ISA pricing


(Alex Sherwood) #1

This discussion got started after James shared a sneak peak :point_down: of the ISAs here.


ISAs sneak peak
#2

Price change? I thought it was £3/month


ISAs sneak peak
(Vladislav Kozub) #3

Looks like a slight discount if paid yearly.


(Alex Sherwood) #4

It is :raised_hands:


#5

Okay, so the options are £3 per month via direct debit or £30 per year via which method of payment, manual or direct debit also?

Edit: I’m interested to know the rationale behind the 2 different price options for the ISA, so if you could she’d some light that would be great.


(Vladislav Kozub) #6

This is just general practice to offer discount when paid annually. It guarantees certain income for Freetrade and is more predictable, hence the willingness to sacrifice some of the revenue to secure the predictability.


#7

A subscription model in of itself by direct debit that guarantees revenue typically works monthly too e.g. Netflix, mobile subscriptions etc. Monthly subscriptions are sticky with good predictability. I am looking for more specificity in a response, maybe the decision is based on data…


#8

Also, please include an option to pay the ISA annually. I’d like to pay the £30 once a year rather than having to pay that £2.50 monthly.


(Emma) #9

I thought that’s what it meant by billed yearly. The monthly tab will be the £3 cost and billing


#10

I personally don’t see a good reason for a difference in price given investors are/should be in it for the long term (5+ years). I’d prefer to pay monthly so as to smooth out the fee assuming it is charged via direct debit and not natively from available cash balances within the app. However, there appears to be penalisation of £6 for monthly versus yearly which doesn’t seem right when ISA products have a long duration. I’d appreciate a response on this @alex.s


#11

Is the ISA fee for each year you invest in a Freetrade ISA or for the duration you hold any ISA investments with Freetrade?

For example you invest in a ISA for your 18/19 and pay, but then in 19/20 you don’t invest in a ISA, will you have to pay for both 18/19 and 19/20?


(Vladislav Kozub) #12

As long as your funds are held in ISA in 19/20 (even if they were purchased in 18/19), it is most certain that ISA will have to be paid for.


(Danny Jeremiah) #13

I’d expect to be able to pay from my ISA balance. That being the case whether its monthly or annually doesn’t make much difference (so I’d obviously go for annual).


#14

Which begs the question why have 2 pricing options for a long term product when 1 one simple option would suffice? Simplicity and fairness, including wrt pricing, fits with the Freetrade Philosophy the last time I read up on it in the blogs.


(Danny Jeremiah) #15

With my Freetrade investor hat on…I’d call it £3 a month and have it deducted monthly from the first month of account opening with no annual discount. You’re right, for a long-term investment product a SaaS-style annual discount doesn’t seem to make much sense. Happy, personally, to save some £££ but feels like the company is leaving money on the table - I guess you could argue for changing this if/when some competition comes along in order to lock customers in but ISAs are naturally sticky.


#16

I’ve found what I’ve been looking for… this to me strikes as insincere pricing and quite frankly doesn’t pass the no bs test. Of course, there may be actual reasons other that psychological ones but apparently I must wait. My feedback is keep it simple. I’d understand this if it was £3 per month via Pay As You Go and a discount being there for an annual direct debit, but this isn’t the case. It’s just a £6 difference for what? Cashflows under direct debits be it monthly or annually are generally predictable.
Anyway, I’ll leave it at that so that Freetrade can take time to think.


#17

The strategy to have one monthly price and another (slightly cheaper) annual one is not unusual, eg Amazon do it for Prime (£7.99 a month or £79 per annum).

I don’t think there’s any unfairness, you have the option to pay the cheaper rate if you wish.


(Emma) #18

Alpha is priced at £10 per month or £100 per year, so they are being consistent


#19

I’m well aware of Aplha’s prices as I was here in the forum discussing the original pricing model. The inconsistency comes from the new information: only now do we know that the ISA may be priced like Alpha i.e. with a discount.


(Emma) #20

Isn’t that a bonus? We expected £3 a month but now it’s £2.50 if you pay upfront. Nobody is paying more than they expected but some are paying less.