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At the time of this writing, all of the comments here are focused on content, but I want to touch on the author's bit about software: > It’s not just Bloomberg

At the time of this writing, all of the comments here are focused on content, but I want to touch on the author's bit about software: > It’s not just Bloomberg and media — it’s software too. I used to write everything in Ulysses, a syncing Markdown editor for OS X and iOS. I paid $70 to buy the apps, but then the company switched to a $40 a year annual subscription, and as the dozens of angry reviews and comments illustrate, that price is vastly out of proportion from the cost of providing the software (which I might add, is entirely hosted on iCloud infrastructure). I have noticed this as well, that a not-small number of software programs have turned from "give us one money for this version" to "give us slightly smaller amount of one money per month, but do it in perpetuity if you want to keep going with the data you've entered." That, to me, is crap and is incredibly frustrating, especially when the subscription model is coupled with a data lockout threat. A task manager, a word processor, even a drawing program...none of these ought to require a subscription to be able to use. Sure, have a subscription service for something that needs upkeep, like a syncing service (but get out of here if all you do is just lump it into the user's iCloud storage) or a data feed. But it's almost insulting to say "we used to charge you $50 once, now we're charging you $29.95 per month forever (if you want to see those notes in two years, and no, we don't have a data takeout API); it's such a deal!"

baxtr 8y ago
True. A subscription to Office 365 comes down to 99 Euros per years. Of course you’d pay maybe 150 every three years or so for a new version back in the days, but still that’s double. Also, I wonder whether this will lead to a slower development of the software. Before you’d have to create a leap forward to impress people to buy the new version, if the old version was still good enough.
- techsupporter 8y ago
  I like that you mentioned Office 365 because I see that as "subscription done right." You can still buy perpetual licenses for the components of Office, you can easily store the data you created with those components locally, and if you stop paying for Office-as-a-subscription the same programs still let you view (but not edit) your data. Carrot Weather App is another good one. Pay $5 once to get a really polished weather app with some basic "cloud" functions thrown in, like notifications to a phone device, some fun "achievements," and a pretty good weather data feed. If you want the super-accurate feed or if you want more advanced notifications and mobile device access (e.g. repeatedly on your Apple Watch), pay up for the subscription because it costs the dev more. And, if you stop paying, that $5 you initially paid is still valuable because the underlying app still works.
  - wernercd 8y ago
    Jetbrains also has it done "right" I think... yearly license fee... and the version at the time of payment is "perpetual" while you get to continue getting updates as long as your license is "current". Stop paying? When you aren't "current" you can either pay up... or downgrade to your perpetual version "owned".
    - deleted 8y ago
      [deleted]
  - gergles 8y ago
    Conversely, I find Carrot Weather ridiculous when Dark Sky is $4 one time and uses the exact same data source. They (DS) don't try to gouge you for Apple Watch features, which I interpret as "they're probably rich so why not?" $4 a year (or $10, if you don't dismiss the 'ultrapremium club' popup and buy that by mistake) plus the $5 one time is not remotely what I would consider worth paying for a weather app unless Carrot was out in the wild building weather stations. You'll also note that Carrot's website nor App Store description even mention the existence of this buy-up (except on the support page - but why would I look at the support page for an app I was thinking about buying?) or the pricing. They also deceptively show a photo of the Apple Watch showing weather, which is technically correct (the best kind of correct) - but the Apple Watch doesn't update in the background (or give you weather notifications) unless you pay for a subscription. Because weather apps that don't update are really useful. Also, it doesn't "cost the dev more" to send updates to a watch instead of the phone (they're going through the phone anyway,) so I don't buy your justification for paying more for it. It's just a way to market segment and try to scam more money from people who have already paid above market for a weather app. You get Weather Underground data with the 'cheap' sub... but only on the phone. If you want it on the watch, you have to get the expensive sub. This also makes no sense. There's no way in hell wxug is charging extra based on the target device.
- danieldk 8y ago
  It is also surprising how much other subscriptions cost compared with Office 365. Office 365 contains the most complete office suite in existence, probably larger than many operating systems. It also includes 1TB of OneDrive, and free monthly Skype minutes. And the 99 Euros that you quote are for five persons. Most subscription software is a terrible deal in comparison. I have tried to avoid subscription software as much as possible. But we have a family subscription for 1Password because $REASONS. We pay $60 per year for (in comparison to Office) a small software product, with small cloud storage, of which we only need a couple of megabytes for storing encrypted passwords. Also, I wonder whether this will lead to a slower development of the software. Most likely. Once you are locked into some proprietary data format, it is often more expensive to move to an alternative, and it is easier to subscribe. Once a substantial part of the user base has a subscription, there is no more need to entice users with a new version. Subscription software does not benefit the user.
  - wernercd 8y ago
    > Subscription software does not benefit the user. Depends on software, subscription and benefits... I think Office and Jetbrains are softwares done "right". They continually release updates - quarterly?... continually add new features... I think more companies get it "wrong" than get it "right"... but done right, the company has reasons to keep developing - no new stuff? no continued monies. no new monies.
  - AJ007 8y ago
    There was some low hanging fruit for companies to create subscription plans who shouldn’t have been adding them. The more subscriptions your target customer has, the harder it is to convert them on the new one. For the business side the ceiling is a lot higher, but for consumers there is a very low limit. Each market is different, but when I look at an area like Photoshop or Illustrator, the competition keeps getting better. In some areas they aren’t even competing. The workflow of a game artist will have them going through a bunch of different products to get to an end result. A lot of those steps can have alternatives. If a vendor has some proprietary format that doesn’t work with anything else they never even get a user base. If a subscription is funding continuous development, and th company is doing a good job, and I use the software daily it doesn’t bother me. If I use it twice a year, I’m going to be looking hard at alternatives.
- krylon 8y ago
  > Also, I wonder whether this will lead to a slower development of the software. Before you’d have to create a leap forward to impress people to buy the new version, if the old version was still good enough. I am not sure if that would be bad, though. Often enough, I feel that software vendors either just change the UI so they can show non-technical people how "improved" their new version is (MS Office), or they introduce arbitrary incompatibilities, so you need the most recent version to edit files that have been created/modified with that new version (I'm looking at you, Autodesk!). With a subscription model, at least these vendors could focus on changes that actually provide value to their customers rather than making arbitrary changes just to make people buy a new version they might not really need.
- laythea 8y ago
  That is a good point, regarding the stunting of the software industry.
flanbiscuit 8y ago
edit: disregard my comment below, as others have reminded me, the yearly charge is for updates and will not stop you from using it completely if you decide not to renew it, you just don't get any more updates. So this isn't the best example > I have noticed this as well, that a not-small number of software programs have turned from "give us one money for this version" to "give us slightly smaller amount of one money per month, but do it in perpetuity if you want to keep going with the data you've entered." Like Sketch App which used to be just US$99[1] and is now US$99/year[2]. Although in this example, "slightly smaller" doesn't apply 1. https://web.archive.org/web/20160416212244/http://sketchapp.com/ https://web.archive.org/web/20160416212244/http://sketchapp.... 2. https://www.sketchapp.com/pricing/ https://www.sketchapp.com/pricing/
- cridenour 8y ago
  After that year, you get to keep using the product and your files though. You're just paying for updates.
- RandomBookmarks 8y ago
  But the website says: Your license comes with a year’s worth of updates. Once that year is up, you can keep using the last version of Sketch you downloaded, forever. That sounds ok to me.
  - 3pt14159 8y ago
    What happens if there is a security hole in your version?
    - Something1234 8y ago
      Air gap it.
    - sametmax 8y ago
      I don't know about any software that is supported indefinitely. One day you need to upgrade, it's fair enough.
JustSomeNobody 8y ago
> Sure, have a subscription service for something that needs upkeep, like a syncing service (but get out of here if all you do is just lump it into the user's iCloud storage) or a data feed. This. If you sell an app and service together, you can charge a recurring fee. If your app is more traditional, then a one time fee for the app is appropriate. Note, this does not mean that you can just add a service willy nilly like and start charging a recurring fee. That's crap.
- icebraining 8y ago
  That's crap is not exactly a great reason for why one can or can't do something. I'm reading a lot of people with strong opinions, but I'd like to see the reasoning behind them.
  - JustSomeNobody 8y ago
    A restaurant has some really popular plates, fancy looking things. Owner sees a way to generate revenue, so he sells the plates for $5 and every time you bring the plate back, you can refill it for $10 (which is a discount off normal prices). That's a pretty good deal for everyone, this is good. Alternatively, same restaurant has some really popular plates, fancy looking things. Owner sees a way to generate revenue, so he sells the plates for $5 and a recurring fee of $1 per month. That's it, nothing else. Why would I want this? What's in it for me?
    - deleted 8y ago
      [deleted]
    - icebraining 8y ago
      Why would I want this? What's in it for me? Why must there be something for you? The thing in it for you is the same as before: the plates. If they're no longer worth it for you, that's fine, but that's the same if the owner had kept the same model but simply raised the prices or reduced the size of portions. I don't see why that's "crap" or "inappropriate". The only exception I see is people who already bought a plate; I fully agree they should be allowed to keep using it as-is for free, since otherwise that's a breach of an existing agreement. But there's no such agreement between the owner and prospective buyers.
always_good 8y ago
One-time payments for software amount to a pyramid scheme where you benefit from the money of future users. That's not without its downsides either, where your userbase grows indefinitely yet doesn't pay for its own support-email rent. There's obviously a middle ground, like being able to at least use the version you paid for indefinitely but having to pay a smaller price to upgrade. But which direction a pricing structure goes also depends a lot on the niche and type of software. Citing the worst examples of "subscription abuse" isn't really an argument either. Of course you can find examples on each end of a spectrum. But as far as most software pricing goes, if it's so bad, then people wouldn't pay.
- bastawhiz 8y ago
  There's a difference between charging for updates and charging for continued use. What if Sublime Text started charging a monthly fee just to use it? There's no excuse. > But as far as most software pricing goes, if it's so bad, then people wouldn't pay. And yet people keep paying ransomware for access to their important files.
  - xab9 8y ago
    Like Webstorm? I do feel that I get value for my money and with the yearly fee I get all the updates (which are important in the ever changing world of web development), but sometimes it still feels like protection racket.
    - Bishonen88 8y ago
      no, not like webstorm. Webstorm is pretty similar to sublime text. You pay a price for a perpetual license. After one year of use, you can decide whether you keep on using the 'old' version, or if you pay again to have the newest one with all the updates. I think the comment you were referring to was thinking about stuff like adobe, where if you don't pay, you don't get anything.
      - xab9 8y ago
hedora 8y ago
The real innovation of the *aaS model is that you no longer need to compete with prior versions of your own software or hardware infrastructure. You can hike prices, cut engineering costs, cut some nines off your availability, defeature, or just plain embrace incompetence, and, in the short term, it will improve your balance sheet. Of course, in the long term, customers will revolt, and do so swiftly, and without mercy.
- jjeaff 8y ago
  I don't know. I think a lot of people have decided they like things like the Adobe products subscription. Instead of the several thousand dollars you would have had to pay for the various softwares in the lineup up front, you just pay $50 a month. Which is reasonable of you previously used more than just Photoshop and maybe upgraded every 3 to 4 years. If the end result is a similar cost, I would much rather keep my capital in the business and make a monthly payment.
  - tonyedgecombe 8y ago
    There are some benefits in terms of product as well, if Adobe knows they have subscription revenue then they may be more focussed on fixing bugs and keeping existing customers than adding dubious features in an attempt to get upgrade revenue.
  - jakobegger 8y ago
    But 50€ a month is way too much for casual users. I do some vector design work maybe once a month. I'd love to buy a license for Illustrator, if it cost whatever it used to cost before Creative Cloud. I would use it for a long time. But 50€ per month is too much. So I bought a license for Affinity Designer instead. It covers most of my needs, and it's no subscription. I also bought a license for Sketch, since the subscription is optional. I'd love to use the same tools as professional designers, but they've become too expensive.
    - madeofpalk 8y ago
      They never became more expensive. They were extremely expensive to begin with and now they’re a lot cheaper. Previously it was like 500€ or so? That's too much for the casual user as well. Here’s the reality. I used to pirate Adobe software because there was no way I was going to pay 1500k or whatever Photoshop was. Adobe got $0 from me. Now I subscribe to get access to Photoshop. Adobe now gets £100 from me a year. I’m not the only person I know who went through this. Of course, cheaper alternatives always existed. Adobe’s adoptance of subscription pricing hasn’t changed that.
ada1981 8y ago
I’ve been really stoked with Adobes offering around this, full access to all their products for $30 a month or so.
- siidooloo 8y ago
  Except, if the only app you need is photoshop you can own Affiniy Photo for $30. Or, you can own Affinity Design for $30. And this one is the real kicker, Blackmagic is giving away most of what you need for free, and if you need more you can get a permanent license for a few hundred bucks. How long do you think it will be before Adobe starts really bleeding.
  - madeofpalk 8y ago
    Adobe has had cheaper competitors for ever - basically the only move it’s competitors have is to be cheaper. Adobe still exists.
    - siidooloo 8y ago
      In the past Adobe’s competition wasn’t as good. Now, the competitors products are just as good. In the past PS competitors lacked features pros needed like PMS spot channels/CMYK/LAB. Not anymore. And Resolve is very compelling in the video realm. Many of Adobe’s core products have languished at the same time as many of the features that set them apart in the past are become less differentiating. The photo editing/vector drawing space is becoming more commoditized.
      - bscphil 8y ago
        Which is the "just as good" alternative to Lightroom? I've found its tools to be astonishingly high quality. Adjustments have exactly the effect you expect them to, instead of something closely adjacent to what you expect. The spot remover is basically magical. RAW handling is top notch. I haven't seen anything at all that comes close on a cheaper model.
weavie 8y ago
From the developers perspective though it is way easier to run a business when your software is sold on a subscription basis. If you know to a decent level of accuracy how much income you have, you can easily work out how much you can afford to spend to keep running and growing the business. If you have no idea how much income you are going to make, stuff become a hell of a lot more complicated, unless you have a substantial cash reserve available - not a luxury that everyone has. The directors spend a hell of a lot more time running around banks begging for short term financing, cutting costs and planning out 100 different potential scenarios. If I had to run another business, I would definitely look to running some kind of subscription scheme..
- FPGAhacker 8y ago
  I get this, but how much more predictable are subscriptions? I mean, unless you are holding customers hostage with data lock-in, they are going to come and go. And if you get a reputation as a hostage holder, you will likely spawn competition that avoids your negatives. I’m sure you will get some residual low hanging fruit in the form of people that buy subscriptions and don’t care enough to cancel. Doesn’t seem like a winning business model though.
  - weavie 8y ago
    Indeed they are going to come and go. But, generally this will be to a much more predictable level that if you are relying on upfront sales. Unless you really mess up your product, if someone subscribed last month, you can generally predict that there is a, say, 95% chance that they will still be subscribed next month. If it is a one off payment, then you know you aren't getting any income from them and you just have to hope your sale people are going to do their job next month. It has nothing to do with lock in. That's a bit of a red herring. You can have just the same (or more) chance of a repeat subscriber by creating a really good product as you will with some kind of hostage strategy. As you say, not a winning business model. My experience here comes from more business to business where a months worth of expenses would be covered with 1-2 sales. I had times when the sales people would just disappear on extended unannounced holidays or decide to move to a different job without informing anyone. With our business strategy relying so heavily on upfront sales to maintain the cash flow, it was not a fun position to be in! Things may well be different with consumer products where sales volumes are in the thousands of units.
Sylos 8y ago
In the EU, the GDPR will make data takeout APIs (or some guy exporting as CSV and mailing it to you) mandatory.
- LeonM 8y ago
  Mandatory, yes, but the GDPR does not say it should be done for free. I offer data exports for all my services, so I'm compliant with the GDPR, but you will have to pay me for my time
  - icebraining 8y ago
    Careful, there, it does say that in Article 12, (5): "Information provided under Articles 13 and 14 and any communication and any actions taken under Articles 15 to 22 and 34 shall be provided free of charge". (Article 15 is the Right of access by the data subject.) You can only charge for subsequent copies or when "requests from a data subject are manifestly unfounded or excessive". -- See also the ICO FAQ on the subject: https://ico.org.uk/for-organisations/guide-to-the-general-data-protection-regulation-gdpr/individual-rights/right-of-access/ https://ico.org.uk/for-organisations/guide-to-the-general-da...
  - Jack5500 8y ago
    This is not the case. (Article 12 (5)) https://gdpr-info.eu/art-12-gdpr/ https://gdpr-info.eu/art-12-gdpr/
- chii 8y ago
  > data takeout APIs the data will be useless other than as a source of information. If you have data for an online vector editor, the vector data can be legally taken out via a common format (such as json), but there'll be no importers for this shape of data. Any business can easily construe a common machine readable format that's also completely custom, and unimportable anywhere else, to satisfy the letter of the law.
  - Sylos 8y ago
    If it's any sort of bigger service, competing services will implement their special format. If they frequently change this format to break those implementations or clearly make it much more complex than it needs to be, that can also have legal repercussions.
duxup 8y ago
I was looking at a piece of hardware, that had some software that runs with it. Same deal. You buy the hardware but if you want to use the app.... it's a subscription.
branchless 8y ago
> that price is vastly out of proportion from the cost of providing the software This is not how prices are set. They are set on the willingness and ability to pay. Water costs nothing to produce but if I have it all you will pay me everything you have. For example if their main competitor went bust and not a single atom changed inside this company, they could charge you more. Do they have a monopoly or is it hard to migrate? These are the conversations the people who set the price are having. They are not talking about people being upset if they still pay.
rgbrenner 8y ago
About Ulysses specifically... they say when they were charging a monthly fee their users still expected regular updates after they paid.. and that sales would spike after a release, then fall to an unsustainable level: https://medium.com/building-ulysses/why-were-switching-ulysses-to-subscription-47f80b07a9cd https://medium.com/building-ulysses/why-were-switching-ulyss... "that price is vastly out of proportion from the cost of providing the software" That's just an unfounded assumption by the author. He says he knows this, even though he doesn't know how many developers are working on it, what they get paid, how much time each release takes, how large the code base is, or how many users the product has. Essentially, he has made up a cost in his head, and decided that the costs must be less than his fantasy. For all we know, he's one of 2 users, and the cost for keeping his editor available is $100k/yr/user. This also completely ignores the fact that prices for software aren't generally set using cost plus pricing.
- beberlei 8y ago
  well, that is economics 101. consumers price goods by value, not by costs. if your costs are higher than consumers are willing to pay, then you will at some point go bankrupt.
  - freehunter 8y ago
    Exactly. No one cares what the product costs to make, they care what it costs from their own pocket. If the app isn't worth $40, then it doesn't have the features and/or the polish to have multiple full-time developers working on it. If the price people are willing to pay is lower than your cost of goods sold, lower your COGS or raise your value proposition. Those are the only options.
    - AceJohnny2 8y ago
      > If the app isn't worth $40 Ay, there's the rub. The problem is also related to price anchoring [1]: People [2] accepted the price of $70 for the perpetual value provided by the app (including cloud syncing), but balked at $40/year. The latter price makes the app more expensive over 2 years, and the developer promising updates doesn't have quite the impact to justify the change in the eyes of the angry customers. If the app initially cost, say, $160, maybe the newer pricing would've been better accepted. I hear Adobe and Microsoft are doing quite well with the subscription models... [1] https://en.wikipedia.org/wiki/Anchoring https://en.wikipedia.org/wiki/Anchoring [2] The people who bought it. This is important, because it ignores all the people who thought this wasn't good value. Maybe some of the initial non-purchasers became subscribers. Market analysis is hard.
AndrewKemendo 8y ago
There really isn't a better way to run a business (even if it's just a single app) than to get someone to pay you an amount on a fixed interval. It's predictable and generally weathers shocks pretty evenly. This is also why for most investors dividends are a big selling point - consistency. Even Apple somewhat relies on this, except it's been in 2 year intervals. It's the point of so called "planned obsolescence." So if you're an indie developer, you only have a few options. 1.Go through the rat trap of doing ads and trying to grow a huge userbase with marketing etc..., which everyone hates but most tolerate because it's free. 2. Charge a 1 time fee and hope that you price it right to support long term development and sustainment, knowing that you'll probably limit your market significantly. 3. Charge a recurring low(er) fee and draw a balance between losing a lot of very price sensitive people and having to run a marketing campaign and ad system. No good option there but subscription seems to have the most benefits. By the way, everything needs upkeep.
- madeofpalk 8y ago
  Seems weird to call Apple out for planned obsolescence considering their devices are generally supported by the manufacturer for considerably longer than the alternatives.
  - AndrewKemendo 8y ago
    It's not directly comparable, however the two year upgrade is what they really want people to do - after all it was pretty definitive that they were degrading experience as a trade off on the battery issue.
johnchristopher 8y ago
> I have noticed this as well, that a not-small number of software programs have turned from "give us one money for this version" to "give us slightly smaller amount of one money per month, but do it in perpetuity if you want to keep going with the data you've entered." Frankly, the writing has been on the wall for something like at least 10 years and surely came into life once Adobe announced the CS 5.5 subscription model in 2011.
anfogoat 8y ago
Ulysses has a custom markdown feature that I thought was great. The only problem was that you couldn't use it without opting in to use their own file based storage schema. So if you wanted to store your writings in "regular" files and sync them yourself etc., you couldn't use the custom markdown feature. I thought this was absolutely ridiculous since the custom markdown would have simply gotten written as plain text. I asked why they're limiting the user like that and got even more ridiculous response: apparently they didn't want other people to get confused in case I ever shared the files that were outside their own file based schema. This non sequitur infuriated me enough to ditch the software. None of it made any sense until they announced the subscription model.
wpietri 8y ago
A model I really like is the one IntelliJ uses. They encourage you to buy a subscription. But when you buy a year at once, you get a "perpetual fallback license" such that you can always keep using the version that is current when you buy: https://sales.jetbrains.com/hc/en-gb/articles/207240845-What-is-a-perpetual-fallback-license- https://sales.jetbrains.com/hc/en-gb/articles/207240845-What... That means I always will have access to my projects and to the level of functionality I start with. But I keep getting upgrades as long as I keep paying, and they get the steady revenue stream that means they don't have to play weird marketing games.
- maxxxxx 8y ago
  Developer Express has that too with their .NET components. We have dropped the subscription but are still using a version that's 3 years old but good enough for us.
- pythonaut_16 8y ago
  You also get the perpetual fallback license if you pay month to month for a year, for whatever version you had 12 months ago. E.g. I start paying month-to-month at 2016.2, after 12 months I have a license to 2016.2. But say after the first month, 2017.1 comes out. Then after 13 months I now have a license for 2017.1.
- rolleiflex 8y ago
  One thing that always rubbed me wrong about this is that, logically speaking, if you buy a license for a year, the perpetual fallback license should be the version you had at the end of the license, not the one that was on the market at the beginning of it. It doesn't really make sense the way they do it, and it feels like a particularly hamfisted attempt to grab an almost negligible amount of money, so I'm puzzled.
  - lultimouomo 8y ago
    It's not the negligible amount of money that matters. The trick is that at the end of your yearly subscription you have already upgraded to a newer version, so falling back to the perpetual license means downgrading, which is both often a practical problem and (perhaps most importantly) something that I think many have an emotional aversion to. I'm pretty sure that if the fallback license was to the most recent version you're entitled to during your subscription way more people would take leaps between the end of a subscription and the start of the next one (though Jetbrains offers you a further discount if you don't do so).
petra 8y ago
In general, software has zero marginal cost, so in theory, it's price should fall near zero due to competition. So why is the subscription market behave so different ? And what can be done about that ?
- jgmjgm 8y ago
  It's almost like the industry is not perfectly competitive...
- exolymph 8y ago
  Even with zero marginal cost, you can still have substantial fixed costs. And actually costs don't define prices — what the market will bear defines prices.
  - chii 8y ago
    > what the market will bear defines prices. only if there's no competition, or there are substantial barriers to entry (such as regulation).
- beefield 8y ago
  Well, one could argue that the price is near zero. It is very rare software product that does not have somehow usable open source competitor. Then what you are paying for is something else than the zero marginal cost basic functionality. Like support, branding, network effect rents or something else.
  - wowtip 8y ago
    Basically user's time invested. They know how to use the current software "I NEED Photoshop to do my job!!!". Even if some other software has the same or even slightly better abilities at a lower cost, the overall cost of switching is much greater. Especially if someone else is paying for the tools. Until some software appear that make user's competition more efficient and they are forced to learn new ways to not get out competed. Then the cycle starts all over again.
dgudkov 8y ago
Many economical models (including working 9 to 5, btw) came from the times of physical labor. At that time the part of labor was relatively small in the cost structure, and the part of materials was big. And since materials is a one-time expense, it was natural to have one-time pricing. In the knowledge-based industry such as software the cost of labor has the biggest share in cost structure. And unlike materials, the labor itself is a subscription. Social policies that make firing hard make it even more so. No wonder that revenue structure also tends to shift towards subscription-based models.
- AlexandrB 8y ago
  A less charitable analysis is that the software industry has failed to deliver reliable software so spectacularly that it requires constant upkeep from a team of professionals to maintain a text editor like Ulysses.
dredmorbius 8y ago
https://opensource.com/article/17/12/open-source-business-models https://opensource.com/article/17/12/open-source-business-mo...
cube2222 8y ago
I must say I actually love the subscription model that is becoming the de facto standard. If you sell a one time license to somebody there is no incentive for the seller to keep making the product better, to care keep caring for you. With a subscription model - especially a non-annually-paid one, they have to keep working to keep you. It's also a way more sustainable business model and probably the only thing which can replace ads in practice. If a service like facebook gets a load of money out of you per year, there's no way they would switch to a one-time fee instead. If it were to be replaced by a subscription though, then you're still a constant money flow for them, which would work much better.
- zerowellies 8y ago
  How many products need constant feature updates? Aside from security/compatibility there are plenty of products that already meet everything required of them (to near everyone). How many new features does a file manager need? An PDF reader? For Facebook - I don't think forced subscription would work. People would be forced to think about how much they value the service (a less ubiquitous one at that).
  - hk__2 8y ago
    > How many products need constant feature updates? Aside from security/compatibility there are plenty of products that already meet everything required of them (to near everyone). How many new features does a file manager need? An PDF reader? Do you have any example of file managers or PDF readers with a subscription-based model?
    - zerowellies 8y ago
      Adobe Acrobat Pro, Foxit Phantom PDF. I'll concede I can't think of a file manager though.
      - chrisseaton 8y ago
        But those are PDF editors, not PDF readers.
matchagaucho 8y ago
Price gouging will create opportunities for new entrants.
koonsolo 8y ago
On the other hand, since we are on HackerNews, this is a HUGE business opportunity. Some time ago I bought Affinity Designer because I don't want to pay Adobe for a subscription. And going back to that website, one of the first things they promote is "No subscription. Only €54.99". Seems obvious that any big player that is switching to subscription only, is leaving a gap for smaller companies that support people like us.
mijustin 8y ago
> Many founders choose SaaS simply because they want the recurring revenue. Just because you like the model as a founder, doesn’t mean it’s the right model for your customers! (from https://justinjackson.ca/saas/ https://justinjackson.ca/saas/)
SirHound 8y ago
The difference is you used to pay for a new version. Software 2 would be charged for another $50. Whereas now you pay for Software and it gets improved in perpetuity. It should be charged as such.
djsumdog 8y ago
Look at our old software from the past decades. Old archived documents sitting in some obscure presentation program like Harvard Graphics. Now imagine not being able to load that data at all, even though you have the save file and the program, because the licensing server literally no longer exists. Now imaging a world 15 years from now where Adobe totally goes under due to competitors making much better programs. Their servers go away and now, and you can't even start your licensed software without running it through a debugger and trying to crack the license check.
mrhappyunhappy 8y ago
One perfect example of a shitty conversion to subscription is the adobe suite.
Spooky23 8y ago
Ulysses is an egregious example as they cost more than MS Office in many cases, which is particularly noxious when you consider how little a markdown editor does in comparison. I’m always annoyed about whiny iOS developers complaint about how they cannot make money without obnoxious schemes like this or gambling mechanisms. Software ISVs in olden times had a tiny market, huge expenses around retail channels and distributors, etc. They made money.
koliber 8y ago
There is a difference between paying for tools that bring value, and discretionary spending. If I am paying for software that I use to be more efficient and increases my profits, I am OK with a subscription model, or whatever model is offered. This is, as long as the cost of the software is considerably lower than the value bump I get from using it. With discretionary spending, it takes a lot for me to buy a subscription. If I spend more than X% of a given month consuming what that subscription provides, I will consider buying it. Otherwise, I am fine not consuming that particular service at all. I subscribe to a few magazines and Spotify. I read content online from many sources, but will not buy a subscription to each one of them. None of them are valuable enough for me to subscribe. If there was a way to pay, say $20 per month, and have a set of credits that I could redeem at Washington Post, The Economist, New York Times, Bloomberg, etc, on a per-article basis (I make the decision after the first paragraph or two) I would jump at that right away. The system would need to be very user friendly and almost friction-free.
- chii 8y ago
  > If there was a way to pay, say $20 per month, and have a set of credits that I could redeem at Washington Post, The Economist, New York Times, Bloomberg, etc, on a per-article basis i think this model doesn't work (but i'm willing to be pleasantly surprised). Imagine you read 10 articles a day, 30 days a month. That's 300 articles - that's about 6.6 cents an article, spread across many different organizations. Those articles will need a readership in the 10,000's per article for any sort of return on investment with those sort of prices. Granted, a high quality article is going to be able to reach that, but there's limited time per person to read, and that 10 articles per day read is on the high end - most people read much less than that.
- dagw 8y ago
  If there was a way to pay, say $20 per month, and have a set of credits that I could redeem at Washington Post, The Economist, New York Times, Bloomberg, etc. blendle.com offers basically exactly what you're asking for. (Not in any way affiliated with the site, just an occasional user)
micheljansen 8y ago
The best model I know is the one used by Sketch (https://sketchapp.com/pricing/ https://sketchapp.com/pricing/): A year of updates. A lifetime of Sketch Your license comes with a year’s worth of updates. Once that year is up, you can keep using the last version of Sketch you downloaded, forever. * You can always open the files you have made * There is no incentive for feature creep caused by having to "sell" the next version to your current userbase every so often. * The developer does not have to keep supporting old versions forever.
- IA21 8y ago
  IMO this is much better than what IntelliJ does.
jwr 8y ago
> the company switched to a $40 a year annual subscription, and as the dozens of angry reviews and comments illustrate, that price is vastly out of proportion from the cost of providing the software As a software (SaaS) developer, I find this comment outright bizarre. I find it is hard to make a living with $50/month subscriptions, if you write niche software (and believe me, you DO write niche software, you are not Dropbox), much less support an entire company. Have you actually done the numbers before writing that "price is vastly out of proportion"? Just take the total cost (roughly 2x salary) of several people, divide by that $40/year and see how many subscriptions you come up with. I'm getting ~25000 subscriptions for 5 employees, just to break even, and we haven't even touched the marketing required to get 25000 subscriptions.
- WA 8y ago
  > that price is vastly out of proportion from the cost of providing the software Furthermore, only devs complain about the "proportion of providing the software". Didn't especially Indie devs here on HN take their time to learn the lessons of value-based pricing? I do charge monthly for my app. It's 30 bucks a year for a B2C app. Expensive some might say, fair for others. But I can at least confidently tell that most users use my app every single day. And people who won't use it for more than a few months came away way cheaper than if the one-time-fee was 30-40 bucks to start with. Oh and providing an app as a one-time-fee for $5 or some ridiculous undervalued price that is considered "acceptable" simply doesn't work in niches.
  - jwr 8y ago
    I think that most armchair-businesspeople underestimate the costs of running a business and overestimate the number of paying customers. It is particularly ironic, because they both do not want to pay for software themselves, and also think that masses of other people do want to pay for software. People tend to think that the costs of a software business are just the time of the single developer that writes the software. And they also calculate the cost of that time as what developers actually get as their salary. But this is not how you run a business, not by a long shot. This gap in understanding has been widening recently, because of the completely unsustainable app store pricing.
pc86 8y ago
It's frustrating, but people wouldn't do it if it didn't work. You will generally make far more money charging $5/mo forever than you will charging $50 once for identical software. Not to mention the steady cash flow. An extreme example, but I always pirated Photoshop (as did probably half the people who ever used Photoshop). But now I pay $60/mo for it and a bunch of the other Creative Suite apps. I never would have paid whatever the 4-figure price was even when I was getting paid to make graphics at work. But I'll gladly pay $60/mo to have access to everything now even though I don't get paid for any graphics or video work.

baxtr 8y ago

True. A subscription to Office 365 comes down to 99 Euros per years. Of course you’d pay maybe 150 every three years or so for a new version back in the days, but still that’s double. Also, I wonder whether this will lead to a slower development of the software. Before you’d have to create a leap forward to impress people to buy the new version, if the old version was still good enough.

techsupporter 8y ago
I like that you mentioned Office 365 because I see that as "subscription done right." You can still buy perpetual licenses for the components of Office, you can easily store the data you created with those components locally, and if you stop paying for Office-as-a-subscription the same programs still let you view (but not edit) your data. Carrot Weather App is another good one. Pay $5 once to get a really polished weather app with some basic "cloud" functions thrown in, like notifications to a phone device, some fun "achievements," and a pretty good weather data feed. If you want the super-accurate feed or if you want more advanced notifications and mobile device access (e.g. repeatedly on your Apple Watch), pay up for the subscription because it costs the dev more. And, if you stop paying, that $5 you initially paid is still valuable because the underlying app still works.
- wernercd 8y ago
  Jetbrains also has it done "right" I think... yearly license fee... and the version at the time of payment is "perpetual" while you get to continue getting updates as long as your license is "current". Stop paying? When you aren't "current" you can either pay up... or downgrade to your perpetual version "owned".
  - deleted 8y ago
    [deleted]
- gergles 8y ago
  Conversely, I find Carrot Weather ridiculous when Dark Sky is $4 one time and uses the exact same data source. They (DS) don't try to gouge you for Apple Watch features, which I interpret as "they're probably rich so why not?" $4 a year (or $10, if you don't dismiss the 'ultrapremium club' popup and buy that by mistake) plus the $5 one time is not remotely what I would consider worth paying for a weather app unless Carrot was out in the wild building weather stations. You'll also note that Carrot's website nor App Store description even mention the existence of this buy-up (except on the support page - but why would I look at the support page for an app I was thinking about buying?) or the pricing. They also deceptively show a photo of the Apple Watch showing weather, which is technically correct (the best kind of correct) - but the Apple Watch doesn't update in the background (or give you weather notifications) unless you pay for a subscription. Because weather apps that don't update are really useful. Also, it doesn't "cost the dev more" to send updates to a watch instead of the phone (they're going through the phone anyway,) so I don't buy your justification for paying more for it. It's just a way to market segment and try to scam more money from people who have already paid above market for a weather app. You get Weather Underground data with the 'cheap' sub... but only on the phone. If you want it on the watch, you have to get the expensive sub. This also makes no sense. There's no way in hell wxug is charging extra based on the target device.
danieldk 8y ago
It is also surprising how much other subscriptions cost compared with Office 365. Office 365 contains the most complete office suite in existence, probably larger than many operating systems. It also includes 1TB of OneDrive, and free monthly Skype minutes. And the 99 Euros that you quote are for five persons. Most subscription software is a terrible deal in comparison. I have tried to avoid subscription software as much as possible. But we have a family subscription for 1Password because $REASONS. We pay $60 per year for (in comparison to Office) a small software product, with small cloud storage, of which we only need a couple of megabytes for storing encrypted passwords. Also, I wonder whether this will lead to a slower development of the software. Most likely. Once you are locked into some proprietary data format, it is often more expensive to move to an alternative, and it is easier to subscribe. Once a substantial part of the user base has a subscription, there is no more need to entice users with a new version. Subscription software does not benefit the user.
- wernercd 8y ago
  > Subscription software does not benefit the user. Depends on software, subscription and benefits... I think Office and Jetbrains are softwares done "right". They continually release updates - quarterly?... continually add new features... I think more companies get it "wrong" than get it "right"... but done right, the company has reasons to keep developing - no new stuff? no continued monies. no new monies.
- AJ007 8y ago
  There was some low hanging fruit for companies to create subscription plans who shouldn’t have been adding them. The more subscriptions your target customer has, the harder it is to convert them on the new one. For the business side the ceiling is a lot higher, but for consumers there is a very low limit. Each market is different, but when I look at an area like Photoshop or Illustrator, the competition keeps getting better. In some areas they aren’t even competing. The workflow of a game artist will have them going through a bunch of different products to get to an end result. A lot of those steps can have alternatives. If a vendor has some proprietary format that doesn’t work with anything else they never even get a user base. If a subscription is funding continuous development, and th company is doing a good job, and I use the software daily it doesn’t bother me. If I use it twice a year, I’m going to be looking hard at alternatives.
krylon 8y ago
> Also, I wonder whether this will lead to a slower development of the software. Before you’d have to create a leap forward to impress people to buy the new version, if the old version was still good enough. I am not sure if that would be bad, though. Often enough, I feel that software vendors either just change the UI so they can show non-technical people how "improved" their new version is (MS Office), or they introduce arbitrary incompatibilities, so you need the most recent version to edit files that have been created/modified with that new version (I'm looking at you, Autodesk!). With a subscription model, at least these vendors could focus on changes that actually provide value to their customers rather than making arbitrary changes just to make people buy a new version they might not really need.
laythea 8y ago
That is a good point, regarding the stunting of the software industry.

flanbiscuit 8y ago

edit: disregard my comment below, as others have reminded me, the yearly charge is for updates and will not stop you from using it completely if you decide not to renew it, you just don't get any more updates. So this isn't the best example > I have noticed this as well, that a not-small number of software programs have turned from "give us one money for this version" to "give us slightly smaller amount of one money per month, but do it in perpetuity if you want to keep going with the data you've entered." Like Sketch App which used to be just US$99[1] and is now US$99/year[2]. Although in this example, "slightly smaller" doesn't apply 1. https://web.archive.org/web/20160416212244/http://sketchapp.com/ https://web.archive.org/web/20160416212244/http://sketchapp.... 2. https://www.sketchapp.com/pricing/ https://www.sketchapp.com/pricing/

cridenour 8y ago
After that year, you get to keep using the product and your files though. You're just paying for updates.
RandomBookmarks 8y ago
But the website says: Your license comes with a year’s worth of updates. Once that year is up, you can keep using the last version of Sketch you downloaded, forever. That sounds ok to me.
- 3pt14159 8y ago
  What happens if there is a security hole in your version?
  - Something1234 8y ago
    Air gap it.
  - sametmax 8y ago
    I don't know about any software that is supported indefinitely. One day you need to upgrade, it's fair enough.

JustSomeNobody 8y ago

> Sure, have a subscription service for something that needs upkeep, like a syncing service (but get out of here if all you do is just lump it into the user's iCloud storage) or a data feed. This. If you sell an app and service together, you can charge a recurring fee. If your app is more traditional, then a one time fee for the app is appropriate. Note, this does not mean that you can just add a service willy nilly like and start charging a recurring fee. That's crap.

icebraining 8y ago
That's crap is not exactly a great reason for why one can or can't do something. I'm reading a lot of people with strong opinions, but I'd like to see the reasoning behind them.
- JustSomeNobody 8y ago
  A restaurant has some really popular plates, fancy looking things. Owner sees a way to generate revenue, so he sells the plates for $5 and every time you bring the plate back, you can refill it for $10 (which is a discount off normal prices). That's a pretty good deal for everyone, this is good. Alternatively, same restaurant has some really popular plates, fancy looking things. Owner sees a way to generate revenue, so he sells the plates for $5 and a recurring fee of $1 per month. That's it, nothing else. Why would I want this? What's in it for me?
  - deleted 8y ago
    [deleted]
  - icebraining 8y ago
    Why would I want this? What's in it for me? Why must there be something for you? The thing in it for you is the same as before: the plates. If they're no longer worth it for you, that's fine, but that's the same if the owner had kept the same model but simply raised the prices or reduced the size of portions. I don't see why that's "crap" or "inappropriate". The only exception I see is people who already bought a plate; I fully agree they should be allowed to keep using it as-is for free, since otherwise that's a breach of an existing agreement. But there's no such agreement between the owner and prospective buyers.

always_good 8y ago

One-time payments for software amount to a pyramid scheme where you benefit from the money of future users. That's not without its downsides either, where your userbase grows indefinitely yet doesn't pay for its own support-email rent. There's obviously a middle ground, like being able to at least use the version you paid for indefinitely but having to pay a smaller price to upgrade. But which direction a pricing structure goes also depends a lot on the niche and type of software. Citing the worst examples of "subscription abuse" isn't really an argument either. Of course you can find examples on each end of a spectrum. But as far as most software pricing goes, if it's so bad, then people wouldn't pay.

bastawhiz 8y ago
There's a difference between charging for updates and charging for continued use. What if Sublime Text started charging a monthly fee just to use it? There's no excuse. > But as far as most software pricing goes, if it's so bad, then people wouldn't pay. And yet people keep paying ransomware for access to their important files.
- xab9 8y ago
  Like Webstorm? I do feel that I get value for my money and with the yearly fee I get all the updates (which are important in the ever changing world of web development), but sometimes it still feels like protection racket.
  - Bishonen88 8y ago
    no, not like webstorm. Webstorm is pretty similar to sublime text. You pay a price for a perpetual license. After one year of use, you can decide whether you keep on using the 'old' version, or if you pay again to have the newest one with all the updates. I think the comment you were referring to was thinking about stuff like adobe, where if you don't pay, you don't get anything.
    - xab9 8y ago

hedora 8y ago

The real innovation of the *aaS model is that you no longer need to compete with prior versions of your own software or hardware infrastructure. You can hike prices, cut engineering costs, cut some nines off your availability, defeature, or just plain embrace incompetence, and, in the short term, it will improve your balance sheet. Of course, in the long term, customers will revolt, and do so swiftly, and without mercy.

jjeaff 8y ago
I don't know. I think a lot of people have decided they like things like the Adobe products subscription. Instead of the several thousand dollars you would have had to pay for the various softwares in the lineup up front, you just pay $50 a month. Which is reasonable of you previously used more than just Photoshop and maybe upgraded every 3 to 4 years. If the end result is a similar cost, I would much rather keep my capital in the business and make a monthly payment.
- tonyedgecombe 8y ago
  There are some benefits in terms of product as well, if Adobe knows they have subscription revenue then they may be more focussed on fixing bugs and keeping existing customers than adding dubious features in an attempt to get upgrade revenue.
- jakobegger 8y ago
  But 50€ a month is way too much for casual users. I do some vector design work maybe once a month. I'd love to buy a license for Illustrator, if it cost whatever it used to cost before Creative Cloud. I would use it for a long time. But 50€ per month is too much. So I bought a license for Affinity Designer instead. It covers most of my needs, and it's no subscription. I also bought a license for Sketch, since the subscription is optional. I'd love to use the same tools as professional designers, but they've become too expensive.
  - madeofpalk 8y ago
    They never became more expensive. They were extremely expensive to begin with and now they’re a lot cheaper. Previously it was like 500€ or so? That's too much for the casual user as well. Here’s the reality. I used to pirate Adobe software because there was no way I was going to pay 1500k or whatever Photoshop was. Adobe got $0 from me. Now I subscribe to get access to Photoshop. Adobe now gets £100 from me a year. I’m not the only person I know who went through this. Of course, cheaper alternatives always existed. Adobe’s adoptance of subscription pricing hasn’t changed that.

ada1981 8y ago

I’ve been really stoked with Adobes offering around this, full access to all their products for $30 a month or so.

siidooloo 8y ago
Except, if the only app you need is photoshop you can own Affiniy Photo for $30. Or, you can own Affinity Design for $30. And this one is the real kicker, Blackmagic is giving away most of what you need for free, and if you need more you can get a permanent license for a few hundred bucks. How long do you think it will be before Adobe starts really bleeding.
- madeofpalk 8y ago
  Adobe has had cheaper competitors for ever - basically the only move it’s competitors have is to be cheaper. Adobe still exists.
  - siidooloo 8y ago
    In the past Adobe’s competition wasn’t as good. Now, the competitors products are just as good. In the past PS competitors lacked features pros needed like PMS spot channels/CMYK/LAB. Not anymore. And Resolve is very compelling in the video realm. Many of Adobe’s core products have languished at the same time as many of the features that set them apart in the past are become less differentiating. The photo editing/vector drawing space is becoming more commoditized.
    - bscphil 8y ago
      Which is the "just as good" alternative to Lightroom? I've found its tools to be astonishingly high quality. Adjustments have exactly the effect you expect them to, instead of something closely adjacent to what you expect. The spot remover is basically magical. RAW handling is top notch. I haven't seen anything at all that comes close on a cheaper model.

weavie 8y ago

From the developers perspective though it is way easier to run a business when your software is sold on a subscription basis. If you know to a decent level of accuracy how much income you have, you can easily work out how much you can afford to spend to keep running and growing the business. If you have no idea how much income you are going to make, stuff become a hell of a lot more complicated, unless you have a substantial cash reserve available - not a luxury that everyone has. The directors spend a hell of a lot more time running around banks begging for short term financing, cutting costs and planning out 100 different potential scenarios. If I had to run another business, I would definitely look to running some kind of subscription scheme..

FPGAhacker 8y ago
I get this, but how much more predictable are subscriptions? I mean, unless you are holding customers hostage with data lock-in, they are going to come and go. And if you get a reputation as a hostage holder, you will likely spawn competition that avoids your negatives. I’m sure you will get some residual low hanging fruit in the form of people that buy subscriptions and don’t care enough to cancel. Doesn’t seem like a winning business model though.
- weavie 8y ago
  Indeed they are going to come and go. But, generally this will be to a much more predictable level that if you are relying on upfront sales. Unless you really mess up your product, if someone subscribed last month, you can generally predict that there is a, say, 95% chance that they will still be subscribed next month. If it is a one off payment, then you know you aren't getting any income from them and you just have to hope your sale people are going to do their job next month. It has nothing to do with lock in. That's a bit of a red herring. You can have just the same (or more) chance of a repeat subscriber by creating a really good product as you will with some kind of hostage strategy. As you say, not a winning business model. My experience here comes from more business to business where a months worth of expenses would be covered with 1-2 sales. I had times when the sales people would just disappear on extended unannounced holidays or decide to move to a different job without informing anyone. With our business strategy relying so heavily on upfront sales to maintain the cash flow, it was not a fun position to be in! Things may well be different with consumer products where sales volumes are in the thousands of units.

Sylos 8y ago

In the EU, the GDPR will make data takeout APIs (or some guy exporting as CSV and mailing it to you) mandatory.

LeonM 8y ago
Mandatory, yes, but the GDPR does not say it should be done for free. I offer data exports for all my services, so I'm compliant with the GDPR, but you will have to pay me for my time
- icebraining 8y ago
  Careful, there, it does say that in Article 12, (5): "Information provided under Articles 13 and 14 and any communication and any actions taken under Articles 15 to 22 and 34 shall be provided free of charge". (Article 15 is the Right of access by the data subject.) You can only charge for subsequent copies or when "requests from a data subject are manifestly unfounded or excessive". -- See also the ICO FAQ on the subject: https://ico.org.uk/for-organisations/guide-to-the-general-data-protection-regulation-gdpr/individual-rights/right-of-access/ https://ico.org.uk/for-organisations/guide-to-the-general-da...
- Jack5500 8y ago
  This is not the case. (Article 12 (5)) https://gdpr-info.eu/art-12-gdpr/ https://gdpr-info.eu/art-12-gdpr/
chii 8y ago
> data takeout APIs the data will be useless other than as a source of information. If you have data for an online vector editor, the vector data can be legally taken out via a common format (such as json), but there'll be no importers for this shape of data. Any business can easily construe a common machine readable format that's also completely custom, and unimportable anywhere else, to satisfy the letter of the law.
- Sylos 8y ago
  If it's any sort of bigger service, competing services will implement their special format. If they frequently change this format to break those implementations or clearly make it much more complex than it needs to be, that can also have legal repercussions.

duxup 8y ago

I was looking at a piece of hardware, that had some software that runs with it. Same deal. You buy the hardware but if you want to use the app.... it's a subscription.

branchless 8y ago

> that price is vastly out of proportion from the cost of providing the software This is not how prices are set. They are set on the willingness and ability to pay. Water costs nothing to produce but if I have it all you will pay me everything you have. For example if their main competitor went bust and not a single atom changed inside this company, they could charge you more. Do they have a monopoly or is it hard to migrate? These are the conversations the people who set the price are having. They are not talking about people being upset if they still pay.

rgbrenner 8y ago

About Ulysses specifically... they say when they were charging a monthly fee their users still expected regular updates after they paid.. and that sales would spike after a release, then fall to an unsustainable level: https://medium.com/building-ulysses/why-were-switching-ulysses-to-subscription-47f80b07a9cd https://medium.com/building-ulysses/why-were-switching-ulyss... "that price is vastly out of proportion from the cost of providing the software" That's just an unfounded assumption by the author. He says he knows this, even though he doesn't know how many developers are working on it, what they get paid, how much time each release takes, how large the code base is, or how many users the product has. Essentially, he has made up a cost in his head, and decided that the costs must be less than his fantasy. For all we know, he's one of 2 users, and the cost for keeping his editor available is $100k/yr/user. This also completely ignores the fact that prices for software aren't generally set using cost plus pricing.

beberlei 8y ago
well, that is economics 101. consumers price goods by value, not by costs. if your costs are higher than consumers are willing to pay, then you will at some point go bankrupt.
- freehunter 8y ago
  Exactly. No one cares what the product costs to make, they care what it costs from their own pocket. If the app isn't worth $40, then it doesn't have the features and/or the polish to have multiple full-time developers working on it. If the price people are willing to pay is lower than your cost of goods sold, lower your COGS or raise your value proposition. Those are the only options.
  - AceJohnny2 8y ago
    > If the app isn't worth $40 Ay, there's the rub. The problem is also related to price anchoring [1]: People [2] accepted the price of $70 for the perpetual value provided by the app (including cloud syncing), but balked at $40/year. The latter price makes the app more expensive over 2 years, and the developer promising updates doesn't have quite the impact to justify the change in the eyes of the angry customers. If the app initially cost, say, $160, maybe the newer pricing would've been better accepted. I hear Adobe and Microsoft are doing quite well with the subscription models... [1] https://en.wikipedia.org/wiki/Anchoring https://en.wikipedia.org/wiki/Anchoring [2] The people who bought it. This is important, because it ignores all the people who thought this wasn't good value. Maybe some of the initial non-purchasers became subscribers. Market analysis is hard.

AndrewKemendo 8y ago

There really isn't a better way to run a business (even if it's just a single app) than to get someone to pay you an amount on a fixed interval. It's predictable and generally weathers shocks pretty evenly. This is also why for most investors dividends are a big selling point - consistency. Even Apple somewhat relies on this, except it's been in 2 year intervals. It's the point of so called "planned obsolescence." So if you're an indie developer, you only have a few options. 1.Go through the rat trap of doing ads and trying to grow a huge userbase with marketing etc..., which everyone hates but most tolerate because it's free. 2. Charge a 1 time fee and hope that you price it right to support long term development and sustainment, knowing that you'll probably limit your market significantly. 3. Charge a recurring low(er) fee and draw a balance between losing a lot of very price sensitive people and having to run a marketing campaign and ad system. No good option there but subscription seems to have the most benefits. By the way, everything needs upkeep.

madeofpalk 8y ago
Seems weird to call Apple out for planned obsolescence considering their devices are generally supported by the manufacturer for considerably longer than the alternatives.
- AndrewKemendo 8y ago
  It's not directly comparable, however the two year upgrade is what they really want people to do - after all it was pretty definitive that they were degrading experience as a trade off on the battery issue.

johnchristopher 8y ago

> I have noticed this as well, that a not-small number of software programs have turned from "give us one money for this version" to "give us slightly smaller amount of one money per month, but do it in perpetuity if you want to keep going with the data you've entered." Frankly, the writing has been on the wall for something like at least 10 years and surely came into life once Adobe announced the CS 5.5 subscription model in 2011.

anfogoat 8y ago

Ulysses has a custom markdown feature that I thought was great. The only problem was that you couldn't use it without opting in to use their own file based storage schema. So if you wanted to store your writings in "regular" files and sync them yourself etc., you couldn't use the custom markdown feature. I thought this was absolutely ridiculous since the custom markdown would have simply gotten written as plain text. I asked why they're limiting the user like that and got even more ridiculous response: apparently they didn't want other people to get confused in case I ever shared the files that were outside their own file based schema. This non sequitur infuriated me enough to ditch the software. None of it made any sense until they announced the subscription model.

wpietri 8y ago

A model I really like is the one IntelliJ uses. They encourage you to buy a subscription. But when you buy a year at once, you get a "perpetual fallback license" such that you can always keep using the version that is current when you buy: https://sales.jetbrains.com/hc/en-gb/articles/207240845-What-is-a-perpetual-fallback-license- https://sales.jetbrains.com/hc/en-gb/articles/207240845-What... That means I always will have access to my projects and to the level of functionality I start with. But I keep getting upgrades as long as I keep paying, and they get the steady revenue stream that means they don't have to play weird marketing games.

maxxxxx 8y ago
Developer Express has that too with their .NET components. We have dropped the subscription but are still using a version that's 3 years old but good enough for us.
pythonaut_16 8y ago
You also get the perpetual fallback license if you pay month to month for a year, for whatever version you had 12 months ago. E.g. I start paying month-to-month at 2016.2, after 12 months I have a license to 2016.2. But say after the first month, 2017.1 comes out. Then after 13 months I now have a license for 2017.1.
rolleiflex 8y ago
One thing that always rubbed me wrong about this is that, logically speaking, if you buy a license for a year, the perpetual fallback license should be the version you had at the end of the license, not the one that was on the market at the beginning of it. It doesn't really make sense the way they do it, and it feels like a particularly hamfisted attempt to grab an almost negligible amount of money, so I'm puzzled.
- lultimouomo 8y ago
  It's not the negligible amount of money that matters. The trick is that at the end of your yearly subscription you have already upgraded to a newer version, so falling back to the perpetual license means downgrading, which is both often a practical problem and (perhaps most importantly) something that I think many have an emotional aversion to. I'm pretty sure that if the fallback license was to the most recent version you're entitled to during your subscription way more people would take leaps between the end of a subscription and the start of the next one (though Jetbrains offers you a further discount if you don't do so).

petra 8y ago

In general, software has zero marginal cost, so in theory, it's price should fall near zero due to competition. So why is the subscription market behave so different ? And what can be done about that ?

jgmjgm 8y ago
It's almost like the industry is not perfectly competitive...
exolymph 8y ago
Even with zero marginal cost, you can still have substantial fixed costs. And actually costs don't define prices — what the market will bear defines prices.
- chii 8y ago
  > what the market will bear defines prices. only if there's no competition, or there are substantial barriers to entry (such as regulation).
beefield 8y ago
Well, one could argue that the price is near zero. It is very rare software product that does not have somehow usable open source competitor. Then what you are paying for is something else than the zero marginal cost basic functionality. Like support, branding, network effect rents or something else.
- wowtip 8y ago
  Basically user's time invested. They know how to use the current software "I NEED Photoshop to do my job!!!". Even if some other software has the same or even slightly better abilities at a lower cost, the overall cost of switching is much greater. Especially if someone else is paying for the tools. Until some software appear that make user's competition more efficient and they are forced to learn new ways to not get out competed. Then the cycle starts all over again.

dgudkov 8y ago

Many economical models (including working 9 to 5, btw) came from the times of physical labor. At that time the part of labor was relatively small in the cost structure, and the part of materials was big. And since materials is a one-time expense, it was natural to have one-time pricing. In the knowledge-based industry such as software the cost of labor has the biggest share in cost structure. And unlike materials, the labor itself is a subscription. Social policies that make firing hard make it even more so. No wonder that revenue structure also tends to shift towards subscription-based models.

AlexandrB 8y ago
A less charitable analysis is that the software industry has failed to deliver reliable software so spectacularly that it requires constant upkeep from a team of professionals to maintain a text editor like Ulysses.

dredmorbius 8y ago

https://opensource.com/article/17/12/open-source-business-models https://opensource.com/article/17/12/open-source-business-mo...

cube2222 8y ago

I must say I actually love the subscription model that is becoming the de facto standard. If you sell a one time license to somebody there is no incentive for the seller to keep making the product better, to care keep caring for you. With a subscription model - especially a non-annually-paid one, they have to keep working to keep you. It's also a way more sustainable business model and probably the only thing which can replace ads in practice. If a service like facebook gets a load of money out of you per year, there's no way they would switch to a one-time fee instead. If it were to be replaced by a subscription though, then you're still a constant money flow for them, which would work much better.

zerowellies 8y ago
How many products need constant feature updates? Aside from security/compatibility there are plenty of products that already meet everything required of them (to near everyone). How many new features does a file manager need? An PDF reader? For Facebook - I don't think forced subscription would work. People would be forced to think about how much they value the service (a less ubiquitous one at that).
- hk__2 8y ago
  > How many products need constant feature updates? Aside from security/compatibility there are plenty of products that already meet everything required of them (to near everyone). How many new features does a file manager need? An PDF reader? Do you have any example of file managers or PDF readers with a subscription-based model?
  - zerowellies 8y ago
    Adobe Acrobat Pro, Foxit Phantom PDF. I'll concede I can't think of a file manager though.
    - chrisseaton 8y ago
      But those are PDF editors, not PDF readers.

matchagaucho 8y ago

Price gouging will create opportunities for new entrants.

koonsolo 8y ago

On the other hand, since we are on HackerNews, this is a HUGE business opportunity. Some time ago I bought Affinity Designer because I don't want to pay Adobe for a subscription. And going back to that website, one of the first things they promote is "No subscription. Only €54.99". Seems obvious that any big player that is switching to subscription only, is leaving a gap for smaller companies that support people like us.

mijustin 8y ago

> Many founders choose SaaS simply because they want the recurring revenue. Just because you like the model as a founder, doesn’t mean it’s the right model for your customers! (from https://justinjackson.ca/saas/ https://justinjackson.ca/saas/)

SirHound 8y ago

The difference is you used to pay for a new version. Software 2 would be charged for another $50. Whereas now you pay for Software and it gets improved in perpetuity. It should be charged as such.

djsumdog 8y ago

Look at our old software from the past decades. Old archived documents sitting in some obscure presentation program like Harvard Graphics. Now imagine not being able to load that data at all, even though you have the save file and the program, because the licensing server literally no longer exists. Now imaging a world 15 years from now where Adobe totally goes under due to competitors making much better programs. Their servers go away and now, and you can't even start your licensed software without running it through a debugger and trying to crack the license check.

mrhappyunhappy 8y ago

One perfect example of a shitty conversion to subscription is the adobe suite.

Spooky23 8y ago

Ulysses is an egregious example as they cost more than MS Office in many cases, which is particularly noxious when you consider how little a markdown editor does in comparison. I’m always annoyed about whiny iOS developers complaint about how they cannot make money without obnoxious schemes like this or gambling mechanisms. Software ISVs in olden times had a tiny market, huge expenses around retail channels and distributors, etc. They made money.

koliber 8y ago

There is a difference between paying for tools that bring value, and discretionary spending. If I am paying for software that I use to be more efficient and increases my profits, I am OK with a subscription model, or whatever model is offered. This is, as long as the cost of the software is considerably lower than the value bump I get from using it. With discretionary spending, it takes a lot for me to buy a subscription. If I spend more than X% of a given month consuming what that subscription provides, I will consider buying it. Otherwise, I am fine not consuming that particular service at all. I subscribe to a few magazines and Spotify. I read content online from many sources, but will not buy a subscription to each one of them. None of them are valuable enough for me to subscribe. If there was a way to pay, say $20 per month, and have a set of credits that I could redeem at Washington Post, The Economist, New York Times, Bloomberg, etc, on a per-article basis (I make the decision after the first paragraph or two) I would jump at that right away. The system would need to be very user friendly and almost friction-free.

chii 8y ago
> If there was a way to pay, say $20 per month, and have a set of credits that I could redeem at Washington Post, The Economist, New York Times, Bloomberg, etc, on a per-article basis i think this model doesn't work (but i'm willing to be pleasantly surprised). Imagine you read 10 articles a day, 30 days a month. That's 300 articles - that's about 6.6 cents an article, spread across many different organizations. Those articles will need a readership in the 10,000's per article for any sort of return on investment with those sort of prices. Granted, a high quality article is going to be able to reach that, but there's limited time per person to read, and that 10 articles per day read is on the high end - most people read much less than that.
dagw 8y ago
If there was a way to pay, say $20 per month, and have a set of credits that I could redeem at Washington Post, The Economist, New York Times, Bloomberg, etc. blendle.com offers basically exactly what you're asking for. (Not in any way affiliated with the site, just an occasional user)

micheljansen 8y ago

The best model I know is the one used by Sketch (https://sketchapp.com/pricing/ https://sketchapp.com/pricing/): A year of updates. A lifetime of Sketch Your license comes with a year’s worth of updates. Once that year is up, you can keep using the last version of Sketch you downloaded, forever. * You can always open the files you have made * There is no incentive for feature creep caused by having to "sell" the next version to your current userbase every so often. * The developer does not have to keep supporting old versions forever.

IA21 8y ago
IMO this is much better than what IntelliJ does.

jwr 8y ago

> the company switched to a $40 a year annual subscription, and as the dozens of angry reviews and comments illustrate, that price is vastly out of proportion from the cost of providing the software As a software (SaaS) developer, I find this comment outright bizarre. I find it is hard to make a living with $50/month subscriptions, if you write niche software (and believe me, you DO write niche software, you are not Dropbox), much less support an entire company. Have you actually done the numbers before writing that "price is vastly out of proportion"? Just take the total cost (roughly 2x salary) of several people, divide by that $40/year and see how many subscriptions you come up with. I'm getting ~25000 subscriptions for 5 employees, just to break even, and we haven't even touched the marketing required to get 25000 subscriptions.

WA 8y ago
> that price is vastly out of proportion from the cost of providing the software Furthermore, only devs complain about the "proportion of providing the software". Didn't especially Indie devs here on HN take their time to learn the lessons of value-based pricing? I do charge monthly for my app. It's 30 bucks a year for a B2C app. Expensive some might say, fair for others. But I can at least confidently tell that most users use my app every single day. And people who won't use it for more than a few months came away way cheaper than if the one-time-fee was 30-40 bucks to start with. Oh and providing an app as a one-time-fee for $5 or some ridiculous undervalued price that is considered "acceptable" simply doesn't work in niches.
- jwr 8y ago
  I think that most armchair-businesspeople underestimate the costs of running a business and overestimate the number of paying customers. It is particularly ironic, because they both do not want to pay for software themselves, and also think that masses of other people do want to pay for software. People tend to think that the costs of a software business are just the time of the single developer that writes the software. And they also calculate the cost of that time as what developers actually get as their salary. But this is not how you run a business, not by a long shot. This gap in understanding has been widening recently, because of the completely unsustainable app store pricing.

pc86 8y ago

It's frustrating, but people wouldn't do it if it didn't work. You will generally make far more money charging $5/mo forever than you will charging $50 once for identical software. Not to mention the steady cash flow. An extreme example, but I always pirated Photoshop (as did probably half the people who ever used Photoshop). But now I pay $60/mo for it and a bunch of the other Creative Suite apps. I never would have paid whatever the 4-figure price was even when I was getting paid to make graphics at work. But I'll gladly pay $60/mo to have access to everything now even though I don't get paid for any graphics or video work.