Hi there,

I'm planning on offering some extra services with some of my plans but those plans need 12 month commitment(paid monthly). How can I do this? I mean what if the client cancels the account after 3 or 4 months? How do you handle such situations and 12 commitments?

Thanks

Hello Ferzan

depending on the service you offer, one way would be to put each of those clients onto a contract, a legally binding signed agreement betwean yourself and the client stating that the client much pay for the service for a minimum of 12 months.

Another way would be to charge a setup fee that is refunded after 12 months this doesnt have to be massive, you could make it a set % of the annual total.

Other ways that could encouage your client to stay for long periods of time is a sloped pricing structure, maybe after 3 months the price goesdown by 10%, after another 3 months 10% again and so on, this would encourage the client to stick with you by rewarding there loyalty with better pricing.


Regards
Matthew

Maybe only offer them with yearly plans? Or charge the entire amount as a "setup fee"? Hope this helps.

What you could do is charge the person in advanced for 12 months, instead of having them pay it each month.

Well charge for the whole 12 months in advance. And if the clients cancels after about 3-4 months then just refund them a portion of their payment. Ex: If the price for the service is 5/month and the client canceled after four months. Then you are entitled to keep $20 for providing 4 months of service. The client would then get a $40 refund. Maybe less if you decide to charge a cancelation fee.

Originally posted by E_man3
Well charge for the whole 12 months in advance. And if the clients cancels after about 3-4 months then just refund them a portion of their payment. Ex: If the price for the service is 5/month and the client canceled after four months. Then you are entitled to keep $20 for providing 4 months of service. The client would then get a $40 refund. Maybe less if you decide to charge a cancelation fee.


Yes but what the origional poster said was

but those plans need 12 month commitment(paid monthly)



Matthew

Originally posted by ferzan
Hi there,

I'm planning on offering some extra services with some of my plans but those plans need 12 month commitment(paid monthly). How can I do this? I mean what if the client cancels the account after 3 or 4 months? How do you handle such situations and 12 commitments?

Thanks

Generally long term contracts are based on non-refundable annual payments, that's the reason for the discounted rate in the first place. If you offer discounted monthly rates based on "trust", there's not much you can do when they cancel. If a client is given the option between two monthly payment amounts, they'll always go with the cheapest regardless of whether or not they actually intend on staying for a year.

Bundle a free domain with it. Domain registrations are at least one year. Depending on your cost and ability to factor it into the profitability of your plan, give them a two year domain registration for free if they prepay one year of web hosting.

Why? First of all, you can show them the value of a two year domain registration, which varies depending on where you get your domains registered. But secondly, not only do you have them for one year, but when that one year is over, they still have that domain active with you (since essentially it's already paid for) which increases the chances of them renewing with you after the first year.


JP

I offer yearly plans which is almost 40% off compared to monthly rates (multiplied by 12 months). It's quite a bargain coupled with our premium features and is a best seller. So far, no one has claimed a refund midway through their annual hosting . For our protection, we have placed it in the TOS that any refund will be given only if we deduct past monthly services based on the monthly rate.

Signed documents - documents created by a lawyer not just something you whip up - and you might be ok. Even then if they want to cancel they'll cancel.

The best way is to charge the full year upfront. Alternately you could put them on a contract. I use contracts for design work, I used to do it the old way and fax it, but now I use agreena http://www.agreena.com (it's a lot easier)
But of course even if they are on a contract and stop paying, you have to consider if the amount owing is worth taking legal action :)