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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

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
      Indeed, you're right. Don't Adobe give you some "cloud storage" thing though? Fortunately now that we're using Figma I don't have to deal with the hundred pound gorilla called Photoshop.
  - sn0wfire 8y ago
    Jetbrains does not require subscriptions for continued use of any version. Purchasing a 12-month subscription (which is cheaper than their previous "perpetual license") gives you a perpetual license for the current version of software. This is actually my favourite licensing technique I have come across for software. 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...
    - Joeri 8y ago
      There’s a difference though. Previously the version you ended up with was the one at the end of the year of updates. In the current model you have to reinstall the old version of the time of purchase, undoing the updates you got. It’s actually quite clever since you immediately notice what you’re missing by not paying.
      - Rapzid 8y ago
        I could have sworn they offer specials or something where you can get the current and next version.. can't recall, I end up upgrading each year to keep my discount going.
      - donarb 8y ago
        You can actually keep your next current version by buying for a few months to extend to the next 12 month anniversary. See last timeline example on this page: 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...
- siscia 8y ago
  Sorry but nobody is forcing you to use sublime. If they started charging just for use they wouldn't need neither an excuse nor a justification. I really don't see your point. If you could explain further why you think sublime would need an excuse for charging a monthly fee I would really appreciate.
  - icebraining 8y ago
    Yeah, I don't see the reason besides "I don't like it" either. If the problem is access to files, then they could just have a free converter tool to some standard format.
  - coldtea 8y ago
    >If they started charging just for use they wouldn't need neither an excuse nor a justification. Actually they'd need both. And companies are not so dumb as not to understand this. Any company that started charging or went into a subscription model, offered both excuses and justifications for doing so. You might be think "it's a free country, it's their product, and they can do anything with it". Which is true in a trivial way (they're allowed by the law to do anything they like in that area), but it's also wrong. Wrong in that in practice they're not really free: to survive they are bound to the market and their customers responses. So they're free only as much as they're OK with pissing their user base and potentially losing sales (or have most of them go for some other product, and kill their own user base -- e.g. Quark xPress vs Adobe Indesign, and tons of other similar examples).
- thechao 8y ago
  If the sublime folk offered a “bug fix only” monthly subscription, I’d buy that. My grandfather went through a half day’s paycheck of tooling a month on his own dime. I figure bug fixes are the software equivalent of sharpening chisels, buying new bits, surfacing a mill, etc.
  - mehrdadn 8y ago
    > If the sublime folk offered a “bug fix only” monthly subscription, I’d buy that. My grandfather went through a half day’s paycheck of tooling a month on his own dime. I figure bug fixes are the software equivalent of sharpening chisels, buying new bits, surfacing a mill, etc. Except bits don't rot?
    - notSupplied 8y ago
      New OS versions (especially from Apple) regularly create new bugs or completely break compatibility with old software. The cost of upkeep is not entirely predictable and easy to "price-in" to the upfront cost.
      - mehrdadn 8y ago
        Can't speak for Apple I guess, but this isn't exactly the normal case on Windows.
        culturestate 8y ago
        Microsoft jumps through hoops for backwards compatibility, often to their own detriment. Apple - comparatively, not absolutely - almost ignores backwards compatibility...also often to their own detriment.
    - heavenlyblue 8y ago
      They don't rot but they get rusty.
hsljekskfh 8y ago
No, it demands that you create new features and bug fixes that are worth the cost of upgrading and then people buy it. this is great. photoshop was fine in 2012. now you can’t get a copy of it from adobe and cd keys sell for more than they originally cost. this is only because adobe wants to take more money from people until the end of time.
3pt14159 8y ago
The middle ground doesn't work. See MS Windows update hell. The way things should work is like this: Subscription for when you want to use the software and open format data files that you're always easily able to export and download. If a company goes out of business or does something stupid then another one will pop up to handle your needs. This aligns incentives correctly while still allows a healthy dose of competition.
- always_good 8y ago
  Actually, it works in software that many of us use every day. Once again, there's more nuance to making an argument than being able to point out a single absolute example. Why is this such popular rhetoric on HN? Especially in such a varied imprecise world of pricing structures? I use various bits of successful software like Transmit and Alfred that let you update until the next major version in which you must pay again.
  - 3pt14159 8y ago
    It "works" in the way that having insecure software on your computer "works" which is to say that it doesn't work, we just put up with computers where the non-technical don't know the mess they are in. Every major operating system (iOS, Android, Windows, QNX) or widely used software application (MS Office, any browser, any widely used app) issues emergency security patches. The reality is that having everyone on the same version drastically simplifies not just security, but also interoperability. It isn't 1998 anymore. The default is internet connectivity and we should stop pretending our apps are secure when they are not.
    - paulryanrogers 8y ago
      There is a kind of perverse incentive not to work too hard to secure software when doing so removes a critical reason to buy the updates. That being said I do think truly securing an application requires first having a secure platform. Otherwise users could indefinitely demand mitigations at the application layer until it contains most of its own OS.
    - 8y ago
crunchlibrarian 8y ago
This is possibly the worst use of the term "pyramid scheme" I have ever seen used in print, and that's really saying something with how often it's abused nowadays.
- always_good 8y ago
  Yet you left your entire argument up to our imagination. I explained why I find the description fitting. You could at least entertain us with why "future users pay for your upgrades" does not fit in the context of one-time-paid "perpetual license" software beyond disagreeing with the phrase I chose to name the predicament.
  - makomk 8y ago
    It seems to me that there's one very obvious difference: once software is created, creating more copies of it is almost free. The reason pyramid schemes collapse is that they require an exponentially increasing amount of new deposits to keep up with the payments owed to existing depositors, and that's just not how software publishing works. So long as there's a sufficient stream of customers buying, it doesn't cost much more to keep everyone up to date than it does just the new customers, and if there isn't then forcing repurchases won't necessarily fix that.
    - scarface74 8y ago
      But with the way that App Store economics work, you can't easily charge for upgrades but both iOS and Android have new versions yearly with new features that users expect you to implement.
deaddodo 8y ago
Which is why most companies do a mixed model. Pay an amount for a version, get one year of updates (or that specific version + it's updates), then pay to upgrade (and/or reup your year of support).
jakobegger 8y ago
There's a flaw in your logic: You assume that everyone keeps using every app they bought forever. If that was the case, pay-once would be unsustainable. However, that is not the case. Everyone stops using your app at some point. So you don't need to support users forever, you just need to support them for some finite amount of time. Some users might use your app for a few years, some use your app just for a few weeks. Some users will email you half a dozen times, but most will never email you. Your app price should be priced so you can afford to support the average user. And another thing that people forget: When your user base is growing, the amount of word of mouth recommendation you get also grows, and you automatically start selling more licenses, so your revenue also grows. Pay-once and subscription aren't really that different in practice. Pay-once even has an advantage: You get all the money up front. And that's awesome if you are planning to grow your company.
- always_good 8y ago
  It's not a flaw. That's just uncertainty and a gamble. Whether that's sustainable for a given piece of software varies per product. And that's kind of the point I'm making. The extent at which some users subsidize the app for others is just one of the decisions you need to make when deciding on a pricing structure, not a rebuttal.
- taneq 8y ago
  > There's a flaw in your logic: You assume that everyone keeps using every app they bought forever. If that was the case, pay-once would be unsustainable. There's also a flaw in this logic: It assumes that all apps require some kind of server provided by the developer in order to run. Once upon a time, standalone software was standalone and could run in perpetuity without requiring anything more of the original developer. It's still entirely possible to write software like this, there's just a trend away from it due to the prevalence of always-on internet connections and the ease of keeping some of your application server-side as a form of copy protection.
  - jakobegger 8y ago
    Until your standalone software answers customer support requests automatically, you‘re still going to have variable costs that grow with your user base.
petre 8y ago
Atlassian has such a pricing scheme. Pay x amount per year for the cloud version, x-x/10 for the self hosted license and half that amount yearly for updates and continued support. Of course you can still use the license without updates and support. The <10 user license is almost always $10 so that the entry bar is set low, other licenses are much more expensive (>100x) with price going down with numbers until you hit the datacenter versions which are priced differently. I think it's very flexible and covers just about every use case.
brandonjm 8y ago
> Of course you can find examples on each end of a spectrum. A good example is the Adobe Creative Suite 6 Master Collection which was so expensive to buy in Australia that it was cheaper to fly to the US, buy a copy and fly back. Now, you can get a years subscription to Creative Cloud for 'All Apps' for about 1/5th of the price of what CS6 MC was in Australia. It is still expensive, and after 4 or 5 years you will have spent more but thats significantly longer than Office 365 which costs about 2/3rd the price per year of a copy of Office 2016 outright.
AlexandrB 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. This logic applies to literally any one-time purchase that includes a warranty, yet the consumer goods sector has managed it somehow. What's really happening is a deterioration of the idea of "owning[1]" software. I'm sure it's great for the publisher, but it's almost all downside for the user. I'm still using an email app that was acquired and shut down by Google in 2012 and it continues to work just fine. On PC I use WinRAR from 10 years ago with no issue. I can't imagine having to pay for all of these little apps on a subscription basis and then having to find alternatives when the creators get acquired/go bankrupt because the subscription is no longer supported. Edit: To add to that, if the cost of the subscription is to provide me with superior support, will publishers selling me these subscriptions be removing the warranty disclaimer from their EULA? Probably not, right? [1] Yes, you never "owned" it, but licensed a copy - but in practice it was similar to owning a physical good.
- vel0city 8y ago
  You're exposed to pretty serious security vulnerabilities if you're still using a 10-year-old version of WinRAR to unrar/unzip/uncompress files you get from the internet.
prepend 8y ago
Did you know that every physical good sold is a pyramid scheme using your definition? In the US, companies have product liability to correct defects for the lifetime of the product, subject to routine limitations. [1] So companies create business models to compensate for this limitation. Companies figured this out with software decades ago, so it’s certainly possible (eg, Microsoft). [1] https://injury.findlaw.com/product-liability/what-is-product-liability.html https://injury.findlaw.com/product-liability/what-is-product...
pc86 8y ago
IMO except for highly priced products, paying once for software does not entitle you to support unless it's the user forum/SO type. John Doe giving a company $50 three years ago does not give him the right to email people at the company asking for tech support. Many many companies still allow this, but I think if you want support you should be paying a support fee (e.g. monthly subscription).

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
    Indeed, you're right. Don't Adobe give you some "cloud storage" thing though? Fortunately now that we're using Figma I don't have to deal with the hundred pound gorilla called Photoshop.
- sn0wfire 8y ago
  Jetbrains does not require subscriptions for continued use of any version. Purchasing a 12-month subscription (which is cheaper than their previous "perpetual license") gives you a perpetual license for the current version of software. This is actually my favourite licensing technique I have come across for software. 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...
  - Joeri 8y ago
    There’s a difference though. Previously the version you ended up with was the one at the end of the year of updates. In the current model you have to reinstall the old version of the time of purchase, undoing the updates you got. It’s actually quite clever since you immediately notice what you’re missing by not paying.
    - Rapzid 8y ago
      I could have sworn they offer specials or something where you can get the current and next version.. can't recall, I end up upgrading each year to keep my discount going.
    - donarb 8y ago
      You can actually keep your next current version by buying for a few months to extend to the next 12 month anniversary. See last timeline example on this page: 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...
siscia 8y ago
Sorry but nobody is forcing you to use sublime. If they started charging just for use they wouldn't need neither an excuse nor a justification. I really don't see your point. If you could explain further why you think sublime would need an excuse for charging a monthly fee I would really appreciate.
- icebraining 8y ago
  Yeah, I don't see the reason besides "I don't like it" either. If the problem is access to files, then they could just have a free converter tool to some standard format.
- coldtea 8y ago
  >If they started charging just for use they wouldn't need neither an excuse nor a justification. Actually they'd need both. And companies are not so dumb as not to understand this. Any company that started charging or went into a subscription model, offered both excuses and justifications for doing so. You might be think "it's a free country, it's their product, and they can do anything with it". Which is true in a trivial way (they're allowed by the law to do anything they like in that area), but it's also wrong. Wrong in that in practice they're not really free: to survive they are bound to the market and their customers responses. So they're free only as much as they're OK with pissing their user base and potentially losing sales (or have most of them go for some other product, and kill their own user base -- e.g. Quark xPress vs Adobe Indesign, and tons of other similar examples).
thechao 8y ago
If the sublime folk offered a “bug fix only” monthly subscription, I’d buy that. My grandfather went through a half day’s paycheck of tooling a month on his own dime. I figure bug fixes are the software equivalent of sharpening chisels, buying new bits, surfacing a mill, etc.
- mehrdadn 8y ago
  > If the sublime folk offered a “bug fix only” monthly subscription, I’d buy that. My grandfather went through a half day’s paycheck of tooling a month on his own dime. I figure bug fixes are the software equivalent of sharpening chisels, buying new bits, surfacing a mill, etc. Except bits don't rot?
  - notSupplied 8y ago
    New OS versions (especially from Apple) regularly create new bugs or completely break compatibility with old software. The cost of upkeep is not entirely predictable and easy to "price-in" to the upfront cost.
    - mehrdadn 8y ago
      Can't speak for Apple I guess, but this isn't exactly the normal case on Windows.
      - culturestate 8y ago
        Microsoft jumps through hoops for backwards compatibility, often to their own detriment. Apple - comparatively, not absolutely - almost ignores backwards compatibility...also often to their own detriment.
  - heavenlyblue 8y ago
    They don't rot but they get rusty.

hsljekskfh 8y ago

No, it demands that you create new features and bug fixes that are worth the cost of upgrading and then people buy it. this is great. photoshop was fine in 2012. now you can’t get a copy of it from adobe and cd keys sell for more than they originally cost. this is only because adobe wants to take more money from people until the end of time.

3pt14159 8y ago

The middle ground doesn't work. See MS Windows update hell. The way things should work is like this: Subscription for when you want to use the software and open format data files that you're always easily able to export and download. If a company goes out of business or does something stupid then another one will pop up to handle your needs. This aligns incentives correctly while still allows a healthy dose of competition.

always_good 8y ago
Actually, it works in software that many of us use every day. Once again, there's more nuance to making an argument than being able to point out a single absolute example. Why is this such popular rhetoric on HN? Especially in such a varied imprecise world of pricing structures? I use various bits of successful software like Transmit and Alfred that let you update until the next major version in which you must pay again.
- 3pt14159 8y ago
  It "works" in the way that having insecure software on your computer "works" which is to say that it doesn't work, we just put up with computers where the non-technical don't know the mess they are in. Every major operating system (iOS, Android, Windows, QNX) or widely used software application (MS Office, any browser, any widely used app) issues emergency security patches. The reality is that having everyone on the same version drastically simplifies not just security, but also interoperability. It isn't 1998 anymore. The default is internet connectivity and we should stop pretending our apps are secure when they are not.
  - paulryanrogers 8y ago
    There is a kind of perverse incentive not to work too hard to secure software when doing so removes a critical reason to buy the updates. That being said I do think truly securing an application requires first having a secure platform. Otherwise users could indefinitely demand mitigations at the application layer until it contains most of its own OS.
  - 8y ago

crunchlibrarian 8y ago

This is possibly the worst use of the term "pyramid scheme" I have ever seen used in print, and that's really saying something with how often it's abused nowadays.

always_good 8y ago
Yet you left your entire argument up to our imagination. I explained why I find the description fitting. You could at least entertain us with why "future users pay for your upgrades" does not fit in the context of one-time-paid "perpetual license" software beyond disagreeing with the phrase I chose to name the predicament.
- makomk 8y ago
  It seems to me that there's one very obvious difference: once software is created, creating more copies of it is almost free. The reason pyramid schemes collapse is that they require an exponentially increasing amount of new deposits to keep up with the payments owed to existing depositors, and that's just not how software publishing works. So long as there's a sufficient stream of customers buying, it doesn't cost much more to keep everyone up to date than it does just the new customers, and if there isn't then forcing repurchases won't necessarily fix that.
  - scarface74 8y ago
    But with the way that App Store economics work, you can't easily charge for upgrades but both iOS and Android have new versions yearly with new features that users expect you to implement.

deaddodo 8y ago

Which is why most companies do a mixed model. Pay an amount for a version, get one year of updates (or that specific version + it's updates), then pay to upgrade (and/or reup your year of support).

jakobegger 8y ago

There's a flaw in your logic: You assume that everyone keeps using every app they bought forever. If that was the case, pay-once would be unsustainable. However, that is not the case. Everyone stops using your app at some point. So you don't need to support users forever, you just need to support them for some finite amount of time. Some users might use your app for a few years, some use your app just for a few weeks. Some users will email you half a dozen times, but most will never email you. Your app price should be priced so you can afford to support the average user. And another thing that people forget: When your user base is growing, the amount of word of mouth recommendation you get also grows, and you automatically start selling more licenses, so your revenue also grows. Pay-once and subscription aren't really that different in practice. Pay-once even has an advantage: You get all the money up front. And that's awesome if you are planning to grow your company.

always_good 8y ago
It's not a flaw. That's just uncertainty and a gamble. Whether that's sustainable for a given piece of software varies per product. And that's kind of the point I'm making. The extent at which some users subsidize the app for others is just one of the decisions you need to make when deciding on a pricing structure, not a rebuttal.
taneq 8y ago
> There's a flaw in your logic: You assume that everyone keeps using every app they bought forever. If that was the case, pay-once would be unsustainable. There's also a flaw in this logic: It assumes that all apps require some kind of server provided by the developer in order to run. Once upon a time, standalone software was standalone and could run in perpetuity without requiring anything more of the original developer. It's still entirely possible to write software like this, there's just a trend away from it due to the prevalence of always-on internet connections and the ease of keeping some of your application server-side as a form of copy protection.
- jakobegger 8y ago
  Until your standalone software answers customer support requests automatically, you‘re still going to have variable costs that grow with your user base.

petre 8y ago

Atlassian has such a pricing scheme. Pay x amount per year for the cloud version, x-x/10 for the self hosted license and half that amount yearly for updates and continued support. Of course you can still use the license without updates and support. The <10 user license is almost always $10 so that the entry bar is set low, other licenses are much more expensive (>100x) with price going down with numbers until you hit the datacenter versions which are priced differently. I think it's very flexible and covers just about every use case.

brandonjm 8y ago

> Of course you can find examples on each end of a spectrum. A good example is the Adobe Creative Suite 6 Master Collection which was so expensive to buy in Australia that it was cheaper to fly to the US, buy a copy and fly back. Now, you can get a years subscription to Creative Cloud for 'All Apps' for about 1/5th of the price of what CS6 MC was in Australia. It is still expensive, and after 4 or 5 years you will have spent more but thats significantly longer than Office 365 which costs about 2/3rd the price per year of a copy of Office 2016 outright.

AlexandrB 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. This logic applies to literally any one-time purchase that includes a warranty, yet the consumer goods sector has managed it somehow. What's really happening is a deterioration of the idea of "owning[1]" software. I'm sure it's great for the publisher, but it's almost all downside for the user. I'm still using an email app that was acquired and shut down by Google in 2012 and it continues to work just fine. On PC I use WinRAR from 10 years ago with no issue. I can't imagine having to pay for all of these little apps on a subscription basis and then having to find alternatives when the creators get acquired/go bankrupt because the subscription is no longer supported. Edit: To add to that, if the cost of the subscription is to provide me with superior support, will publishers selling me these subscriptions be removing the warranty disclaimer from their EULA? Probably not, right? [1] Yes, you never "owned" it, but licensed a copy - but in practice it was similar to owning a physical good.

vel0city 8y ago
You're exposed to pretty serious security vulnerabilities if you're still using a 10-year-old version of WinRAR to unrar/unzip/uncompress files you get from the internet.

prepend 8y ago

Did you know that every physical good sold is a pyramid scheme using your definition? In the US, companies have product liability to correct defects for the lifetime of the product, subject to routine limitations. [1] So companies create business models to compensate for this limitation. Companies figured this out with software decades ago, so it’s certainly possible (eg, Microsoft). [1] https://injury.findlaw.com/product-liability/what-is-product-liability.html https://injury.findlaw.com/product-liability/what-is-product...

pc86 8y ago

IMO except for highly priced products, paying once for software does not entitle you to support unless it's the user forum/SO type. John Doe giving a company $50 three years ago does not give him the right to email people at the company asking for tech support. Many many companies still allow this, but I think if you want support you should be paying a support fee (e.g. monthly subscription).