Monthly plans usually have higher per-month price than annual plans. So when customers move from monthly to annual plans, you lose MRR.

Based on that, is the move an upgrade or a downgrade?

You get to choose. There’s some art in calculating the metrics.

Let’s make it a downgrade

Your point of view: Upgrades should never be a negative number - I can’t be winning if I lose MRR, right?

Upgrades = Plan changes that take per-month price up

Downgrades = Plan changes that take per-month price down

Let’s make it an upgrade

Your point of view: We want to track if the customers move to the strategic direction that we want.

Cash is the king, so getting money up front is what we want. If annual plan price is higher than CLTV, that means automatic increase to life-time values too. Definitely a good thing.

Upgrades = Customers doing things you want. Money you get or lose because of that

Downgrades = Customers doing things you don’t want. Money you lose or get because of that

Spot the difference?

Developer vs. Accountant. Math vs. Strategy.

FirstOfficer categorizes a move from monthly to annual plan as an upgrade.

Jaana Kulmala
in