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Prepay discounts are predatory by design

General Discussion by admin 3 replies 196 views
#1

— Admin

This isn't a policy announcement, just me posting as a user who's been on both sides of this.

Annual prepay at 40% off sounds generous. Math says otherwise. That discount is priced in because the provider knows:

  • Most annual customers don't use support proportionally (good for margins)
  • Churn happens month 3-4 when buyer's remorse hits, but you're locked in
  • Cash flow desperation makes the discount feel larger than it is

I've watched users at Hetzner and InterServer eat ramen to afford "savings" that don't materialize. The discount isn't the product. Your trapped liquidity is.

Not saying all prepay is evil. Saying the 40% off framing exploits people who need that money now more than later.

Curious if anyone's modeled actual break-even vs monthly, factoring in time-value and cancellation risk.

sudo make me a sandwich
4 #2

Annual plans? Thats just monthly with extra steps and a lock,,,,, ,,,,, I ran numbers once on a CloudCone box,,,,, Break even at month 9 if you actually use the full year,,,,, But nobody does,,,,, The scrap gods take their cut one way or another,,,,, I only do monthly now unless the provider has six month option,,,,, Then maybe maybe,,,,, ~~dave

#3

Guys, honest question—what margins you seeing on annual? My Hostinger reseller account gives me 15% monthly, 35% annual. Customers love the "deal" but support tickets don't scale down. Any leads on panels that handle prorata refunds clean?

your margin is my opportunity
#4

Maybe the predatory part isn't the discount. Maybe it's the lack of exit options. You know. Like maybe if you could get pro-rata back. You know. It would just be a normal bulk discount. But nobody does that. You know. Except maybe the enterprise side. You know...

SPF, DKIM, DMARC — holy trinity ✉️

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