A significant one-time startup fee increases a customer's initial investment and creates a psychological barrier to leaving. This counterintuitive strategy can drastically reduce churn and increase lifetime value, as customers feel they have more to lose by canceling.
For services requiring customer participation to be successful (e.g., coaching, setup processes), a one-time startup fee ensures commitment. This financial investment makes customers more likely to complete required tasks and pay attention, ultimately improving their results.
Attract customers with a heavily discounted first month or term. Simultaneously, charge a substantial one-time setup fee. This strategy liquidates acquisition costs and generates immediate cash flow while the discount drives initial interest, solving two problems at once.