There I was, sitting at a desk inside the gym. Sitting across from the guy who sells personal training. And he's making the case for why I should buy the larger package. His starting point: I get a better rate. But that's not what sold me.
What sold me was his closing line, “You can always pause your membership, stop paying monthly, and still use your unused sessions.”
The way he said it made it clear he knew it was his closer.
Isn't that what we all want?
When you think about memberships, isn't that what we all want? Let's think about it in another way – apart from my personal trainer sessions. Let's say we were members of the dollar shave club. We pay $9 and get 4 blades monthly. As long as we keep paying, we keep getting blades.
But what happens when we realize we've collected too many blades? What happens when we realize we weren't changing them fast enough to really warrant 4 monthly?
Suddenly we're looking at a pile of unused blades that we calculate will take us 4 months to get thru. So what do we want? We want to hit the “pause” button, right? Stop paying monthly.
But we don't want out of our membership, do we? Not really.
Things get complicated quickly.
But what if we made an agreement to pay $9/month for 12 months? In that case, we really owe the company $108, one way or another. And not paying for 4 months means we've short-changed them by $36.
So, what do we do?
Well, I'll tell you what the gym did when I went to cash in on the promise of the “stop paying monthly, and still use your unused sessions.”
They offered the “pause” feature, but at a price. And the price was higher based on the level of commitment you'd made. So since I'd bought the higher rate, my monthly charge was higher.
Still, it wasn't bad – paying $15 a month to stay “active” on a monthly charge that was normally $300 felt like a deal. Until you find out that you can only have it on hold for a limited number of months.
Are you starting to see how crazy this gets? Because while they don't mind the carrying costs of the subscription that is on hold, they can't predict cash-flow if they let everyone put their accounts all on pause for random lengths of time.
And we haven't even started talking about pro-rating
Let's say I decided to “un-pause” my membership. Good news. But I would like to downgrade my commitment level because I don't need as much personal training, or razor blades.
If you're a dollar shave club member, you know their answer. While they don't do proration, you also aren't in a year-long subscription. So changing your plan is easy – you just start on the new plan the next month.
If you're a customer of a gym with a fancy personal trainer program, it's not that simple. Yes, you agreed to pay monthly, but the contract was actually a year long agreement (or more). To get out of that agreement you'll likely have to pay a fee, and not a small one.
The State of WordPress Membership Solutions
I've told you before about several WordPress membership solutions. In case you wondered, or it's your first time here, here are my top five, in alphabetical order.
They're all awesome in their own right. And each is the best solution for specific needs. But each also has realized that subscription pausing and prorations is hard work.
It's not hard because technically no one knows how to do hard stuff. It's hard because these guys would have to know exactly how to build a system that would please all of us.
After all, spending money focused on this edge case is only worth it if we all become more engaged customers.
I need your feedback.
So here's my dream approach to subscription pausing and prorations. I'd love to hear your thoughts below, in agreement or disagreement. That way, when I hit these guys up and point them this way, all of us will be heard.
My Dream Approach
I'm going to try to articulate all of the discrete scenarios that I know of.
Monthly Memberships
In the case where someone signs up for a monthly membership, I'd start using proration right away. I'd take the monthly rate, divide it the days in the month, and multiple it by the days left in the month.
In essence, every new member deals with proration and then pays the first full month on the first of the following month. And if a person wants to pause their membership, I'd let them. But I wouldn't prorate the pause. No money for the remainder of the month.
Then, for every month that they're paused, I want an optional “hold” charge – either as a flat fee per month, or as a percentage. This keeps their account on hold, yet still active.
What this means is that they can still log in to the system. I want members to move into a new state (“on hold”) and have access to everything they've had access to. But I wouldn't want them to have access to anything new (which means drip “days” stop getting counted).
When they decide to start up again, the “hold” fee for that month is refunded, and they are charged a prorated amount to the end of the month. Then, on the first, they're charged again for the regular monthly fee.
At this point, the drip “day” count starts up again, and they start getting access to new content again.
Monthly Memberships – Upgrading & Downgrading
In the case where they upgrade or downgrade, but remain active, proration works as it did before.
I would do the calculation of the amount “invested” to date (monthly rate/ days in the month) and credit that as a deposit against the new monthly charge. They'd then only be charged the delta for the prorated amount left in the new monthly charge.
For downgrades, I would do something very similar. That said, again, I would want want to introduce a potential charge. I know a lot of web based solutions that don't charge for that downgrade, but memberships aren't just for online tools. So having the potential to charge a one-time downgrade fee is useful to me.
The new monthly charge would then start again at the beginning of the month, after the prorated restart.
Yearly Memberships
Now, when it comes to a yearly membership that charges once a year (typically up front), pausing a membership can get interesting. I would love two options.
“Hibernation”
The first option is that a pause and restart doesn't impact the timeline. The start and end dates of the “membership year” don't change.
The user would be asked how long they'd like to put their membership into hibernation, and they'd get a prorated amount back.
If this approach is selected, I would disallow logging in during the hiatus. That's the trade-off. You aren't charged extra. You even get money back, but you also don't get access while you're hibernated.
“Phase Shifting”
The second option doesn't give any money back. But it also doesn't stop someone from logging back in. It does, however, stop them from receiving new content. That means the drip counter stops counting “active days.”
For this option, there is no proration. But there is pausing and resuming. What happens though is that the end date is pushed out for as long as the pause occurs. That's why I'd call this a phase-shifting approach.
Yearly Memberships – Monthly charges
When you're not billed yearly, but monthly, the yearly membership is pretty similar. But there are a few differences.
1. If you hibernate a yearly membership, I would not prorate anything. I would simply tell members that they'll have access until the end of the month. When they restart, I'd then prorate their charges until the first again. But in-between, they'd still lose access.
2. If you phase-shift a yearly membership, but are paying monthly, I would give them access to old stuff, not give them new content, and start charging them when they start again. In both the pause and the restart, I'd prorate charges.
Yearly Memberships – Upgrading & Downgrading
When a user upgrades, the reality is that financially, it's all upside. So because of that, I would let them upgrade at any point in the year. When they do, I would prorate the investment (either monthly or yearly) and calculate the new amount for the remainder of the year and charge that.
If a user is downgrading, the reality is that it's going to cost an organization. That's never fun. I can think of some offers that lighten the blow to the membership organization.
One option would be to offer the member to downgrade, but instead of giving them money back (yearly payer), I would give them the lower level for longer (ie. store credit).
Another option lets them downgrade and get a portion of their money back (yearly payer) but charges them a downgrade fee (which we could set). This will always be less than the remainder of their contracted amount, but more than nothing.
For people on a monthly payment arrangement (of a yearly plan), I would let them downgrade at the start of the new month, but not before then (with no proration). And I'd still keep the option to charge them a downgrade fee (though I know some people won't use it).
What did I miss?
So that's what I'd love to see supported across all my favorite membership plugins in the WordPress community. What's your take? Did I miss something big? Did I suggest something that you think is silly?
Let me know.