regularly, and the hassle of doing something (cancelling them) is more than the hassle of doing nothing. However, you’ll also find most SaaS companies will give you a discount if you pay for the year upfront. That way they get all the money in now…