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Stripe Downgrades

The Downgrades metric measures the number of customers who have shifted from a higher-priced subscription plan to a lower-priced one within a specified timeframe.

With Databox you can track all your metrics from various data sources in one place.

Downgrades 1.5% Start tracking this metric
  • About
  • Tech details
  • Notes

What Are Downgrades

A downgrade is when a customer moves from a higher subscription level to a lower one, resulting in a loss of revenue for the business.
This metric is crucial for subscription-based businesses as it could indicate a problem with the service, such as high prices or lack of perceived value at higher plan tiers.

How to Calculate Downgrades

You can calculate your downgrade ratio by dividing the number of customers who have switched to lower-tier subscription plans by the total number of customers.
Here’s the exact formula:

Downgrades = Number of customers who downgraded / Total number of customers

Let’s say you have a software company with 1000 subscribers. During a specific period, 15 customers downgraded their subscription plans.

Upgrades = 15 / 1000

This leaves us with a 1.5% downgrade ratio for the specific time period.

What Is an Acceptable Downgrade Ratio

The acceptable downgrade ratio can vary depending on the pricing structure, the business model, the company’s specific goals, and a variety of similar factors.
But as a general rule of thumb, a downgrade ratio of below 2% is something many businesses find acceptable.

Just remember that an acceptable downgrade ratio is not a fixed number, but a dynamic metric that changes to your specific circumstances.
Regular monitoring and analysis of downgrade ratios, along with customer feedback, will help you determine what is acceptable for your own organization and help you make more informed decisions going forward.

How to Reduce the Number of Downgrades

Reducing the number of downgrades and making sure your customers are satisfied with the service is a critical aspect of maintaining and growing your business’s revenue.
Let’s take a look at some specific tactics that industry leaders employ in their companies when trying to reduce downgrades:

  • Increase the duration of your deal: Extending the length of subscriptions encourages long-term commitment, which directly impacts your number of downgrades. For example, you can offer discounts for longer-term plans and give your customers a reason to stick with higher-tier subscriptions. Plus, having more time prompts stronger customer relationships and gives you more opportunities to demonstrate product value.
  • Deliver more value to at-risk customers: What are you doing about at-risk users? Create a system where you can quickly identify customers who are likely to downgrade and prepare personalized offers to get them to stay. The offer can be based on any concerns you noticed they may have, maybe helping them with certain features or talking to them about the capabilities they would like to see in their current tier plan.
  • Bundle up additional perks: Bundling additional perks in a subscription enhances its perceived value, and consequently reduces downgrades. By offering extra services, exclusive features, or partner deals, businesses can make higher-tier subscriptions more appealing. This proactive approach boosts customer satisfaction and maintains revenue by directly reducing downgrades.

More resources to help you improve:

Visualizations

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    Pie Chart

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    Bar and Line Chart

    Used to show comparisons between values.

How to track Downgrades in Databox?

Databox is a business analytics software that allows you to track and visualize your most important metrics from any data source in one centralized platform.

To track Downgrades using Databox, follow these steps:

  1. 1
    Connect Stripe that contains the metric you want to track
  2. 2
    Select the metric you want to track from the list of available metrics
  3. 3
    Drag and drop the selected metric onto your dashboard
  4. 4
    Watch your dashboard populate in seconds
  5. 5
    Put Downgrades on the Performance screen
  6. 6
    Get Downgrades performance daily with Scorecards or as a weekly digest
  7. 7
    Set Goals to track and improve performance of Downgrades
Stripe integration with Databox Track Downgrades from Stripe in Databox GET STARTED

Basics

  • Description
    The Downgrades metric measures the number of customers who have shifted from a higher-priced subscription plan to a lower-priced one within a specified timeframe.
  • Category
    Payment Processing
  • Subcategory
    Subscriptions
  • Date Added
    2015-04-28
  • Cumulative Support
    Yes
  • Units
    No
  • Granularities
    hourly, daily, weekly, monthly, quarterly, yearly
  • Favorable Trend
    decreasing
  • Historical Data
    Yes
  • Changing historical data
    No
  • Forecast Support
    Yes
  • Benchmark Support
    Yes
  • Media Support
    No
  • Dimension
    N/A
  • Metric Type
  • API Endpoint
    https://api.stripe.com/v1/events
  • The usage and limitations of the ‘Upgrades’ and ‘Downgrades’ Stripe metrics

    Usage
    Upgrades or downgrades are tracked when they actually happen. For example, if a user moved from PlanA ($59) to PlanB ($119) today, an upgrade of $60 will be tracked. The same logic will apply to downgrades.

    In cases where the user would switch back and forth, every upgrade and downgrade would be tracked and would influence the upgrade or downgrade amount in Databox. Therefore, Databox suggests using the Calculated Metrics to track the Net New Upgrade or Downgrade values.

    Below is an example of the MRR Upgrades metric and the same logic will apply for other Upgrades and Downgrades metrics.

    Net New MRR Upgrades = MRR Upgrades – MRR Downgrades

    Limitation
    To calculate upgrades, downgrades, and reactivations we use the /events endpoint. In accordance with the Stripe API documentation, Databox can collect only 30 days of historical data through this API endpoint.
    For example, if an upgrade occurred 31 days ago, it would not be pushed to and visible in Databox today.

Questions? We've got answers.

  • What are the reasons users may downgrade their plans?

    One of the main reasons for downgrades is cost – customers may feel they aren’t getting enough value for their money. Or in some other cases, they may not fully use or understand the features of higher-tier plans.

    Other factors that can lead to downgrades include business changes like budget cuts or downsizing, issues with customer service, and dissatisfaction with product performance.

  • How to prevent users from downgrading plans?

    To keep your users from downgrading their plans, you need to consistently demonstrate the value of your higher-tier services.

    Try to regularly check in with your customers to catch potential problems before they turn into reasons for a downgrade.

    Educate your users about how they can benefit from your advanced features and ask them if they want 1-on-1 assistance to learn the ropes around it.

    There is a variety of different ways you can reduce the number of upgrades, but talking to your customers and getting their direct feedback on what they think (and acting on it) is at the core of each strategy.

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