14 ms·

The Subscription App Paradox

77 points by tzfld 9y ago

codecamper 9y ago
The problem is that the ios app store (not sure about play) does not offer a paid upgrade option. It is unrealistic to expect developers to toil away, improving software each year, using new platform features, all for no incremental income from existing users. I'm an app developer with a relatively successful app who spends about 1 minute every 6 months thinking about upgrading the app. No money, no honey.
- deergomoo 9y ago
  This is the biggest problem, really. Your three options are: subscription, which the article lists the problems with; publishing a new ‘My App 2’ on the store, which is confusing for users and unless your app stores nothing or is entirely cloud based, presents a migration path that is messy at best or; offer new features as in-app purchases, which, depending on the scale and nature of your app, can be incredibly complex or even impossible to do in a way that makes sense. I can’t see it being done because it goes agains the ‘simple’ principle of the App Store, but would be nice to be able to separate the concepts of bug/security fixes and featur updates to allow multiple concurrent versions to exist under the same entry.
- thejosh 9y ago
  What about new users? Wouldn't you want to keep improving to attract new users? Depends on your market though I guess.
  - syllogism 9y ago
    Don't updates roll your review ratings, though? For user acquisition I'd rather be sitting on 500 reviews and a 4 star rating that point out some legit problems. That's better than releasing a new version and having the reviews reset to 0.
- rcarmo 9y ago
  I would gladly pay for upgrades - if they are reasonably priced, of course, and I don't mean for $5 apps. Some of the iOS apps I run cost me $15-$50 a pop, like Prompt, Coda, Working Copy and a few Omni apps. But I bought them _across a few years_, and I would rather buy food and books for my kids than spend $5-$10 monthly on a single app, _except_ when it is the front-end for a service I need (like Dropbox, which I still use). My approach to mobile apps is that I prefer to pay up-front and spend around $100 yearly (on average, discounting service-oriented apps) rather than pay $5 for _anything_ on a monthly basis - that allows me to buy one quality app per quarter, and avoid losing time and money on frilly apps and subscriptions I don't need. I think the real problem here is people making up useless "services" and wanting to turn their apps into niche shopfronts that will only ever reach a minuscule portion of their target base. (I will on occasion spend a few extra bucks on a quality game for the kids - or myself - too, but even then I've been avoiding anything with in-app purchases of any kind, and tend to go for promotions rather than new launches.) edit - typos
- clumsysmurf 9y ago
  Google Play doesn't have this either. It comes up year after year, and seems like an obvious omission ... but where there must be some conflict with Google's priorities.
- ksec 9y ago
  I think many have argued that an App is a product, and you dont upgrade your Washing Machine, Set Top Box or Routers etc, you buy a new one. Hence you buy a new App. That is all perfectly fine, but it turns out most users, ( Not developers or Geeks ) will only buy a new product when their product stop working or became OUT DATED. Since most App will continue to work for as long as it is, users have no incentive to buy a newer version. That is why developers wanted a Subscription model. It is hard to sell to its existing users pool, a rental model allow them to have a continuous revenue. With upgrade model, it is basically offering a discount for its existing users, instead of telling them to buy a New version. And it turns out, the more subscription Apps there is, the more i like the upgrade pricing model better.
- scarface74 9y ago
  There is a paid upgrade model that some publishers use, but it's a hack. Say they charged $5.99 for Foobar v.1 and then they also want to charge $5.99 for Foobar v.2 but allow their current customers to upgrade for $2.00. They keep both versions at $5.99 and sell an "app bundle" of both products for $7.99. That will allow current customers to pay $2.00. Of course the developer needs to put in big bold writing in the description of v.1 not to buy that product.
raffomania 9y ago
I'm hopeful that a Patreon-like donation model will prove successful for apps/products with a passionate userbase. Ulysses, as described in the article, does seem to have a pretty active community with a lot of people willing to pay.
- tobltobs 9y ago
  Maybe times will change but currently you are lucky if you waive less then 98% of your possible income if you use a donation model.
- tonyedgecombe 9y ago
  Begging for a few crumbs doesn't look like success to me.
binaryanomaly 9y ago
Imho the problem are not subscriptions per se but it’s how you treat your customers. If customers feel treated unfair and ripped off developers hopefully feel the churn. If the switch and the pricing is fair most people won’t mind in the longterm. Ulysses is imho a negative example how you should not do it. They were so much in love with themselves they completely failed to look at it also from a customers perspective (not everybody is a professional writer who purchased the expensive apps) which of course set up many people. Don‘t be evil, ignorant and arrogant...
rocqua 9y ago
At some point, an app is done or close to done. At that point, maintenance to keep the app compatible is all that is needed. So, the company should downscale. Only, companies don't. As such, the subscription pays for way more than simple upkeep. It pays for a large development team to continue to add features to an app that is essentially already done.
- posguy 9y ago
  This is caused by every VC demanding that their stable of startups all shoot for the moon and become multi-billion dollar companies. If moonshots weren't such a high priority, and instead startups focused on building a successful business, perhaps there wouldn't be so many dead startups. Doing a few tens of million a year in revenue isn't a terrible place to be after a few years!
  - pbhjpbhj 9y ago
    If profit motive (aka greed) wasn't the primary driver of Western Capitalism ...
  - ballenf 9y ago
    Taking (or seeking) VC means that you don't want to be a gradual, incrementally growing company.
- fauigerzigerk 9y ago
  That's true and not limited to paid apps either. Twitter spent over $700 million on research and development in 2016. They made a loss of over $450 million. To be fair, their R&D doesn't exclusively pay for an improved 140 character text box. It also goes towards staying attractive for advertisers and trying new ideas. But still, the gap between the rather modest progress that Twitter is making on any front and their enormous costs (not just on R&D) is striking.
- josephg 9y ago
  Yes, this is a constant sourse of amazement for me too! The chrome team at google is well over 1000 people. (The opensource code base now has over 800 committers). The initial release had 100 committers[1], so probably about as many man hours have gone into google chrome in the last year than were put into the project in its first ~5 years of existence or something. In the last year just shy of 1.5 million non-blank lines of code[2] have been added to the browser, which is more code than was in the whole browser when it was first launched, webkit included. But what does all that new code do?? I'd challenge anyone who's not a developer to name a single new feature added to chrome in the last year. I'm a web developer and I struggle to name more than 5 changes. Its easy to pick on chrome because the numbers are mostly-public. But the same is probably true of facebook.com, ms office and all sorts of other big company products. As features compound, the marginal value of each additional line of code added becomes vanishingly small. (All the really useful features have already been added, and project iteration gets much slower in big projects). There are thousands of engineers working on facebook.com. If they all quietly left and were never replaced, how long do you think it would take before anyone in the public would notice? 6 months? 1 year? Longer? And if thats the case, what a waste of that huge pool of talent. If you could leave your job without any of your users noticing or caring, what a waste of your education and your potential. Quit and start that company you've always been dreaming about starting. Go do literally anything of substance. [1] https://www.openhub.net/p/chrome/contributors/summary https://www.openhub.net/p/chrome/contributors/summary [2] https://www.openhub.net/p/chrome/analyses/latest/languages_summary https://www.openhub.net/p/chrome/analyses/latest/languages_s...
msmithstubbs 9y ago
Several of the app subscriptions listed appear to actually be subscriptions for content (Apple Music, The Guardian, Medium) while others are actual services being paid for (Dropbox).
TeMPOraL 9y ago
Apps are just a harbinger; this starts to happen everywhere else too. I dislike how our ever more efficient economy makes your capabilities and quality of life tied closer and closer to your instantaneous income. Instead of one-time purchases, more and more things are becoming money sinks now. This might be great for the perfect citizens - young, punctual, hard-working individuals steadily going up the corporate ladder - but it's incredibly annoying for everyone else. Any small hiccup in your cashflow, and suddenly you have to start cutting off parts of your life. It's tolerable now, because you still can own most of the things. But will it be 10 years from now? When because of e.g. sudden health expenses, you're left wondering whether to cancel dishwashing or clotheswashing service for a month, so that you don't have to cancel the service that feeds your kid at school? Will everything you "have", and everything you can do, be solely determined by the allocation of your cashflow to various available services?
- posguy 9y ago
  If you can't afford to pay someone to do something, you either do it yourself or it doesn't happen. This isn't particularly new, and if you look at most people's lives, they just aren't paying for every new thing as a service, if they pay for any PaaS at all.
  - mantas 9y ago
    Like go for a walk instead of driving or wash clothes by hand?
- pbhjpbhj 9y ago
  Ha, it's like capitalism come to the home: means of production (of clean dishes) being removed from the common man to afford greater profits to the capitalists; seize back the means of production (the dishwasher)! Vive la Revolution!
- fauigerzigerk 9y ago
  That's an interesting point, but I doubt it's much worse than it is today if at all. Poor poeple can be in trouble when their car or washing machine gives up the ghost. So they buy a new one on credit. The monthly instalments are quite similar to a subscription model. I'm not sure which one is more expensive.
bitL 9y ago
This is the reason we need alternatives to iOS and Android - to allow real customer-centric mobile OS where users aren't held hostage. Would it be a big problem for OS manufacturers to add more options, such as paid upgrade that could retain access to previous version's settings instead of being completely sandboxed from it? Of course not. Would it be a problem to offer a year-long automatic upgrades while retaining the last version once payment runs off, instead of blocking access? Of course not. It's just greed, the need to have "predictable income" and to stuff it to the user that allows this to happen. Instead of trying out and buying an app as a one-off if I like it, I am not going to even look at a non-essential app that requires a subscription.
danieldk 9y ago
The trend of subscriptions seems to be accelerating, I think it is detrimental to the ISV ecosystem as a whole. I have bought many macOS applications in the last decade or so. And like so many others, I do not shun to spend 50 Euro or more on an app. However, as of recently I have been more restrained in buying applications, since it seems that they could switch to a subscription model at any random moment. Instead, I have been looking more and more at FLOSS alternatives. Even if their quality is sometimes not as good, the prospect of being able to use an application long-term makes them more attractive. Moreover, I have also started donating more to FLOSS developers as a result.
- rcarmo 9y ago
  Same here. I've increasingly started to use things like Darktable because I want to be sure I can use the same app for a decade or so (which is likely to be impossible in iOS, really, the way things are going).
- ThomPete 9y ago
  I run a successful app with one time payment and I thought about turning it into subscription. Instead I decided to keep it a one time payment and then instead will be offering subscription add ons for extra services. I hope that strikes a balance because I understand the issue from the customers side but also want to make a living out of it too.
  - bitL 9y ago
    You can do both; one time payment for a major version for individual users and subscription for businesses. Just don't do subscription-only please.
    - danieldk 9y ago
      Indeed. Please do both! Microsoft has done this pretty well with Office. You can choose to get an Office 365 subscription or buy Office standalone. (Office 365 pricing is also extremely good for what you get, compared to most software subscriptions.)
jakobegger 9y ago
Who is your customer? Are you selling to a journalist that uses your app to write every day? Are your customers athletes that exercise 3 times a week? Then yes, go for it, charge for a subscription. Or do you have a long tail of „casual users“? Bloggers that write an article or two every month. Casual runners that want to track their weekend runs. Someone who wants to touch up vacation photos once a year. Then a subscription is unsuitable. Casual users will pay once for a premium app, especially if they expect to use it for a long time. But its gonna be hard to convince them to pay a monthly fee. Most apps will have a mix of regular and casual users. Just make sure to think of the different audiences your app has. Your business model will decide which of them you can keep.
- koolba 9y ago
  > Casual users will pay once for a premium app, especially if they expect to use it for a long time. But its gonna be hard to convince them to pay a monthly fee. I don't think so. It may not be as easy to convince as "just $1!" but I bet the customers will come. I also think they'll forget to cancel. That's where the real casual money is. Thousands of customers oblvious to the monthly fees. It's like gym memberships but without the high pressure sales tactics. The customer signs up, uses it for a a week, then gets billed monthly for the next year.
  - pbhjpbhj 9y ago
    Are you promoting stealing people's money using the gym-membership model? It sounds like you are. That model is what you come to when you realise burglary doesn't scale.
    - koolba 9y ago
      > Are you promoting stealing people's money using the gym-membership model? It sounds like you are. I'm not promoting it. I'm calling it out as the natural progression of switching to a subscription model. When a customer sees "$1/month" vs. "$12/once" what they're really seeing is "$1" vs "$12". The apps on a subscription model will win out. > That model is what you come to when you realise burglary doesn't scale. It's not subscription themselves that are bad. It's selling a product that relies on your customer not using the product to be profitable. Limited space in the gym leads to overcrowding which incentives them to not have you come. The less you come, the less crowded it looks, the easier it is for them to sell memberships (i.e. subscriptions).
kitx 9y ago
Think the fairest model is one where you pay once for the app, updates are free for a set period of time, then you have to pay again to upgrade if you wish to. If not, the old version is yours indefinitely. Well aware that the App Stores do not offer this option, but it is possible if you implement your own billing system on macOS or Windows.
mherrmann 9y ago
For me, the determining factor is whether it costs the vendor something to provide the service. Running a server? Fair. An app that runs on my hardware? Not fair. Updates? Requires development effort, so totally fair. etc.
kuschku 9y ago
A major issue with this is that incomes are different in different places. Maybe to someone in Silicon Valley spending a hundred to two hundred bucks a month on a bunch of apps is reasonable, but to a student that has less than 50 bucks left after rent and groceries (and might need to buy new clothes sometimes, too), this is ridiculous. It’s a similar issue with the completely ridiculously priced smartphones. Android often loves breaking their APIs, so you need to test the new releases on a physical phone before they’re public. Google now dropped the Nexus phones, so that means you need a Google Pixel. The cheapest Google Pixel is 900$ in Germany. How the hell am I supposed to pay for that? Or is App Development now supposed to only be a thing for big businesses?
- yjftsjthsd-h 9y ago
  > you need to test the new releases on a physical phone Why not use the emulator?
  - kuschku 9y ago
    Because that doesn’t expose issues that appear with the UI gestures, or some interactions. I’ve tried with the emulator, but it never is the same as the real device, and you just can’t test pinch-zo-zoom for example on an emulator.
    - dogma1138 9y ago
      You can use any android device to send multi-touch, gestures and sensors events to the emulator: http://tools.android.com/tips/hardware-emulation http://tools.android.com/tips/hardware-emulation Android Emulator also has been supporting "multi touch" via the mouse and keyboard for a while now, IIRC it's alt+click. Android devices that run stock android and get monthly updates can be bought for under 150 and even 100 EUR e.g. WilleyFox.
      - kuschku 9y ago
        > Android devices that run stock android and get monthly updates can be bought for under 150 and even 100 EUR e.g. WilleyFox. Yes, sure, and I’ve still got my Nexus 5X – but Google only provides the preview releases for the Pixel devices from now on, all other devices only get those after release.
Walkman 9y ago
I really like 1Password's old model for a user point of view; they asked money for every new major version of 1Password, but old version bug fixes were free. This way, if you needed the new features or newer OS support, you could pay for the new major version (same as buying a new suit) or you could use the old version if it was fine for you. This model is fair, but still generates more income for the developers from loyal users who upgrade.
- Silhouette 9y ago
  That's how most software used to work. You paid for the big new versions, but if you had one already, you might get minor updates for free either from the Internet or even going back a bit further from the cover disc on the front of a magazine or a BBS. The thing is, that model relies on the big upgrades being sufficiently attractive to users that they will pay more money just to get the new features. It's clear what you're getting and what you're paying for it. That works well if you keep making big steps forward with whatever your software does that are valuable to your users. It doesn't work so well if all you've got to offer is a few incremental refinements that don't much change the value of your product. As others have been mentioning, sometimes software is essentially complete, and this way you can't just keep selling something that's done to the same customer over and over again. This is why some of these calculations about the cost effectiveness of subscriptions for business software make me laugh (and then not subscribe). They'll compare the cost for an ongoing subscription today with the cost of buying every new version before, ignoring the fact that new versions before might not have been a big advance and plenty of customers probably only upgraded every other version or less, or in some cases not at all.
  - alex7o 9y ago
    There are people who have bought Skyrim more than once.
  - falcolas 9y ago
    There's another option to "keep building new features for an existing app": Take your expertise and apply it to a new app. Why keep all your eggs in a single bucket when you have a great opportunity to diversify and not risk pissing off your customers with pricing changes?
_pmf_ 9y ago
Web and app developers have pushed hard to obsolete mature desktop software that costs money with low effort MVPs that have a subset of functionality, but are cheap. Now they have established a new, lower baseline for quality, they switch and want to have proper money for their low quality product.
Silhouette 9y ago
This seems to be happening much more with mobile apps than desktop software, and I can't help feeling this is partly a response to not being able to charge a serious price for a serious app as a one-off. In mobile world, apps cost a few dollars at most. That's just how it is, because everything in the early days was quick and cheap and that set the market's expectations. It doesn't matter that you needed to spend a billion dollars in R&D and your app is the secret to eternal life, if it's more than $1.99, it's too expensive and the bad reviews will pour in. So if you really are building something that is expensive but worth it, you need to disguise the price, and thus almost everything serious uses either in-app purchases or a subscription model to avoid the scary number. Compare this to the world of professional software, where it's almost the other way around. Businesses are used to spending lots of money on software, because it makes them more money in return, but they won't do so lightly. To get businesses to pay on a subscription basis, even the biggest names in the industry have had to set their subscription levels at a tiny fraction of the previous cost for a one-off purchase, because businesses will do the sums and won't take the deal if it's going to work out too expensive.
- tonyedgecombe 9y ago
  It seems to be happening in desktop as well, I was looking for some bookkeeping software and it has all shifted to subscriptions in the last couple of years.
  - Silhouette 9y ago
    There are definitely moves in that direction on desktop as well, for sure. Microsoft, Adobe and Autodesk are some of the big names that traditionally made expensive business software and increasingly rely on subscriptions (and bulk licensing for larger businesses, though in itself that's nothing new). No doubt there are many smaller players trying to follow the same path, though I find it interesting that other smaller players are starting to compete based on not having the downsides of a subscription. It seems the market is big enough for both variations, at least in some areas.
rtpg 9y ago
The example apps that this person gives seem to prove subscription models being a good alternative more than anything Guardian for 2.50 a month. How much did newspapers cost? 10 a month for VPN service. You have to rent a server right? 80 bucks for Dropbox a year. How much does that external terabyte hard drive cost, let alone the syncing feature. Not to mention that a lot of stuff is in easily exportable formats.... There's always going to be one off apps, but most of this stuff is too nice to be supported by one off purchases (far before it's considered "done"). Paying 100 dollars a month for premium software when we spend all our time in our computer is ... Fine I think. Though the counterargument is that I wouldn't spend 100 bucks a month on chairs.
- tomc1985 9y ago
  Subscription services are blatant rent-seeking. Startups should be ashamed to have their hands out like common street hawkers. I don't care if there are recurring monthly expenses for your company to meet, you used to be able to buy software and now, increasingly, you can't. We are very quickly heading down the path to a full-blown renteer class, who don't own anything and live at the mercy of their myriad service providers, who by-the-way seem more concerned with their perverted version of 'innovation' then customer satisfaction or avoiding product sunsets.
  - ryanwaggoner 9y ago
    That's not what rent-seeking means. They're adding value, not manipulating public policy, no regulatory, capture, etc. I think what you're trying to say is that they're charging more than you think they should. That's not what rent-seeking means. These apps are providing value and doing so under a subscription model. If you don't think they provide sufficient value, there are almost always loads of competitors. Additionally, it makes no sense to sell a lot of software under a one-time fee. There are significant ongoing costs for support, maintenance, servers, etc. It makes as much sense as selling one-time fee access to the grocery store.
    - tomc1985 9y ago
      In many (most, imo) cases the value added is minimal, sometimes added seemingly only to justify the monthly costs. And it is very much rent-seeking. How could you not describe big 5's lobbying activities as conducted at least partially for regulatory capture? Look who is in charge of the FTC and FCC, particularly that one kid that tried to act cool to tech geeks, what's-his-name. And that is not even what I meant by rent seeking. We are seeing a new kind, at least in tech: subjugation of consumers means of production, achieved by carefully dispensing bits through services instead of allowing customers to retain control of them (via un-drm'd media or downloads). The purpose of this change is to create more revenue for the owner.... which is rent-seeking. Similar things have been going on for years with consumer stables... DollarShaveClub's One Wipe Charlies (expensive) to replace toilet paper (cheap), or juicero (expensive) to replace a blender and fruit (cheap). Chemical cleaners (expensive) instead of centuries-old natural techniques (cheap) even when chemicals are inappropriate to the cleaning job. And so on...
ducttape12 9y ago
I've found the flipside of the subscription model; I'm actually able to use commercial software for free. Most subscription software has a free tier, and most of the time it's good enough for my needs. In the few cases where it isn't, thanks to having some technical knowledge, I'm able to string some utilities or services together to accomplish what I need.
forkLding 9y ago
I guess we can use a car buying model instead, either pay upfront for a lot or pay subscription until you dont want to or until the amount exceeds upfront payment, I think it will be easier to stomach for users.
wkrause 9y ago
If people are paying for a subscription then the market is clearing. Or in other words the customer has decided that they are better off with the service than without. I think part of why people dislike subscription models is due to the reduction of their personal consumer surplus. Under a one time purchase model, power users who get value out of a product for many years get a nice windfall. Users who only need or use the product for a shorter period of time have a smaller consumer surplus since they're paying the same price. A subscription model almost functions as a form of price discrimination. You end up charging more to those that get value out your product for a longer period of time. I'd imagine this has the effect of increasing producer surplus at the expense of consumer surplus. In theory every consumer has a one time price such that they would be indifferent between a perpetual model and the subscription model. The issue is there isn't a way for the supplier to segment the market in a way that is as efficient as the subscription model for every user. If you offer the two models together you create an adverse selection problem where only consumers who estimate a greater consumer surplus from the one time price will choose that option, lowering overall revenue for the supplier.
turowicz 9y ago
You either pay for each version of the software or a subscription in a SaaS model. I don't see anything wrong with that.

77 points by tzfld 9y ago

The problem is that the ios app store (not sure about play) does not offer a paid upgrade option. It is unrealistic to expect developers to toil away, improving software each year, using new platform features, all for no incremental income from existing users. I'm an app developer with a relatively successful app who spends about 1 minute every 6 months thinking about upgrading the app. No money, no honey.

deergomoo 9y ago
This is the biggest problem, really. Your three options are: subscription, which the article lists the problems with; publishing a new ‘My App 2’ on the store, which is confusing for users and unless your app stores nothing or is entirely cloud based, presents a migration path that is messy at best or; offer new features as in-app purchases, which, depending on the scale and nature of your app, can be incredibly complex or even impossible to do in a way that makes sense. I can’t see it being done because it goes agains the ‘simple’ principle of the App Store, but would be nice to be able to separate the concepts of bug/security fixes and featur updates to allow multiple concurrent versions to exist under the same entry.
thejosh 9y ago
What about new users? Wouldn't you want to keep improving to attract new users? Depends on your market though I guess.
- syllogism 9y ago
  Don't updates roll your review ratings, though? For user acquisition I'd rather be sitting on 500 reviews and a 4 star rating that point out some legit problems. That's better than releasing a new version and having the reviews reset to 0.
rcarmo 9y ago
I would gladly pay for upgrades - if they are reasonably priced, of course, and I don't mean for $5 apps. Some of the iOS apps I run cost me $15-$50 a pop, like Prompt, Coda, Working Copy and a few Omni apps. But I bought them _across a few years_, and I would rather buy food and books for my kids than spend $5-$10 monthly on a single app, _except_ when it is the front-end for a service I need (like Dropbox, which I still use). My approach to mobile apps is that I prefer to pay up-front and spend around $100 yearly (on average, discounting service-oriented apps) rather than pay $5 for _anything_ on a monthly basis - that allows me to buy one quality app per quarter, and avoid losing time and money on frilly apps and subscriptions I don't need. I think the real problem here is people making up useless "services" and wanting to turn their apps into niche shopfronts that will only ever reach a minuscule portion of their target base. (I will on occasion spend a few extra bucks on a quality game for the kids - or myself - too, but even then I've been avoiding anything with in-app purchases of any kind, and tend to go for promotions rather than new launches.) edit - typos
clumsysmurf 9y ago
Google Play doesn't have this either. It comes up year after year, and seems like an obvious omission ... but where there must be some conflict with Google's priorities.
ksec 9y ago
I think many have argued that an App is a product, and you dont upgrade your Washing Machine, Set Top Box or Routers etc, you buy a new one. Hence you buy a new App. That is all perfectly fine, but it turns out most users, ( Not developers or Geeks ) will only buy a new product when their product stop working or became OUT DATED. Since most App will continue to work for as long as it is, users have no incentive to buy a newer version. That is why developers wanted a Subscription model. It is hard to sell to its existing users pool, a rental model allow them to have a continuous revenue. With upgrade model, it is basically offering a discount for its existing users, instead of telling them to buy a New version. And it turns out, the more subscription Apps there is, the more i like the upgrade pricing model better.
scarface74 9y ago
There is a paid upgrade model that some publishers use, but it's a hack. Say they charged $5.99 for Foobar v.1 and then they also want to charge $5.99 for Foobar v.2 but allow their current customers to upgrade for $2.00. They keep both versions at $5.99 and sell an "app bundle" of both products for $7.99. That will allow current customers to pay $2.00. Of course the developer needs to put in big bold writing in the description of v.1 not to buy that product.

raffomania 9y ago

I'm hopeful that a Patreon-like donation model will prove successful for apps/products with a passionate userbase. Ulysses, as described in the article, does seem to have a pretty active community with a lot of people willing to pay.

tobltobs 9y ago
Maybe times will change but currently you are lucky if you waive less then 98% of your possible income if you use a donation model.
tonyedgecombe 9y ago
Begging for a few crumbs doesn't look like success to me.

binaryanomaly 9y ago

Imho the problem are not subscriptions per se but it’s how you treat your customers. If customers feel treated unfair and ripped off developers hopefully feel the churn. If the switch and the pricing is fair most people won’t mind in the longterm. Ulysses is imho a negative example how you should not do it. They were so much in love with themselves they completely failed to look at it also from a customers perspective (not everybody is a professional writer who purchased the expensive apps) which of course set up many people. Don‘t be evil, ignorant and arrogant...

rocqua 9y ago

At some point, an app is done or close to done. At that point, maintenance to keep the app compatible is all that is needed. So, the company should downscale. Only, companies don't. As such, the subscription pays for way more than simple upkeep. It pays for a large development team to continue to add features to an app that is essentially already done.

posguy 9y ago
This is caused by every VC demanding that their stable of startups all shoot for the moon and become multi-billion dollar companies. If moonshots weren't such a high priority, and instead startups focused on building a successful business, perhaps there wouldn't be so many dead startups. Doing a few tens of million a year in revenue isn't a terrible place to be after a few years!
- pbhjpbhj 9y ago
  If profit motive (aka greed) wasn't the primary driver of Western Capitalism ...
- ballenf 9y ago
  Taking (or seeking) VC means that you don't want to be a gradual, incrementally growing company.
fauigerzigerk 9y ago
That's true and not limited to paid apps either. Twitter spent over $700 million on research and development in 2016. They made a loss of over $450 million. To be fair, their R&D doesn't exclusively pay for an improved 140 character text box. It also goes towards staying attractive for advertisers and trying new ideas. But still, the gap between the rather modest progress that Twitter is making on any front and their enormous costs (not just on R&D) is striking.
josephg 9y ago
Yes, this is a constant sourse of amazement for me too! The chrome team at google is well over 1000 people. (The opensource code base now has over 800 committers). The initial release had 100 committers[1], so probably about as many man hours have gone into google chrome in the last year than were put into the project in its first ~5 years of existence or something. In the last year just shy of 1.5 million non-blank lines of code[2] have been added to the browser, which is more code than was in the whole browser when it was first launched, webkit included. But what does all that new code do?? I'd challenge anyone who's not a developer to name a single new feature added to chrome in the last year. I'm a web developer and I struggle to name more than 5 changes. Its easy to pick on chrome because the numbers are mostly-public. But the same is probably true of facebook.com, ms office and all sorts of other big company products. As features compound, the marginal value of each additional line of code added becomes vanishingly small. (All the really useful features have already been added, and project iteration gets much slower in big projects). There are thousands of engineers working on facebook.com. If they all quietly left and were never replaced, how long do you think it would take before anyone in the public would notice? 6 months? 1 year? Longer? And if thats the case, what a waste of that huge pool of talent. If you could leave your job without any of your users noticing or caring, what a waste of your education and your potential. Quit and start that company you've always been dreaming about starting. Go do literally anything of substance. [1] https://www.openhub.net/p/chrome/contributors/summary https://www.openhub.net/p/chrome/contributors/summary [2] https://www.openhub.net/p/chrome/analyses/latest/languages_summary https://www.openhub.net/p/chrome/analyses/latest/languages_s...

msmithstubbs 9y ago

Several of the app subscriptions listed appear to actually be subscriptions for content (Apple Music, The Guardian, Medium) while others are actual services being paid for (Dropbox).

TeMPOraL 9y ago

Apps are just a harbinger; this starts to happen everywhere else too. I dislike how our ever more efficient economy makes your capabilities and quality of life tied closer and closer to your instantaneous income. Instead of one-time purchases, more and more things are becoming money sinks now. This might be great for the perfect citizens - young, punctual, hard-working individuals steadily going up the corporate ladder - but it's incredibly annoying for everyone else. Any small hiccup in your cashflow, and suddenly you have to start cutting off parts of your life. It's tolerable now, because you still can own most of the things. But will it be 10 years from now? When because of e.g. sudden health expenses, you're left wondering whether to cancel dishwashing or clotheswashing service for a month, so that you don't have to cancel the service that feeds your kid at school? Will everything you "have", and everything you can do, be solely determined by the allocation of your cashflow to various available services?

posguy 9y ago
If you can't afford to pay someone to do something, you either do it yourself or it doesn't happen. This isn't particularly new, and if you look at most people's lives, they just aren't paying for every new thing as a service, if they pay for any PaaS at all.
- mantas 9y ago
  Like go for a walk instead of driving or wash clothes by hand?
pbhjpbhj 9y ago
Ha, it's like capitalism come to the home: means of production (of clean dishes) being removed from the common man to afford greater profits to the capitalists; seize back the means of production (the dishwasher)! Vive la Revolution!
fauigerzigerk 9y ago
That's an interesting point, but I doubt it's much worse than it is today if at all. Poor poeple can be in trouble when their car or washing machine gives up the ghost. So they buy a new one on credit. The monthly instalments are quite similar to a subscription model. I'm not sure which one is more expensive.

bitL 9y ago

This is the reason we need alternatives to iOS and Android - to allow real customer-centric mobile OS where users aren't held hostage. Would it be a big problem for OS manufacturers to add more options, such as paid upgrade that could retain access to previous version's settings instead of being completely sandboxed from it? Of course not. Would it be a problem to offer a year-long automatic upgrades while retaining the last version once payment runs off, instead of blocking access? Of course not. It's just greed, the need to have "predictable income" and to stuff it to the user that allows this to happen. Instead of trying out and buying an app as a one-off if I like it, I am not going to even look at a non-essential app that requires a subscription.

danieldk 9y ago

The trend of subscriptions seems to be accelerating, I think it is detrimental to the ISV ecosystem as a whole. I have bought many macOS applications in the last decade or so. And like so many others, I do not shun to spend 50 Euro or more on an app. However, as of recently I have been more restrained in buying applications, since it seems that they could switch to a subscription model at any random moment. Instead, I have been looking more and more at FLOSS alternatives. Even if their quality is sometimes not as good, the prospect of being able to use an application long-term makes them more attractive. Moreover, I have also started donating more to FLOSS developers as a result.

rcarmo 9y ago
Same here. I've increasingly started to use things like Darktable because I want to be sure I can use the same app for a decade or so (which is likely to be impossible in iOS, really, the way things are going).
ThomPete 9y ago
I run a successful app with one time payment and I thought about turning it into subscription. Instead I decided to keep it a one time payment and then instead will be offering subscription add ons for extra services. I hope that strikes a balance because I understand the issue from the customers side but also want to make a living out of it too.
- bitL 9y ago
  You can do both; one time payment for a major version for individual users and subscription for businesses. Just don't do subscription-only please.
  - danieldk 9y ago
    Indeed. Please do both! Microsoft has done this pretty well with Office. You can choose to get an Office 365 subscription or buy Office standalone. (Office 365 pricing is also extremely good for what you get, compared to most software subscriptions.)

jakobegger 9y ago

Who is your customer? Are you selling to a journalist that uses your app to write every day? Are your customers athletes that exercise 3 times a week? Then yes, go for it, charge for a subscription. Or do you have a long tail of „casual users“? Bloggers that write an article or two every month. Casual runners that want to track their weekend runs. Someone who wants to touch up vacation photos once a year. Then a subscription is unsuitable. Casual users will pay once for a premium app, especially if they expect to use it for a long time. But its gonna be hard to convince them to pay a monthly fee. Most apps will have a mix of regular and casual users. Just make sure to think of the different audiences your app has. Your business model will decide which of them you can keep.

koolba 9y ago
> Casual users will pay once for a premium app, especially if they expect to use it for a long time. But its gonna be hard to convince them to pay a monthly fee. I don't think so. It may not be as easy to convince as "just $1!" but I bet the customers will come. I also think they'll forget to cancel. That's where the real casual money is. Thousands of customers oblvious to the monthly fees. It's like gym memberships but without the high pressure sales tactics. The customer signs up, uses it for a a week, then gets billed monthly for the next year.
- pbhjpbhj 9y ago
  Are you promoting stealing people's money using the gym-membership model? It sounds like you are. That model is what you come to when you realise burglary doesn't scale.
  - koolba 9y ago
    > Are you promoting stealing people's money using the gym-membership model? It sounds like you are. I'm not promoting it. I'm calling it out as the natural progression of switching to a subscription model. When a customer sees "$1/month" vs. "$12/once" what they're really seeing is "$1" vs "$12". The apps on a subscription model will win out. > That model is what you come to when you realise burglary doesn't scale. It's not subscription themselves that are bad. It's selling a product that relies on your customer not using the product to be profitable. Limited space in the gym leads to overcrowding which incentives them to not have you come. The less you come, the less crowded it looks, the easier it is for them to sell memberships (i.e. subscriptions).

kitx 9y ago

Think the fairest model is one where you pay once for the app, updates are free for a set period of time, then you have to pay again to upgrade if you wish to. If not, the old version is yours indefinitely. Well aware that the App Stores do not offer this option, but it is possible if you implement your own billing system on macOS or Windows.

mherrmann 9y ago

For me, the determining factor is whether it costs the vendor something to provide the service. Running a server? Fair. An app that runs on my hardware? Not fair. Updates? Requires development effort, so totally fair. etc.

kuschku 9y ago

A major issue with this is that incomes are different in different places. Maybe to someone in Silicon Valley spending a hundred to two hundred bucks a month on a bunch of apps is reasonable, but to a student that has less than 50 bucks left after rent and groceries (and might need to buy new clothes sometimes, too), this is ridiculous. It’s a similar issue with the completely ridiculously priced smartphones. Android often loves breaking their APIs, so you need to test the new releases on a physical phone before they’re public. Google now dropped the Nexus phones, so that means you need a Google Pixel. The cheapest Google Pixel is 900$ in Germany. How the hell am I supposed to pay for that? Or is App Development now supposed to only be a thing for big businesses?

yjftsjthsd-h 9y ago
> you need to test the new releases on a physical phone Why not use the emulator?
- kuschku 9y ago
  Because that doesn’t expose issues that appear with the UI gestures, or some interactions. I’ve tried with the emulator, but it never is the same as the real device, and you just can’t test pinch-zo-zoom for example on an emulator.
  - dogma1138 9y ago
    You can use any android device to send multi-touch, gestures and sensors events to the emulator: http://tools.android.com/tips/hardware-emulation http://tools.android.com/tips/hardware-emulation Android Emulator also has been supporting "multi touch" via the mouse and keyboard for a while now, IIRC it's alt+click. Android devices that run stock android and get monthly updates can be bought for under 150 and even 100 EUR e.g. WilleyFox.
    - kuschku 9y ago
      > Android devices that run stock android and get monthly updates can be bought for under 150 and even 100 EUR e.g. WilleyFox. Yes, sure, and I’ve still got my Nexus 5X – but Google only provides the preview releases for the Pixel devices from now on, all other devices only get those after release.

Walkman 9y ago

I really like 1Password's old model for a user point of view; they asked money for every new major version of 1Password, but old version bug fixes were free. This way, if you needed the new features or newer OS support, you could pay for the new major version (same as buying a new suit) or you could use the old version if it was fine for you. This model is fair, but still generates more income for the developers from loyal users who upgrade.

Silhouette 9y ago
That's how most software used to work. You paid for the big new versions, but if you had one already, you might get minor updates for free either from the Internet or even going back a bit further from the cover disc on the front of a magazine or a BBS. The thing is, that model relies on the big upgrades being sufficiently attractive to users that they will pay more money just to get the new features. It's clear what you're getting and what you're paying for it. That works well if you keep making big steps forward with whatever your software does that are valuable to your users. It doesn't work so well if all you've got to offer is a few incremental refinements that don't much change the value of your product. As others have been mentioning, sometimes software is essentially complete, and this way you can't just keep selling something that's done to the same customer over and over again. This is why some of these calculations about the cost effectiveness of subscriptions for business software make me laugh (and then not subscribe). They'll compare the cost for an ongoing subscription today with the cost of buying every new version before, ignoring the fact that new versions before might not have been a big advance and plenty of customers probably only upgraded every other version or less, or in some cases not at all.
- alex7o 9y ago
  There are people who have bought Skyrim more than once.
- falcolas 9y ago
  There's another option to "keep building new features for an existing app": Take your expertise and apply it to a new app. Why keep all your eggs in a single bucket when you have a great opportunity to diversify and not risk pissing off your customers with pricing changes?

_pmf_ 9y ago

Web and app developers have pushed hard to obsolete mature desktop software that costs money with low effort MVPs that have a subset of functionality, but are cheap. Now they have established a new, lower baseline for quality, they switch and want to have proper money for their low quality product.

Silhouette 9y ago

This seems to be happening much more with mobile apps than desktop software, and I can't help feeling this is partly a response to not being able to charge a serious price for a serious app as a one-off. In mobile world, apps cost a few dollars at most. That's just how it is, because everything in the early days was quick and cheap and that set the market's expectations. It doesn't matter that you needed to spend a billion dollars in R&D and your app is the secret to eternal life, if it's more than $1.99, it's too expensive and the bad reviews will pour in. So if you really are building something that is expensive but worth it, you need to disguise the price, and thus almost everything serious uses either in-app purchases or a subscription model to avoid the scary number. Compare this to the world of professional software, where it's almost the other way around. Businesses are used to spending lots of money on software, because it makes them more money in return, but they won't do so lightly. To get businesses to pay on a subscription basis, even the biggest names in the industry have had to set their subscription levels at a tiny fraction of the previous cost for a one-off purchase, because businesses will do the sums and won't take the deal if it's going to work out too expensive.

tonyedgecombe 9y ago
It seems to be happening in desktop as well, I was looking for some bookkeeping software and it has all shifted to subscriptions in the last couple of years.
- Silhouette 9y ago
  There are definitely moves in that direction on desktop as well, for sure. Microsoft, Adobe and Autodesk are some of the big names that traditionally made expensive business software and increasingly rely on subscriptions (and bulk licensing for larger businesses, though in itself that's nothing new). No doubt there are many smaller players trying to follow the same path, though I find it interesting that other smaller players are starting to compete based on not having the downsides of a subscription. It seems the market is big enough for both variations, at least in some areas.

rtpg 9y ago

The example apps that this person gives seem to prove subscription models being a good alternative more than anything Guardian for 2.50 a month. How much did newspapers cost? 10 a month for VPN service. You have to rent a server right? 80 bucks for Dropbox a year. How much does that external terabyte hard drive cost, let alone the syncing feature. Not to mention that a lot of stuff is in easily exportable formats.... There's always going to be one off apps, but most of this stuff is too nice to be supported by one off purchases (far before it's considered "done"). Paying 100 dollars a month for premium software when we spend all our time in our computer is ... Fine I think. Though the counterargument is that I wouldn't spend 100 bucks a month on chairs.

tomc1985 9y ago
Subscription services are blatant rent-seeking. Startups should be ashamed to have their hands out like common street hawkers. I don't care if there are recurring monthly expenses for your company to meet, you used to be able to buy software and now, increasingly, you can't. We are very quickly heading down the path to a full-blown renteer class, who don't own anything and live at the mercy of their myriad service providers, who by-the-way seem more concerned with their perverted version of 'innovation' then customer satisfaction or avoiding product sunsets.
- ryanwaggoner 9y ago
  That's not what rent-seeking means. They're adding value, not manipulating public policy, no regulatory, capture, etc. I think what you're trying to say is that they're charging more than you think they should. That's not what rent-seeking means. These apps are providing value and doing so under a subscription model. If you don't think they provide sufficient value, there are almost always loads of competitors. Additionally, it makes no sense to sell a lot of software under a one-time fee. There are significant ongoing costs for support, maintenance, servers, etc. It makes as much sense as selling one-time fee access to the grocery store.
  - tomc1985 9y ago
    In many (most, imo) cases the value added is minimal, sometimes added seemingly only to justify the monthly costs. And it is very much rent-seeking. How could you not describe big 5's lobbying activities as conducted at least partially for regulatory capture? Look who is in charge of the FTC and FCC, particularly that one kid that tried to act cool to tech geeks, what's-his-name. And that is not even what I meant by rent seeking. We are seeing a new kind, at least in tech: subjugation of consumers means of production, achieved by carefully dispensing bits through services instead of allowing customers to retain control of them (via un-drm'd media or downloads). The purpose of this change is to create more revenue for the owner.... which is rent-seeking. Similar things have been going on for years with consumer stables... DollarShaveClub's One Wipe Charlies (expensive) to replace toilet paper (cheap), or juicero (expensive) to replace a blender and fruit (cheap). Chemical cleaners (expensive) instead of centuries-old natural techniques (cheap) even when chemicals are inappropriate to the cleaning job. And so on...

ducttape12 9y ago

I've found the flipside of the subscription model; I'm actually able to use commercial software for free. Most subscription software has a free tier, and most of the time it's good enough for my needs. In the few cases where it isn't, thanks to having some technical knowledge, I'm able to string some utilities or services together to accomplish what I need.

forkLding 9y ago

I guess we can use a car buying model instead, either pay upfront for a lot or pay subscription until you dont want to or until the amount exceeds upfront payment, I think it will be easier to stomach for users.

wkrause 9y ago

If people are paying for a subscription then the market is clearing. Or in other words the customer has decided that they are better off with the service than without. I think part of why people dislike subscription models is due to the reduction of their personal consumer surplus. Under a one time purchase model, power users who get value out of a product for many years get a nice windfall. Users who only need or use the product for a shorter period of time have a smaller consumer surplus since they're paying the same price. A subscription model almost functions as a form of price discrimination. You end up charging more to those that get value out your product for a longer period of time. I'd imagine this has the effect of increasing producer surplus at the expense of consumer surplus. In theory every consumer has a one time price such that they would be indifferent between a perpetual model and the subscription model. The issue is there isn't a way for the supplier to segment the market in a way that is as efficient as the subscription model for every user. If you offer the two models together you create an adverse selection problem where only consumers who estimate a greater consumer surplus from the one time price will choose that option, lowering overall revenue for the supplier.

turowicz 9y ago

You either pay for each version of the software or a subscription in a SaaS model. I don't see anything wrong with that.