And it gets even better. Instead of up to 33% leaving, say 50% of that group convert to Premium instead of Ultimate. That isn’t any lost revenue since the price is going up to what Ultimate used to be. So that cushions their numbers even more.
SnotFlickerman@lemmy.blahaj.zone 3 weeks ago
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 lets 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 x $20 a month and thats $680 million a month. 34 million 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. So they can hemorage 11 million users and still break even.
The math doesn’t bode well for us who vote with our wallets.
ramble81@lemmy.zip 3 weeks ago
quackerjo@lemmy.wtf 3 weeks ago
I’m not a certified math surgeon, but I think your math is wildly optimistic in favor of Microsoft due to how the subscriptions are actually brokendown per price tier.
I don’t doubt that they did a lot of math to figure out an acceptable level of churn for this change, I just don’t think it’s nearly as generous and wide as you’re calculating.
Jakule17@lemmy.world 3 weeks ago
Okay, but wouldn’t a higher price also discourage new people from subscribing in the first place? Or are companies that shortsighted?
Minnels@lemmy.zip 3 weeks ago
Most of them are. Just make profit NOW!!
MrFinnbean@lemmy.world 3 weeks ago
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.
ColeSloth@discuss.tchncs.de 3 weeks ago
Now factor in the cost savings from a lower server load and less staff to run the back end, and possibly the smaller licensing\use costs for the games available to play since less people would be accessing those games.
Rentlar@lemmy.ca 3 weeks ago
One could imagine that conveniently, Microsoft’s online support pages and the support staff were designed to only handle hundreds of thousands of cancelations at a time.