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I think that pure subscription is the only sustainable model. If the incentive for a new customer is the same as keeping an existing customer, you aim for the

I think that pure subscription is the only sustainable model. If the incentive for a new customer is the same as keeping an existing customer, you aim for the right product. I find permanent license models are pyramidal and/or foster featuritis.

danpalmer 8y ago
I disagree. I’d never subscribe to an app whose value isn’t directly tied to the subscription nature. I’d subscribe to Dropbox for example, as it’s an ongoing service, but a text editor? No. I realise there are some small ongoing costs like support, but customers know when the value doesn’t align with the pricing and they don’t like it.
- antaviana 8y ago
  If you are unable to extract more value than the cost of the subscription, then it is a bad investment, otherwise it is a good investment with more long term chances for you to extract value from it.
  - girvo 8y ago
    If it’s a one-off payment, you have your lifetime worth of chances to extract value. So I’m not following your point here, can you clarify?
    - antaviana 8y ago
      Subscriptions have higher chances of survival than permanent licenses because developers have intentionally deferred revenue. So 6 years from now, the motivations to continue operating the business will be higher by a team selling a subscription at $99/year than a permanent license at $299. This way your workflow relying on that tool has higher chances to survive new operating operating systems, new formats and other forms of obsolescence. I liked Microsoft Money but it is not anymore around. Had it been Money 365, it would still probably be around.
  - danpalmer 8y ago
    That could be a rational way of looking at it, but consumers aren't rational. I think revenue being tied to value is much more important in purchasing decisions. Most software that was a one-off purchase model and have now become a subscription model, have added significant service-based features. Examples that come to mind are 1Password that now has family sharing and team collaboration features, or Office 365 which has sync/storage and more web sharing features. It could be argued that the sustainability of subscriptions enabled these features, but I think it's much more symbiotic - these features enabled a subscription model to work. For an example of where this hasn't gone as well, I'd look to Ulysses which has moved to a subscription model but doesn't have service based features, and which you do not get to keep using at all if you stop paying. This has resulted in a backlash from customers that can be seen in the reviews online.
oldcynic 8y ago
I try not to buy subscriptions because you usually lose all functionality at the end. The subscription is usually significantly more expensive than the simple cost of buying a licence for the current version. (eg 1Password). Between those two points there's no benefit for me, the customer, regardless of what marketing tell me. To add another my thought process is "which sub would I drop to get this?". The answer is usually none. I'm not going to allow myself to end up with dozens of subscriptions for things that don't necessarily require an online component (VPNs and such). I get it. Subs are great for the company. You'll have a significant number of paying users who never get around to cancelling, or forget what service is tied to the mysterious £4.99 monthly charge, you get to charge double in a year what you used to think was a reasonable cost for outright. Edit: Clarity
- chasote 8y ago
  I agree that subscription fatigue is a problem and most will opt out but I feel you are projecting too much malice onto the developers in your last sentence. Why does asking for the subscription automatically entail they are hoping people will stop using the product but stay subscribed or are charging far more than they think the service is worth? I think it is too jaded an outlook to see it all as a zero sum fight. The service might just be worth a subscription and the developers want to continue providing it and not be able to with a different business model.
  - scrollaway 8y ago
    Appropriately-usernamed GP isn't wrong though. SAAS models are loved by entrepreneurs because you get more money at a lower cost: Making a sale is easier because the numbers are lower, but what you rake in is higher because LTV is (usually) higher than what you'd normally charge as a one-off. The amount of people who forget to unsubscribe, who don't care and leave it running, etc, is shocking. Hell, I'm frugal, and I've been guilty of leaving things like my Prime subscription running for months despite living somewhere I don't even have Amazon. My WoW subscription is still running today even though I haven't logged on the game since 2017. (My monthly costs are sub-300usd... making a $15/mo subscription 5% of my costs) So yeah, it can absolutely be toxic. I've seen people not be confident enough in their product and rely on tricks rather than worry about making what they charge for attractive enough for users to want to pay for it. But all in all, unless you're straight up scamming people, I think the incentives behind subscriptions are pro-consumer. Certainly a hell of a lot more than the incentives behind ads. There are two problems I see as unsolved in the subscription model today: - Payment gateway fees prevent microsubscriptions. Decentralized digital currencies promised to solve this -- they didn't. When the cost of providing a subscription is $0.001, and you have to charge at least $0.32 to break even, you're forced to tack it on to something bigger. This also massively incentivizes long-term subscription plans (12 month plans), over impulse-buy short term subscriptions. - Subscription management is done individually by services. This is a feature that your preferred payment provider should be offering. Paypal has a pretty decent implementation of this for users (A shame that Paypal sucks so much for developers). If you could cancel/manage all your subscriptions through your bank, subscription fatigue would be less of a problem I believe.

danpalmer 8y ago

I disagree. I’d never subscribe to an app whose value isn’t directly tied to the subscription nature. I’d subscribe to Dropbox for example, as it’s an ongoing service, but a text editor? No. I realise there are some small ongoing costs like support, but customers know when the value doesn’t align with the pricing and they don’t like it.

antaviana 8y ago
If you are unable to extract more value than the cost of the subscription, then it is a bad investment, otherwise it is a good investment with more long term chances for you to extract value from it.
- girvo 8y ago
  If it’s a one-off payment, you have your lifetime worth of chances to extract value. So I’m not following your point here, can you clarify?
  - antaviana 8y ago
    Subscriptions have higher chances of survival than permanent licenses because developers have intentionally deferred revenue. So 6 years from now, the motivations to continue operating the business will be higher by a team selling a subscription at $99/year than a permanent license at $299. This way your workflow relying on that tool has higher chances to survive new operating operating systems, new formats and other forms of obsolescence. I liked Microsoft Money but it is not anymore around. Had it been Money 365, it would still probably be around.
- danpalmer 8y ago
  That could be a rational way of looking at it, but consumers aren't rational. I think revenue being tied to value is much more important in purchasing decisions. Most software that was a one-off purchase model and have now become a subscription model, have added significant service-based features. Examples that come to mind are 1Password that now has family sharing and team collaboration features, or Office 365 which has sync/storage and more web sharing features. It could be argued that the sustainability of subscriptions enabled these features, but I think it's much more symbiotic - these features enabled a subscription model to work. For an example of where this hasn't gone as well, I'd look to Ulysses which has moved to a subscription model but doesn't have service based features, and which you do not get to keep using at all if you stop paying. This has resulted in a backlash from customers that can be seen in the reviews online.

oldcynic 8y ago

I try not to buy subscriptions because you usually lose all functionality at the end. The subscription is usually significantly more expensive than the simple cost of buying a licence for the current version. (eg 1Password). Between those two points there's no benefit for me, the customer, regardless of what marketing tell me. To add another my thought process is "which sub would I drop to get this?". The answer is usually none. I'm not going to allow myself to end up with dozens of subscriptions for things that don't necessarily require an online component (VPNs and such). I get it. Subs are great for the company. You'll have a significant number of paying users who never get around to cancelling, or forget what service is tied to the mysterious £4.99 monthly charge, you get to charge double in a year what you used to think was a reasonable cost for outright. Edit: Clarity

chasote 8y ago
I agree that subscription fatigue is a problem and most will opt out but I feel you are projecting too much malice onto the developers in your last sentence. Why does asking for the subscription automatically entail they are hoping people will stop using the product but stay subscribed or are charging far more than they think the service is worth? I think it is too jaded an outlook to see it all as a zero sum fight. The service might just be worth a subscription and the developers want to continue providing it and not be able to with a different business model.
- scrollaway 8y ago
  Appropriately-usernamed GP isn't wrong though. SAAS models are loved by entrepreneurs because you get more money at a lower cost: Making a sale is easier because the numbers are lower, but what you rake in is higher because LTV is (usually) higher than what you'd normally charge as a one-off. The amount of people who forget to unsubscribe, who don't care and leave it running, etc, is shocking. Hell, I'm frugal, and I've been guilty of leaving things like my Prime subscription running for months despite living somewhere I don't even have Amazon. My WoW subscription is still running today even though I haven't logged on the game since 2017. (My monthly costs are sub-300usd... making a $15/mo subscription 5% of my costs) So yeah, it can absolutely be toxic. I've seen people not be confident enough in their product and rely on tricks rather than worry about making what they charge for attractive enough for users to want to pay for it. But all in all, unless you're straight up scamming people, I think the incentives behind subscriptions are pro-consumer. Certainly a hell of a lot more than the incentives behind ads. There are two problems I see as unsolved in the subscription model today: - Payment gateway fees prevent microsubscriptions. Decentralized digital currencies promised to solve this -- they didn't. When the cost of providing a subscription is $0.001, and you have to charge at least $0.32 to break even, you're forced to tack it on to something bigger. This also massively incentivizes long-term subscription plans (12 month plans), over impulse-buy short term subscriptions. - Subscription management is done individually by services. This is a feature that your preferred payment provider should be offering. Paypal has a pretty decent implementation of this for users (A shame that Paypal sucks so much for developers). If you could cancel/manage all your subscriptions through your bank, subscription fatigue would be less of a problem I believe.