MBA1814 Should You Pay Monthly or Annually for Software?

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Hey oh welcome to the 100 RMBA Show. Because a better business begins with you. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and in today's episode you will learn should you pay monthly or annually for software? If you run a business, you are online. Even if you're a physical business, you have an online presence and many tools will be needed to run that presence or that business straight on the Internet. Should you invest in these tools and go with an annual plan and save some money or should you go monthly and stay flexible? As you know, I run a software company myself so I can give you some inside knowledge about which one is best for every situation in your business. Sometimes monthly is going to serve you better and sometimes the opposite. They the key is knowing when for each so you can make the right decision for your business. Listen, software is a huge leverage tool. You're able to really scale and leverage your product or service in a huge way with software. But let's make sure you're investing the right way to manage your cash flow and maximize your savings versus impact on your business. So let's get into it. Let's get down to business.

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Monthly or annual for software well, first let me define what I mean by software. Software could be many different services like your website hosting or a tool to design your social media posts like Canva. Or your website builder like Squarespace. Or your customer service tool like Intercom or Zendesk. Or your email marketing software like Mailchimp, ConvertKit, AWeber, or your online course delivery tool. You get the point. Most online businesses are using ten plus software tools to run their business or software services. Even if you have a physical business, you will have an online presence. Like I mentioned, a website, an email list. And you need to know should you go monthly or annually? First, let's just talk about the elephant in the room, which is price. In 95% of all cases, with all software, if you choose to go annually, you will save the most money. That's just how it works. All right. They want you to commit for a longer period of time. It helps the company lower churn and therefore they're willing to give you a discount if you commit for 12 months. This is the easiest way to save the most money. Some software companies will give you a 5%, 10%, even 20% discount if you go annually. And that can equal hundreds, even thousands of dollars when it comes to your annual costs for that one piece of software or service. But on the flip side, many people don't want to go annually because they don't want to throw that much cash up front. They want to start small with a monthly payment and then decide later. So I'm going to give you a game plan. I'm going to give you exactly what to do so you can know how to choose and which plan to go with. First thing you need to find out with any service or software is do they have a free trial or a money back guarantee. If they have either of these, whether it's 14 days or 30 days, you should go in with the intention of going annually because you're gonna save the most money with this option. Your mission though is in that trial period, in that money back guarantee period. You need to decide if this is going to be the tool you're going to use. And really you don't really need more than a week because you don't want to invest that much time setting up and working with this product if it's not a good fit within a week, you know, and it's time to reinvest your time somewhere else. In fact, I can evaluate a piece of software or tool within minutes and I can decide right then and there when I sign up, hey, am I going to stick around or not? So I sign up for actually the longest term possible. They offer me two years, I'm going to go two years because I know if it's a good fit for my business, I'm going, I'm going to commit because it's going to save me the most money and I don't want to switch around, I don't want to move around if it's a good fit for my business. Now in the near future, I'm going to go with at least an annual plan. Why? Because it costs me time and money to switch providers. I rather learn one piece of software, train my team on it, get it all set up, get it all working for my business and just stick with it for as long as it works for me. And that's going to be minimum a year. And I can evaluate that within the trial or 30 day money back guarantee or whatever guarantee period it is. Now there are some caveats. Now if the tool is going to cost me more than $2,000 up front, I have to evaluate how much of a savings is it. Why? Because of course you can put this on a credit card and finance it or even pay it off within 60 days and not have to pay any interest on that, on that actual charge. But the point here is that under $2,000, it's not really a huge expense for any startup. It costs maybe five times as much for a physical business to have an appliance like a stove or a commercial fridge. And most software and tools are in the thousand to two thousand range. Even email marketing that can get quite expensive can be within this range. And I'm okay with that. And I'm okay with actually advising people to put that kind of money up front, especially if there is a trial or money back guarantee. Your job is in that period to make sure this is a great tool for you, Use it, implement it, put it in a real world case scenario, Run your first, you know, newsletter campaign with that software, with that email marketing software in this example to see if everything goes well, everything gets delivered, everybody's happy. It looks great. If all goes well, great. Stick around. It's a good investment. The other thing is that you don't have to totally use the product for everything in your business. You can just kind of test it with one project, one little product, one little initiative. For example, I'm evaluating all different kinds of onboarding software so I can give like those little tool tips inside of Webinar Ninja. I'm only doing for one aspect of the software, a new feature that we released. If it goes well, if I feel like it's good, I'm going to stick around through the trial. If not, I'm going to keep looking around and seeing if there's a better option. So when is it wise to go monthly? Number one, some software products or services, the price fluctuates based on your growth. So you really can't know for sure how much you're going to pay whether you go monthly or annual, because it's maybe based on a certain variable. For example, like Intercom, which is a customer service tool that allows people to chat and send messages. It's based on how many people use that tool in your product, like how many customers interact with you. So the more customers you have, the more expensive it gets. So I sometimes with a tool like that, I don't know how much I'm going to be investing for the year because it could fluctuate. So what I like to do is go monthly first to see how much I'm paying for the first month, second month, third month, and then I can dictate and say, okay, you know what, this is what it looks like the rate is going to be. This is how much I'm going to pay throughout the year or how much I'm going to pay per month. I could save 20% if I go annual, so I can upgrade later to annual. Now I have to say most services, services have these buckets or plans that allow you to understand and really budget and wouldn't be considered one of these situations. For example, like with email marketing software, they'll say, hey, you can have up to 5,000 contacts or 10,000 contacts. So you know how many contacts you have and you know how much it's going to cost, and you know how much you're going to, how many contacts you're going to have for the rest of the month and the rest of the year. So you can kind of budget, you can kind of see how much it's going to cost you. But if you have something that's going to change every single day and change your pricing like the intercom example I gave. Or for example, like an onboarding software like AppCues where they will charge me for every time somebody sees this flow, or a tutorial. It's really hard for me to gauge how much I'm going to pay. So a good idea is to go monthly with those tests of software and then go to annual once you have a rough idea how much you're going to pay month to month. Monthly is also a great option if you're experimenting something in your business. So for example, let's say you're going to experiment using Facebook ads to market your business. You're not sure if you're gonna do this long term. You're gonna run a three month experiment and based on those results, you're gonna go ahead and then go annual. You're not fully committed to it yet. So for example, a tool like adespresso, which allows you to create Facebook ads very easily and split test them, you might sign up for a monthly plan to get started with to run through the experiment. If things go well and Facebook ads convert for you, awesome. Now you upgrade to annual and save that money. Now, there are some exceptions to some of the things I talked about. Some opportunities I should say. Often software companies will do special offers, whether it's Black Friday or you're on a webinar and they're giving an exclusive offer where they're going to give you some bonuses or an exclusive discount or some custom onboarding or whatever it is. If you go annual, obviously they'll want you to commit for that year in exchange for those bonuses or that special offer. My advice is if you feel like these bonuses can help you and your team implement that software better in your business faster, more efficiently, it's worth signing up, especially if there's a trial period or a money back guarantee, even if you're experimenting. Because the likelihood of you having a successful experiment will be higher. If those bonuses will help you get there, often they'll include guides or tutorials or courses or even coaching calls to get you to succeed with that software and with your initiative. Anytime you have an opportunity to implement anything in your business better, more efficiently, do it. Because it's going to save you time, it's going to save you money, it's going to allow you to get the benefit, the ROI faster. So one of my recommendations, if you're thinking about buying a piece of software, get on their email list, okay. Sign up for their newsletter. They're going to send you an invite to offers or to a webinar or to some exclusive thing sooner or later. Better yet, I often just message or chat with their support and say, hey, I'm thinking about signing up. Do you have any special offers going on? Do you have a webinar coming up? Can I avail any of these offers? Or if I sign up today, will I be able to kind of retroactively get that offer if I see it next week in the webinar or whatever it is? The point here is that just ask and often they will say, yep, we do have a special offer. Yes, we have a great discount. Yes, we have a bundle offer coming up. Sign up here to check that webinar out. Check out the offer, or they're going to say, here's the offer straight up. These are opportunities for you to really maximize your success with that software, with that tool for your business.

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To wrap up today's lesson, software is a great way for you to maximize your efforts in your business, to leverage the technology to your advantage so you can reach more people and you can do it more efficiently. So if you actually use the software and that's your job to implement, it's going to be a good investment. The software works and does what it promises. It's going to be an incredible investment. It's going to pay for itself tenfold in most cases or more. I can tell you firsthand from our customers at Webinar Ninja. We get endless comments and emails and messages saying, hey, I just signed up for an annual plan and and off my first webinar, I made more than what I invested to actually pay for that annual plan. So they get an ROI immediately and will continue to get an ROI in the days and months to come. But those are the people who actually use the software and implement what the software is meant to do. So to summarize, and the reason why I'm mentioning this is that the worst investment in software is a software you don't use. So make sure that when you sign up for a piece of software to you are committed to using it. Not just today or tomorrow, but for the long term. This is where people have regrets. They sign up for something and they don't use it. That's not anybody's responsibility but you. So if the software makes sense or the service makes sense for your business and it can help you grow or work more efficiently, do it. But really do it. Implement what it's meant to do. Thanks so much for listening. If you love what you hear, leave us an Apple Podcast rating and review. We'd love to hear what you think of the podcast. And of course, when you leave us a review, enter our weekly random job we call Free Ride Friday. Listen on Friday to see if you won a free ride to one of our programs. It's our way to say thanks for showing us love on Apple Podcasts. Before I go, I want to leave you with this When I started my first online business back in 2002, there was nowhere near the tools and software out there that we have today. I wish I had a fraction of the tools that are available today. It would have made my life a whole lot easier. But we now have the opposite problem. We have too much choice. There's so many different options for the same thing, for the same type of action, same type of thing you're trying to pull off, whether it's email marketing or project management or customer service. So choosing can be hard. So in my opinion, the best product is the easiest one to use, the one that is actually going to allow you to use it regularly. Remember I told you that by using the product, that's how you get you know that power and be able to leverage the power of the software and get an roi. So if you're in doubt, just choose the one that you find easiest to use because that's going to encourage you to actually use it. Thanks so much for listening and I'll check you in tomorrow's Episode Q and A Wednesday. I'll see you then. Take care.

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