In the following explanation, we will use the word “subscription” to refer to not only our subscription services but also to licenses for the use of Stops. When we charged fees for six months or a year in advance, it made a lot of sense to offer a trial period, not because a few weeks was enough to evaluate a subscription, but because of the amount of money involved. Even though we offered a refund for a cancellation within a trial period, very few asked for it, even though there were six months or a year of fees at stake. The reason so few asked for a refund is because the amount of money required in advance served to screen out those who were not serious about developing their investment discipline. They probably also saw enough potential benefit in using the program that they thought it was worth the money to stay with it beyond the trial period. However, when we started charging a small monthly fee, a money-back trial period no longer made sense.
Instead of charging for six months or a year in advance, we now charge only $25 per month (one month at a time) for a single subscription (for Valu-Pak we charge the equivalent of the fee for three subscriptions), and whatever monthly fee is current at the time for Stops. Under this fee arrangement, there are several new factors to consider.
1. The very small advance fee is not an effective screening device. The small fee required to try a subscription, coupled with a money-back trial period, would result in subscription orders by many more people who really think they can evaluate a subscription in a few weeks, people who have no intention of trying a subscription or stop loss calculator for a period that is long enough to give it a chance to prove its worth. The low monthly fee, coupled with a money-back trial period, therefore means we would be sending many more refunds for small amounts of money to people who should not have subscribed in the first place. Generally, people who are willing to pay more are also more realistic in their expectations. Most serious market investors are sensible enough to know that it takes more than a few weeks to determine if they can make money by using a subscription service. Charging a small month by month fee without a money-back enticement to quit, gives people who are serious a chance to evaluate the effectiveness of what we offer with very little at stake for each month of the evaluation period.
2. Encouraging the less serious “evaluators” who have unrealistic expectations would mean that we would have to have somebody on our staff to take the time and go to the expense of processing more refunds for small amounts of money. In the past, to keep our expenses down, we paid any refunds by check (crediting a credit card is far more expensive). In addition, somebody had to type up the acknowledgement of cancellation letter with details of the transaction, write the check, address the envelope, go to the post office, pay for postage and mail the letter. That does not include the time it takes to set up the account in the first place, allocate a password, write a “welcome letter” when the person first subscribed, write the details of the subscription, provide instructions for access, and so on. Then there are the additional time and resources required to deactivate an account, passwords, and Web site access. Then it is necessary to make modifications to the subscriber spreadsheet so it will “know” what has happened, and so that future balances will read correctly. All of that takes time and resources. The reason we can offer a single subscription for $25/month rather than the normal $95 to $195/month for a single subscription is because we keep our expenses low. The difference between our fees and “normal” fees would easily pay for the time and resources needed to take care of the details associated with a trial period, but the individuals who do not cancel would end up paying an extra $75 or more month after month after month.
3. Are you really interested in giving a subscription a fair trial? We want subscribers who are willing to give a subscription a fair trial, and we believe it is impossible to accomplish that in only a month. We do not want to encourage “tire kickers” who flit from site to site trying to pick up freebies. We also do not want to encourage subscribers who are willing to pay $25 only if they can get it back after trying a subscription for only 15 days! The premise of such people (that they can judge a subscription’s effectiveness in only a few days) is absurd. The problem is that they are expecting to accomplish the impossible. See What Is a “Fair Trial.”
4. A trial period of a few weeks when a fee is only $25 makes little sense. It would attract people who have an unrealistic idea about how long it takes to evaluate a program and even reinforce or encourage unrealistic expectations. It would attract quick quitters. In addition, it would increase our overhead disproportionately to the amount of money involved. Finally, it could damage our reputation. A “quick quitter” who quits after a few weeks, when asked about his experience with our service, is apt to say “yes, I tried that, but it didn’t work for me. I found it to be a waste of time,” even though he didn’t give the program a chance.