I am always wondering, why renewal price is either double or 3 times of new purchase? At times I have lost clients since renewal price were 2 times or 3 times of new purchase. This is the standard practice these days, I would like to know why?
A recent example, Today morning I got an email for Norton that my Norton Internet Security is about to expired on 30th Aug and my credit card would be charged Rs 2190.00 for 1yrs subscription renewal. I thought of check the price of new purchase on their website and was surprise that 2yrs new subscription is Rs 2073.99. So, Why are existing customers being ignored by most companies?
Similar is the case if you planning to buy domain or hosting. Like in case of Godaddy, they would sell a new domain any where in between Rs 250 to Rs 350.00 and renewal would be anyway in between Rs 550 to 750 for .com domain.
Similar is the case with hosting, rather I have noticed that Godaddy renewal price are 3 times then their new purchase price.
So here are my concerns:
- Why are companies following these practice?
- Why you cannot have a standard price for new/renewal?
- Why renewal are 3 times then new purchase?
- Why are existing customers don’t get discount and benefits like new customers?
Do you feel these companies are just fooling us and this practice should be stopped!
Omkar Nisal
Customer Acquisition strategy my friend.
That’s it.
And probably disconnected acquisition & retention departments in the organization.
Amit Shroff
Omkar I understand that but what could be the strategy for Norton, where I can discontinue the current subscription and buy a new licence. The additional effort that I need to do is put in the new serial number that’s it.
Omkar Nisal
Amit, I think they hope that not many people will take efforts to find out comparative pricing of competitors or their own new products, and/or they simply hope not many people will take efforts to go out and buy new subscription and put serial number.. heck there might be lot of people who might be on automatic credit card charge mode subscription.
Even if there are as little as 30% such customers .. they make a decent profit… plus low new subscription costing is a nice way to eat into market share.
And yes there are LOTTTT of non tech professional people , businesses and other subscribers who dont have time for all this.. more over, a few dollars here and there does not matter to them at all.
I believe that this mentality is quite high in developed countries, where every minute and every bit of mental energy not constructively utilized is calculated in terms of potential income lost. And so if some one considers himself/herself worth even 40$ / hour . s/he would not bother about /worry spending 80 / 90 dollars per year if it means there is no headache of keeping track of subscription expiry date and its relative pricing for new subscription. Heck s/he might not even be aware that its costing more!
Works in many cases. Especially so in the higher income groups.
On a lighter note, this reminds me of Sharukh khan’s services to his rich boss in movie Yes Boss
Abey John
Omkar is right. I had a client who had a few of his domains on auto renew at the old $35 per domain at Network Solutions. He said the pain of migrating to a cheaper registrar was just not worth the effort.
Generally, the low upfront pricing is what is known as the loss leader strategy. This is more famous in large format retail. Most subscription services work on the assumption that you are going to stick with them – and this assumption is usually based on some number crunching which gives a life time value for the customer.
WRT to Norton’s AV renewal I suggest you go offline. AV products on retail in India are generally cheaper than the online price. In the case of Kaspersky its as much as 50%. From a purely tech pov I’d recommend dumping Norton and going with Kaspersky or Eset (wasn’t able to find India pricing for Eset though). Norton is a bloated memory and processor hog besides having such a cow of an interface.
Amit Shroff
Yes I agree, but this works with companies like Godaddy where shifting base is task in itself, but with products like Norton, it is just changing the product serial. I also usually don’t check and let it auto debit my credit card.
But this time I just happened to check it, spoke to their team and the refused to offer discount. But instead asked me to buy a new product.
So, I am not creating a new account, just buying a new product serial no. So how does it benefit them.
Amit Shroff
Abey, I have been using Norton since last 14yrs and I am happy. I personally feel there is nothing better. My system have never been effected and everything is project. I some how cannot trust any other AV. That’s my personal thought.
Alok Rodinhood Kejriwal
Whats there to wonder?
Didn’t it occur to you that the first price was compromised – just to make you buy (like Omkar said)
Ps – this is the case of Gillette Razor and Blades!
Total the total cost of Razor and then how much you spend on blades all your life… It will be 1:1000