I cancelled too! I really wanna see what excuse Microsoft will pull out to walk back the changes.
Hit 'em where it hurts, people.
I cancelled too! I really wanna see what excuse Microsoft will pull out to walk back the changes.
Hit 'em where it hurts, people.
The thing about this shit is…
Microsoft, like Google, is now a user-data driven company and they have already made loss/profit ratio analysis on this long before they released the price increase. They’re absolutely banking on people cancelling but making up the difference and then some from the people who stay.
For a thought experiment let’s consider how many subscribers they were reported to have in Feburary: 34 million. Let’s assume that everyone is paying for the highest tier to make the math easier. So current income would be 34 million user x $20 a month and thats $680 million a month. New income of 34 million users x $30 a month is $1.02 billion. The difference is $340 million a month. Let’s divide that by $30 a month. That gets us about 11,333,333 users. So they can hemorrhage over 11 million users and still break even. To make sure, let’s subtract 11 million users. That gives us 23 million users. 23 million users x $30 a month is $690 million a month, a cool $10 million a month above current profits.
For final context, 11 million users is roughly 32% of their entire subscriber count. They can afford to lose a third of the people subscribing and still make money.
The math doesn’t bode well for us who vote with our wallets.
One could imagine that conveniently, Microsoft’s online support pages and the amount of support staff were designed to only handle hundreds of thousands of cancelations at a time.
Okay, but wouldn’t a higher price also discourage new people from subscribing in the first place? Or are companies that shortsighted?
The same math is there too. They can afford to loose one third of new subscribers to get the same amount of money.
But their new customer acquisition cost wont get higher at the same pace and they get more valuable customers whose payback period will be shorter.
Also i dont think its relevant here, but less customers means less operating costs, so they will most likelly save some money on customer service and behind the scenes things like server upkeeps etc., but i dont think these make real difference here.
Also if for some reason things start to go bad they still have option to create “a budget version” for the people who see the normal subscrition as too expencive.