Pricing the Annual Plan at Sehat Seekho
Sehat Seekho is a Lahore-based subscription learning platform that prepares candidates for medical entry tests. It has 4,200 active monthly subscribers paying PKR 1,200 per month. Monthly churn is 9%, blended customer acquisition cost is PKR 4,800, and gross margin is 72% after content, hosting and instructor royalties. Most subscribers cancel in the four to six weeks before their exam date, and the platform's biggest intake months are June and July. The finance lead has proposed an annual plan at PKR 11,000 - a 23.6% discount - to pull cash forward and reduce churn. The growth lead wants to spend PKR 3 million on a content refresh instead, arguing churn is a product problem. A third option is PKR 1.4 million on a structured first-14-days onboarding sequence, based on the observation that subscribers who complete three practice tests in their first fortnight churn at 4% rather than 9%.
1. Evaluate the PKR 11,000 annual plan using the unit economics. What discount, if any, is defensible?
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Current unit economics (per monthly subscriber):
- Monthly gross margin = 1,200 × 0.72 = PKR 864
- Expected lifetime = 1 / 0.09 = 11.1 months
- LTV = 864 × 11.1 ≈ PKR 9,600
- LTV/CAC = 9,600 / 4,800 = 2.0; CAC payback = 4,800 / 864 ≈ 5.6 months
The annual plan: PKR 11,000 × 0.72 = PKR 7,920 of gross margin collected upfront, versus PKR 10,368 if the same subscriber paid monthly for twelve months. The company gives away PKR 2,448 per converted subscriber.
Break-even: 7,920 / 864 = 9.2 months. The annual plan only wins if the subscriber would otherwise have stayed fewer than about nine months.
That is the flaw. The product is exam-timed - most users leave at their exam, typically within four to six months. The plan therefore charges a 23.6% discount to people who were going to pay for five or six months anyway. The subscribers who do stay past nine months are precisely the ones you least need to discount; at 9% monthly churn, roughly 40% of a cohort is still active at month ten.
Defensible position: either drop the blanket annual plan, or price it at PKR 12,500–13,000 (a 7–10% discount) and restrict it to the repeat-taker segment - students who sit multiple entry tests and are genuinely multi-year. Segment before discounting.
2. Onboarding (PKR 1.4M), content refresh (PKR 3M), or annual plan? Choose and justify, including the evidentiary weakness in the onboarding data.
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Choose onboarding - but pilot it first, because the evidence is correlational.
The arithmetic: if 45% of new subscribers complete three practice tests in fortnight one, blended churn becomes (0.45 × 4%) + (0.55 × 9%) = 6.75%, lifting lifetime from 11.1 to 14.8 months and LTV from PKR 9,600 to about PKR 12,800 - an increase of roughly PKR 3,200 per new subscriber. Against 1.4M spend, break-even is about 440 incremental subscribers. At current acquisition volumes that is a matter of months, not years.
The weakness: the 4%-vs-9% gap is a selection effect. Subscribers who do three practice tests in two weeks are already motivated; the tests may be a marker of commitment, not its cause. If the causal effect is a third of the observed gap, break-even stretches to roughly 1,300 subscribers and the case weakens considerably.
So: spend PKR 200,000 on a controlled pilot - randomised onboarding nudge versus current flow, measured on 30-day and 90-day churn - before releasing the remaining 1.2M.
Why not the others: the PKR 3M content refresh is the least targeted spend; it addresses a product complaint nobody has actually evidenced, and content is already the largest cost line. The annual plan is a discount to the wrong segment (see previous answer) and, worse, front-loads cash into a business whose demand is seasonal - it does not fix churn, it hides it for twelve months.
3. The CFO argues the annual plan is still worth doing purely for cash flow. How would you answer, and what would you need to see?
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Cash flow is a real argument; it is not sufficient on its own, but it is testable.
Take the strongest version of the CFO's case: prepaid cash removes CAC payback risk, funds the June–July acquisition spike without borrowing, and reduces the number of renewal events the retention team must handle. At PKR 11,000 upfront, the company recovers its PKR 4,800 CAC on day one instead of month six.
The counter: the cash is a one-time inflow that must be earned over twelve months. Under accrual accounting, unearned revenue sits as a liability, and if a subscriber cancels in month three the refund exposure is real. Because intake is concentrated in June and July, an annual plan launched in spring produces a cash bulge followed by eleven months of no revenue from those users - which is worse planning visibility than a monthly stream.
What I would need to see before approving:
- The discount-elasticity test: offer 7%, 15% and 23.6% annual prices to random cohorts and observe conversion, not survey intent.
- The refund policy written down and stress-tested at a 20% mid-term cancellation rate.
- A split of uptake by exam date - if annual buyers are overwhelmingly repeat-takers, the cannibalisation concern largely disappears and the CFO wins the argument.
If those three clear, run the annual plan with a capped discount. If they cannot be produced before the June intake, launch monthly only and revisit next cycle.