Offer a time limited discount to drive paid subscriptions

Canva offers a discounted subscription purchase upfront instead of defaulting to a freemium offer.

Immediate Revenue Generation

Offering a discount on a paid conversion prompt allows the platform to generate revenue immediately from users who are willing to convert. In contrast, free trials or freemium models may delay revenue generation as users can access the product or service without paying upfront. T

Accelerated Decision-Making

Discounts create a sense of urgency and incentivize users to make a decision more quickly. The fear of missing out on the discounted price motivates users to act promptly and convert before the offer expires.

Greater Engagement

Users who convert to the paid version are likely to engage more actively with the product or service, as they have made a financial investment in it. They may explore additional features, participate in premium content or services, and become more committed to using the product or service over the long term.

Loss Aversion

Loss aversion is the psychological principle that suggests people are more sensitive to potential losses than equivalent gains. By offering a discount on a paid conversion prompt instead of a trial or freemium, the platform is framing the opportunity in terms of what users might miss out on if they don't act. Users are more motivated to avoid losing out on the discount, which creates a sense of urgency and incentivizes them to convert to the paid version.

Anchoring

Anchoring is the cognitive bias where individuals rely heavily on the first piece of information they receive when making decisions. By presenting the paid conversion prompt with a discounted price, the platform establishes a reference point (the original price) from which users evaluate the discounted offer. This anchoring effect makes the discounted price appear more attractive and appealing compared to the full price, increasing the likelihood of conversion.

Sense of Urgency

Discounts create a sense of urgency and scarcity, prompting users to act quickly to take advantage of the limited-time offer. The fear of missing out on the discount taps into users' emotions and motivates them to make a decision sooner rather than later. This urgency increases the likelihood of conversion as users strive to avoid losing out on the discounted price.

Psychological Anchoring

The discounted price serves as an anchor against which users evaluate the offer. Compared to the original price, the discounted price appears more favorable and attractive, making the decision to convert to the paid version more compelling. Users perceive the discounted price as a significant savings opportunity, which enhances their willingness to take action.

Risk Reduction

Offering a discount reduces the perceived risk associated with trying out the paid version. Users may be more willing to invest in the paid version at a discounted price, as they feel like they are getting a better value for their money. The discount mitigates the perceived financial risk of trying out the paid version, making the decision to convert more appealing and less daunting.

Perceived Value Diminished

Users may perceive the discounted price as the product's true value, leading them to expect similar discounts in the future. This can devalue the product in the eyes of users and erode profit margins over time.

Lower Conversion Rates

Some users may be hesitant to convert to the paid version, even with a discount, if they are unsure about the product's value or if they perceive the discounted price as still too high. This could result in lower conversion rates compared to offering a free trial or freemium model.

A/B Testing

Implement A/B testing to compare the performance of offering a discount on a paid conversion prompt against other pricing strategies, such as free trials or freemium models. Monitor conversion rates, revenue per user, and user retention to evaluate the effectiveness of each approach.

User Feedback Surveys

Gather feedback from users to understand their perceptions of the pricing strategy and their willingness to convert. Ask users about their preferences for pricing models, their perceptions of product value, and any concerns or hesitations they may have about converting to the paid version.

Segmentation Analysis

Analyze user segments to identify which groups respond best to the discount offer and which segments may prefer alternative pricing models. Tailor the pricing strategy to different user segments based on their preferences and behaviors to optimize conversion rates and revenue generation.