Let them churn: Why we embraced month-to-month subscriptions when starting Numeric

At Numeric, we made a decision to only offer only month-to-month subscriptions in our early days. This deliberate choice quickly became the bedrock of our culture. 

Instead of opting for the security of annual or multi-year contracts standard in B2B SaaS, we were determined to face the reality of the market head on: providing customers with a choice every month to renew Numeric. It instilled a sense of urgency and a commitment to deliver rapid, tangible value to our customers.

Reflecting on the journey, we are confident it was the right path.

Why Month-to-Month?

‍

Offering month-to-month subscriptions is a way to more quickly test product-market fit. If your product sucks, you know much sooner rather than later and you have hedged against falling into the trap of building a beautiful, but functionally useless product.

Churn (or lack thereof) in early days is really a feedback mechanism, inciting more renewal decisions tightens that feedback loop.

Turning Up the Heat

Ditching long-term contracts meant facing potential customer churn head-on every month. This reality, while stressful, especially when dealing with issues from clients, pushed us to address problems swiftly and effectively. This pressure was not just a challenge; it was an opportunity that drove our team to develop creative, impactful solutions.

Today, while our contracts are typically annual or longer, it still informs how we operate. Driving for retention each month instilled a seriousness in addressing any customer issues. As our team grows, we're focused on retaining that urgency, even for team members joining a Numeric where annual contracts are standard.

Time to Value

We believe our customers should experience Numeric's value within 30 days. This tight timeframe meant we had to be on our toes constantly, proving our worth in the first month and every month thereafter. This not only brought an unmatched level of urgency to our work but also informed product and engineering decisions around what we needed to improve in order to provide faster value.

Note: This is, of course, going to vary for different products and their frequency of use, complexity on onboarding, etc. It wouldn’t necessarily make sense for a product that takes 6 months to implement to have a month-to-month contract.

Reducing Friction

Our earliest adopters showed immense trust in choosing Numeric, and we aimed to minimize their risk. As opposed to signing up for an annual contract right away, our early customers simply agreed to try for a month. By making it easier to cancel, we earned trust and made it easier to sign.

As we grew and better understood our ideal customer profile, we saw naturally saw a preference shift towards longer-term agreements. We'd earned trust and reducing friction instead translated to making it easy to handle invoices and contracting.

There Are Real Downsides

While our month-to-month model has been a driving force for our success, it's not without its downsides. 

• Getting paid upfront has a really meaningful impact on cash flow. I recognize we were fortunate to not need to prioritize this over all else. 
• There is some reasonable logic that month-to-month contracts suggest you are not confident in your product offering. Large businesses are hesitant to work with early stage startups understandably, and it’s an odd conversation to have when a buyer wants to pay you annually but you are pushing the term to be month-to-month. 
• Another practical annoyance is managing collections on a monthly basis, which often requires more administrative effort than longer-term contracts. 

‍

These challenges, though real, we found were outweighed by the benefits.

Conclusion

Our month-to-month subscriptions transcended mere billing logistics; it was about cultivating a culture focused on customer satisfaction, innovation, and adaptability. This approach has been instrumental in Numeric's growth and will continue to guide us.

Stay tuned for another key inflection point in the company — our decision to offer a large portion of our product for free. 

Resonate with a culture of urgency, accountability, and where customer challenges take the front seat? We’re hiring.