Metadata
- Author: Olga Berezovsky
- Full Title:: Subscription Upgrades and Downgrades: A Deep Dive Into B2C vs. SaaS Reporting - Issue 223
- Category:: 🗞️Articles
- URL:: https://dataanalysis.substack.com/p/subscription-upgrades-and-downgrades?utm_campaign=posts-open-in-app&triedRedirect=true
- Finished date:: 2024-10-02
Highlights
This is because there isn’t a standardized definition of upgrade and downgrade, as they can vary. For example, a user moving from a monthly plan to an annual one doesn’t necessarily constitute an upgrade because the monthly paid price typically decreases, leading to a decline in actual MRR. (View Highlight)
In some cases, ARPU may also decline (depending on how it’s calculated), but LTV increases. Therefore, when users transition from an annual plan to a monthly one, revenue may go up, but LTV tends to decline. (View Highlight)
Users moving from shorter to longer-term plans are considered “upgrades,” regardless of the actual amount paid. (View Highlight)
But the key point is how do you view it in ARR?
LTV indirectly reflects both ARR and ARPU, and since most companies already report this KPI, it becomes an easier metric to track user movements. Once you apply this LTV-based logic, identifying upgrades and downgrades becomes more straightforward. (View Highlight)