I was wondering weather you think it is smarter to ask you customers to pay on a monthly basis through paypal or to get them to pay in big increments.

Tell me what you think..

A very similar discussion took place here, just days ago: http://www.hostingdiscussion.com/bil...-strategy.html

Personally, I think it is better to have a monthly option. If there is a monthly option, a client will be more likely to purchase your service as they know they can cancel after the first month, rather than needing to prepay for six months and waiting for then. However, having an option for both (with a small discount on six month prepay) works also.

The monthly option is better rather paying for semi annually or annually. We do see a large number of emerging companies in web hosting business. Most of them do not even understand what is the value of reliability to the customers.

From my personal experience, I have found that most of the companies are closed down due to any reason. Out of every 200 companies started, only 1 completes its 1 year of customer satisfaction. When you pay semi annually, you are like bound with the company with a virtual contract that you will have to host with them for at least next 6 months and most companies are closed before this time or if they do not, their service is very unreliable, poor uptime which annoys its customers most. So, they loose up the amount they paid for 6 months of service as in most of the cases, the buyers are not entertained any refund since these amounts are usually high.

While paying monthly, its not that much to loose if you do not like the hosting or the company is unreliable. And in such cases, the amount is usually small, so the buyer is refunded unless the owner dont wants to steal your money.

So finally, I would prefer monthly payments rather than paying up a sum of 3/6/12 months.

So, its better for customers to pay few cents more than loosing few dollars and its also better for web hosts to pay few cents more in trnsaction fees rather getting lots of red reputations.

We always ask customers to pay for the first month and then we can discuss payment for a longer period.

There is a number of reasons, firstly we can get a taste of how much of a burden this user will be on support (if they're opening 10 tickets a day we'll give them less discount for bulk payment than someone who never bothers us).

Secondly it usually gives us time to detect if the user is fraudulent and slipped through our filters and it means if we have to refund it's not such a big deal.

Thirdly the customer may not like our service so we prefer them to test for the month before they commit for a longer term. This also means you don't have to work out silly amounts because they want a refund for their 2 months and 2 days remaining service. That said not that many people really like to prepay, at least that's what we find.

As a hosting provider I say that providing semi-annual or annual subscriptions may not work for us. Clients would be expecting a very low price for that. Nowadays clients are smart enough to ask for greater discounts. But if there is a monthly subscription both the hosting provider and client would be happy at the same time.
"Big risk Big tension Bigger Output, Less risk Less tension Less Output !!!"

We give our clients the option at signup whether they want to pay monthly, quarterly, semi-annually or annually. Just so that they have a bigger choice

I wouldn't advise to prepay your servers because this industry is very unstable with chops and changes in terms of pricing and corporate structure. For all you know the company could go bankrupt.

I feel this a decision more to kept as an option for the customer .. if you care about the customer, if they wish monthly they should be provide with monthly option.

If any client is comfortable for yearly or quarterly then give them that option as well.

From a customer perspective, I belive it is best to pay on a monthly basis at first, and if you are satisfied with your host, pay long term, which usually means a discount for you.

But as a company, we do like quoted.

Well it depends on the customer, some like it monthly, some annually and some semi annually so the best thing for us to do is to offer more than one billing cycle so the customer have a choice.

The reason for this is due to the extensive competition in the web hosting industry, if there wasn't anything like that, then it would have been a different story

Giving your customers more choices will always be in your favor and makes sense offering multiple payment cycle choices. Everyone's needs are different while some don't mind paying monthly others would rather save the most and go for a longer payment which does offer more discounts. Really depends on the person

Bigger bulk payments are better for you. Small incremental payments are better for your customers(more freedom). I prefer offering both, variety is best.

Customers like options.

Offer as many packages as you can in 1-month increments at a time up to 6 months and then jump to 1-year increments from there.

For packages of 6-months and more, I would suggest offering a pro-rated refund if the customer needs to cancel.

For packages of 1-year and more, I would offer additional product that would normally cost more as an upgrade.