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This article gives an overview of the types of subscription plans and explains the various terminologies involved. It also outlines how to add a subscription plan from the platform.

TABLE OF CONTENTS

• Fee based smallcases - Pricing type
• Subscription Plans Overview
• Flat-fee
• AuM (Assets Under Management)
  • AuM Fee
  • Advance Fee & One time Fee
  • Things To Note
• How to add Subscription Plans from the Platform
• How to Change the Plan Type to Auto Renew for Existing Plans? 
• GST in the Subscription Fee

As of today, smallcase platform provides two broad types of smallcases - Free and paid.

• Free access: You don't have to pay any fees to invest in this type of smallcases. These can be accessed by everyone.

• Fee based: For the paid smallcases, you can invest in a smallcase after subscribing to that smallcase or its holding manager (more on this in the upcoming sections)

• Fee based smallcases - Pricing type

Before we dive right in, lets see the two different types of pricing plans that we have:

1. Manager level pricing: Subscribe to manager and get access to invest in all the smallcases managed by them (only available for Flat-fee plans because it is difficult to keep a track of AuM of multiple smallcases)

2. smallcase level pricing: Subscribe to individual smallcases to get access to invest in them (both Flat-fee and AuM available; read on)
   
   

• Subscription Plans Overview

We have different subscription plans. Broadly, they can be divided into:

1. Flat-fee

2. AuM (Assets Under Management)

• Flat-fee

You pay a fixed amount for a fixed duration (monthly, every 3 months, every 6 months or annually). This is a prepaid subscription plan - you pay before the subscription cycle starts.

For example, if I subscribe to a smallcase on 18 June for 1 month, I have access to that smallcase till 18 July. I’ll have to pay again to renew the subscription (see the image below)

You can also see a checkbox for auto renew subscription. 

• Users subscribing to smallcases with Flat-fee type pricing models have the option to auto renew their subscription at the end of the subscription period. The subscription fee amount is auto-debited at the end of the period - this is done with the help of E-Mandate. 

• According to the SEBI  guidelines, for auto debit the user has to create an e-Mandate which gives us the permission to debit the amount automatically from the user's bank account at the end of the subscription cycle. 

• Users can also uncheck the auto renew box. In this case, user will have to manually renew the subscription at the end of the cycle. If the user is not able to renew the subscription on time, they are given a Grace Period. 

• A user’s manual renewal might fail due to many reasons - they forget to renew manually, payment failures, etc. 

• In this case, the user is given a grace period of 7 days.

• During this period, the user retains their subscription to the smallcase. 

• Only after the completion of the grace period is their subscription to that smallcase revoked.

• AuM (Assets Under Management)

• AuM Fee

TL;DR: You pay for how much you invest in that smallcase

For smallcases with this type of subscription plan, the fee is calculated based on a percentage of the invested value. This percentage is explicitly mentioned on the manager website, smallcase.com and broker platform

AuM plans are auto debit plans. We calculate the average AuM for the month and on the end date of the user’s subscription cycle, the subscription fee(which is X% of your average AuM) is automatically deducted. See the example below for better understanding.

Let's say that you have invested INR 100 in a smallcase with an AuM charge ratio of 2%. The process of calculating average AuM for the month is detailed with the INR 100 example below. 

Note: Debit of the subscription fee happens according to the subscription dates and not the investment dates. In the above example, if the user subscribed to the smallcase on 18th June and invested for the first time on 25th June, the fee debit will happen on 17th July only!

Clearly, if the user does not invest anything, his net worth will be 0 and he will not be charged a fee. However, the user is making use of the manager’s services and there should be compensation for that. Here, we introduce the concept of Advance/One time Fee. This is a functionality given to the managers to hedge their risk of users not investing in the smallcase.

• Advance Fee & One time Fee
  

An AuM based smallcase plan primarily has 2 components:

• Advance Fee or One time Fee (Optional) 
  This is a one time fee paid by the user to start the subscription
  

• Charge ratio based AuM fee (Annual percentage)
  This is the AuM charge percentage at which the user’s monthly AuM fees is calculated with respect to their Avg. Investment value for the month (Calculation explained int he previous section)
  
  

The one time payment by the user to start subscription can be of two types:

• Advance Fee
  The advance fee paid by the user at the start of the subscription won’t just be a one time fee, instead it will be treated as an advance payment which will be offset from the user’s monthly calculated AuM fees till the cumulative AuM fee value exceeds the advance fee or till the user gets unsubscribed from the smallcase. 
  
• One time Fee
  In this case, the one time payment is purely to start the subscription and all subsequent monthtly AuM fees will be debited on top of this one time fee
  
  

The table below shows how Advance Fee & One time Fee differ based on offsetting of the subsequent monthly AuM fees

As can be seen in the above table, with the Advance Fee essentially the user pays only the AuM fee that is calculated based on their investment value as no new debit is triggered till the AuM fees cumulated over months exceeds the advance fee initially paid by the user at the start of the subscription. 

Sample Excel with customisable smallcase plan details

• Things To Note

Advance Fee

• If in case the user’s subscription is ended before their cumulative AuM fee exceeds the advance fee, the advance balance will neither be refunded to the user nor will it be carried forward to when the user re-subscribes
  

  • This means, if a user gets unsubscribed and then re-subscribes the smallcase, user will have to pay the advance fee once again to start the subscription which will be then be offset from the subsequent monthly AuM fee charges
    
    

• If a user gets unsubscribed due to the last AuM fee debit failing (in case advance balance is exhausted):
  

  • On re-subscribing the smallcase, user will have to pay
    Previous pending amount + Advance fee 
    To start the subscription
    

  • The previous cycle’s pending amount will not be offset from the new advance fee as the advance fee will always be used to offset future fees and not historical fees

One time Fee

• Optional and depends on the smallcase manager

• Explicitly mentioned along with the AuM fee percentage

• One time fee has to be paid when the user is subscribing to the smallcase to get access to that smallcase constituents.

• This is paid only once at the beginning of the subscription

• How to add Subscription Plans from the Platform

Before we go into how to add subscription plans to a smallcase, I’ll outline the preliminary steps first.

Step 1: creating the smallcase (uploading stocks csv, filling in the meta details like name, description, logo, rationale, methodology, etc)

Step 2: the smallcase will be saved as a draft

Step 3: click on the three dots on the right and click “publish smallcase”

From here, you will be asked to specify the subscription details. (by publishing the smallcase, it will be available for live tracking to the users)

Step 4: You will be asked to choose a plan:  AuM or Flat-fee

• Publish as Fee-based: only users who subscribe will be able to see the components of the smallcase. That is, you will charge a subscription fee to give users access to your research (fee based smallcase)

• Publish as Free Access: Anyone with the link will be able to invest in the smallcase. Users will not be charged any fee - Free Access

Step 5: Creating a Flat-fee subscription plan

• Select Flat-fee and click on “Create Plan”

• You will see 4 subscription frequencies that we support

• You can choose one or all or any number of subscription frequencies. Lets go with Monthly

• Actual Price: Price of the smallcase

• Strike Price: Promotional price (higher than the actual price. It is shown as a discount)

• Renewal type: Select one of the three (Auto Renew, One Time has been discussed in the previous sections)

  • Selecting “Both” gives the user the freedom to choose either Auto renew or One Time subscription

• Similarly, set the other frequencies and click “Save and Publish smallcase”

Step 6: Creating an AuM subscription plan

• Select “AuM based plan” 

• Enter the Charge ratio and One time/Advance Fee 

• Toggle the offset flag to enable/disable offset
  
  

• Publish Plan

Step 7: Once the plan is published from the manager’s end, the smallcase goes in Waiting to Publish state

“Waiting to be published” : everyday at 8:30 pm, an automated job runs and publishes all the smallcases in queue. Why 8:30 pm? This is done to ensure that the smallcases are published at the market closing price. These smallcases will be available for users to invest the following day.

• How to Change the Plan Type to Auto Renew for Existing Plans? 
  

You may follow the steps mentioned below:

Step 1: Click on 'Plans & Offers' 

Step 2: Click on 'Edit Plan'

Step 3: Click on the dropdown against the active plan and select 'Auto Renew' and select 'Save Plans'. 

• GST in the Subscription Fee

While configuring the subscription plans, we see “GST will be added extra on the price”, “GST extra if applicable”, etc. Please find the nuances related to GST below.

• The smallcases managed by managers that have entered their GSTIN in their profile will be applicable to GST deductions

• Managers that have not entered their GSTIN will be excluded from this deduction.

  • GST for Flat-fee subscriptions: The subscription fee is inclusive of GST. FOr example, if a manager enters a subscription fee of 100 rupees, it will reflect as 118 rupees to the user.

  • GST for AuM subscriptions:

    • Without Advance/One time Fee: these are the plans with only the charge ratio. GST is added separately to the payable amount at the end of the subscription cycle. It is also explicitly mentioned in the holdings report
      
      

    • With Advance/One time Fee: 18% GST is included in this fee. For example, if the advance/one time fee for a particular subscription is set as 200 rupees, the user will see 236 rupees that includes the GST.