Matthew (or anyone with a system, or subscribed to a system, with a pay-for-profitable-period subscription model),
I’m sure this is been discussed somewhere in the past, but I’d like to get some clarification on how the pay-for-profitable period model works.
My understanding is that, when someone subscribes to system with a pay-for-profitable period model, on the day they subscribe, they are given their own, individual equity benchmark based on the system’s equity that day. Let’s say, for convenience, the benchmark is exactly $10,000.
So, if it is a pay for profitable week, say the system’s equity goes up to $10,550 during the week, then ends the first week at $10,120. It was a profitable week. Does the subscriber’s benchmark then reset to $10,120, or does it reset to $10,550?
Interesting question. An answer would be even more interesting…!
Guys, From what I have seen there are more rules to this than only making money above the high of the set time window. There is also the need to be more profitable than some other point. Take enchante for example. For them to start getting $$ again from their long time subscribers they would need to break some high number (that perhaps Matthew could explain), not just a profit for the set period.
Then there is the issue of the free trial period. Can one come and go constantly in order to slow down the free 30 day total period?
Here’s a quote from Matthew on the subject:
"What we describe in the subscription form when people sign up for “pay-if-profitable” systems applies to this question. We simply measure C2 Hypothetical Performance – no commission, no fees, no nothing. If it’s profitable in the C2 Model Account and system equity is above the high-water mark (i.e. the equity of the system the last time customer was charged), subscriber is charged. Otherwise he is not."
What this implies is that each subscriber’s benchmark is set on the day they subscribe, and reset on the day they are charged, if the period was profitable. If the period wasn’t profitable, they would keep their original benchmark and not be charged until the system equity at the next, scheduled charge date exceeded their benchmark.
If you had a subscriber, who had the misfortune of subscribing at the exact peak, right before a year-long drawdown, they would not be charged a subscription fee for a very long time.
I think this is an ideal subscription method, due to the tendency of people to subscribe to a system right after it has had a good run. It ensures that they don’t get charged a subscription fee during the inevitable pullback, and only have to pay once the system is making new highs, again.
Aha, very interesting. I didn’t see that quote. Is it on the website or is it something Matthew wrote to you or in a post some time ago? At any rate, that there is indeed a high water mark makes it a good subscription model.
I discarded the idea of pay-per-profitable-quarter after consulting with subscribers because we were all under the impression that there was no high water mark. I will be looking into it again now…
It’s from the “Pay Per Profitable Periods” thread in this forum, with the last post date of 1/06/11 (0:42)
Ah thanks Jack, I’m surprised I missed that one!
Dean,
Keep in mind, if you give special billing to any of your subscribers, that function is not available in the Pay-for-Profitable Business Model.
