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Now you've shipped your thing that lasts forever. If it's a mechanical object, maybe you can get continuing revenue from spare parts, but those will bring in le

Now you've shipped your thing that lasts forever. If it's a mechanical object, maybe you can get continuing revenue from spare parts, but those will bring in less than the original purchase. Worst case, someone brings up a factory copying your part design (without doing any engineering work on them, just copies them exactly), and undercuts you. If you sell software, do you let the old stuff atrophy and become insecure? If not, you are spending salaries on maintenance without any associated revenue. As time goes on, the maintenance costs increase without bringing in another cent.

cletus 7y ago
On the software front, this is why I, personally, am a fan of the subscription model... if done right. And almost no one does it right. The shining example for actually doing it right is Jetbrains. There is a schedule for new releases they keep to. You get loyalty discounts for long term subscriptions and ending a subscription entitles you to a version that is ~1 year old in perpetuity. Plus the prices are (IMHO) entirely reasonable. Almost no one else does this. Other companies will, say, take the MSRP of the software package, divide it by 12 and give you that as the monthly price with a minimum contract period of 12 months. They'll also restrict you to choose platform when you purchase and may limit the number of installs rather than concurrent users.
- pixelface 7y ago
  Another company using this model very effectively is Derivative, makers of Touchdesigner. Licenses are sold at an initial price that includes a year of updates. Once that year expires, the newest version (old versions are kept available on the site) within your update period will continue to be usable with your license - which is freely transferable between machines. They offer a couple license tiers, custom work, and paid support hours. They even provide a free non-commercial license that is minimally limited and great for learning. The other great thing is that they are highly responsive to user feedback and bug reports. I've had a situation before where we found a bug in the course of a project and they fixed it in a matter of days, had a build sent over in time for my deadline, and then the fix was pushed for everyone in the following update. I frequently point them out as a model for the best way to offer a software product to both a professional and amateur market. It's essentially all the benefits of perpetual licensing while still providing a revenue stream for the company and ongoing support for professional users. No direct affiliation, but I've shared drinks with the devs and am a very pleased user.
crc32 7y ago
> Now you've shipped your thing that lasts forever. If it's a mechanical object, maybe you can get continuing revenue from spare parts, but those will bring in less than the original purchase. This might be bad for a tractor manufacturer; but an everlasting tractor would be great for society, right? The incentive now is to innovate in order to create a better more efficient product. E.g.; a more fuel efficient tractor which increases productivity - then you'll get another sale. Deliberately hobbling your product so that it needs repair or replacement disincentives innovation and is a form of rent-seeking https://www.investopedia.com/terms/r/rentseeking.asp https://www.investopedia.com/terms/r/rentseeking.asp and as such should be treated as a market failure. (I.e., legislated against)
- closetohome 7y ago
  Exactly - it's a perverse incentive against the interests of society.

cletus 7y ago

On the software front, this is why I, personally, am a fan of the subscription model... if done right. And almost no one does it right. The shining example for actually doing it right is Jetbrains. There is a schedule for new releases they keep to. You get loyalty discounts for long term subscriptions and ending a subscription entitles you to a version that is ~1 year old in perpetuity. Plus the prices are (IMHO) entirely reasonable. Almost no one else does this. Other companies will, say, take the MSRP of the software package, divide it by 12 and give you that as the monthly price with a minimum contract period of 12 months. They'll also restrict you to choose platform when you purchase and may limit the number of installs rather than concurrent users.

pixelface 7y ago
Another company using this model very effectively is Derivative, makers of Touchdesigner. Licenses are sold at an initial price that includes a year of updates. Once that year expires, the newest version (old versions are kept available on the site) within your update period will continue to be usable with your license - which is freely transferable between machines. They offer a couple license tiers, custom work, and paid support hours. They even provide a free non-commercial license that is minimally limited and great for learning. The other great thing is that they are highly responsive to user feedback and bug reports. I've had a situation before where we found a bug in the course of a project and they fixed it in a matter of days, had a build sent over in time for my deadline, and then the fix was pushed for everyone in the following update. I frequently point them out as a model for the best way to offer a software product to both a professional and amateur market. It's essentially all the benefits of perpetual licensing while still providing a revenue stream for the company and ongoing support for professional users. No direct affiliation, but I've shared drinks with the devs and am a very pleased user.

crc32 7y ago

> Now you've shipped your thing that lasts forever. If it's a mechanical object, maybe you can get continuing revenue from spare parts, but those will bring in less than the original purchase. This might be bad for a tractor manufacturer; but an everlasting tractor would be great for society, right? The incentive now is to innovate in order to create a better more efficient product. E.g.; a more fuel efficient tractor which increases productivity - then you'll get another sale. Deliberately hobbling your product so that it needs repair or replacement disincentives innovation and is a form of rent-seeking https://www.investopedia.com/terms/r/rentseeking.asp https://www.investopedia.com/terms/r/rentseeking.asp and as such should be treated as a market failure. (I.e., legislated against)

closetohome 7y ago
Exactly - it's a perverse incentive against the interests of society.