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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 a

by 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.
  - madeofpalk 8y ago
    I look at something like Overcast. Great software that I subscribe to and give him his money. Almost by definition, and through great pains from the developer, there’s almost zero lock in for a podcast client.
    - scarface74 8y ago
      Yes but Marco said that only about 10% pay for subscriptions. That's why he created his own ad platform.
- freddie_mercury 8y ago
  Subscriptions are MASSIVELY more predictable. I say this after working daily for years with FP&A team on building revenue projections for a product that had both subscription and non-subscription sales models. You realise that your post sounds like the stereotype of every bad manager ever? "How much harder could it be to build the new feature if we did X, Y, Z? Surely you can get it done in just three days?"

by weavie 8y ago

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.
- madeofpalk 8y ago
  I look at something like Overcast. Great software that I subscribe to and give him his money. Almost by definition, and through great pains from the developer, there’s almost zero lock in for a podcast client.
  - scarface74 8y ago
    Yes but Marco said that only about 10% pay for subscriptions. That's why he created his own ad platform.
freddie_mercury 8y ago
Subscriptions are MASSIVELY more predictable. I say this after working daily for years with FP&A team on building revenue projections for a product that had both subscription and non-subscription sales models. You realise that your post sounds like the stereotype of every bad manager ever? "How much harder could it be to build the new feature if we did X, Y, Z? Surely you can get it done in just three days?"