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1. Recurring Revenue In some sense, every business dreams of wanting to be a recurring revenue business. - Gyms want you to pay monthly, and discount annual p

1. Recurring Revenue In some sense, every business dreams of wanting to be a recurring revenue business. - Gyms want you to pay monthly, and discount annual plans (and sometimes discount again if you try to cancel your annual plan) - Restaurants want you to come frequently, 6th time is a free sandwich or coffee - Bars want you to come to happy hour, at the same time, every day - Content creators often have a daily, weekly, biweekly, or monthly cadence SaaS is all about recurring revenue. In theory, SaaS aligns incentives because you can quit once the product or service deviates from your expectations or no longer serves your needs. Of course, in practice, SaaS companies want to keep the monthly / annual drip coming and may make it hard to export your data or switch providers. Local first software could be one antidote to this (https://www.inkandswitch.com/local-first/ https://www.inkandswitch.com/local-first/) and perhaps there are others. 2. SaaS loosely resembles old-school semiconductor VC investing SaaS is similar to old-school tech VC investing because the marginal cost is low but the upfront cost is somewhat high / fixed. A lot of investment houses think in terms of recurring revenue as well (e.g. your mortgage is a monthly payment). So if you want external funding, show a premise of recurring revenue!

c-linkage 4y ago
You are correct, but I also hate that "recurring revenue" is the right answer. Not only does a subscription fee act as a constant resource drain (as opposed to a one-time charge) but it further pushes society into the zone of "you won't own anything and like it". Human life and the ability to interact with others and our environment should not be reserved to those that can sustain a high velocity of money. Focusing on a consistent cash flow makes financial management easy but makes everything else suck. It optimizes for the wrong metric. UPDATE: You can also look at subscription fees as a tax on productivity. If I pay once for Adobe software I can amortize that over the entire time I use it, and eventually the monthly cost will reach nearly zero. With a subscription fee I can never amortize the software, meaning the fee is effectively a tax. And if I stop paying the fee I completely lose my ability to use the product.
- WA 4y ago
  On the other hand, you can regard one-time fees as subscriptions in disguise, because hardly any useful software can be used forever. File formats change, collaboration changes, operating systems change. Yeah you could run your bought-once MS-DOS accounting software in a VM forever, but most useful software has a clear expiration date, especially if you try to collaborate on data.
  - josephg 4y ago
    Even knowing that, I much prefer software I buy and own forever. I have too many subscriptions already and I feel icky knowing there’s all these leeches draining money automatically from my bank account every month, with not enough visibility. A few weeks ago I was looking at iPad apps to help me learn piano. They all want a $15/month subscription or something, and I hate it. I know what I’m like - I’ll subscribe then forget and end up spending $100 for an app I use twice. I ended up getting an in person music teacher instead. It’s more expensive, but it feels better spending the money like that. Software I buy then own (or even, pay for once a year for updates like Jetbrains) feels better because each renewal feels like an active, conscious choice.
    - birdman3131 4y ago
      I have a file manager for my phone. (File commander) They have a pro version that I would gladly pay for but the only way to get it is as a monthly subscription. So I just don't buy it.
      - cercatrova 4y ago
        For apps like those, I just find cracks online and install those apps with all pro features included.
      - ThunderSizzle 4y ago
        Why would a file manager that runs locally and doesn't require tons of flashy features have a monthly subscription? It's so stupid. I prefer the Jetbrains model of pay subscription or license, but subscriptions become cheaper as you had more time subscribed (IIRC, 30% discount on 3rd year)
asdff 4y ago
You would think lump sum is better. Monetizing sooner means you can put that money into other investments sooner that will generate greater return for you overall than having it dripped out to you at a fixed schedule.
- sofixa 4y ago
  No, because the lump sum can't be depended upon, it's unpredictable. Will you have 50 buyers this month or none at all because it's holiday season? Or maybe you'll saturate your market niche. You can't plan anything ahead.
  - asdff 4y ago
    You can say the same for whether or not you will net a subscriber next month or have cancellations. What I'm saying is that if your license is priced correctly, that revenue the consumer pays up front can go into a fund that exists to perpetually support this software indpendent of having to maintain an appeased subscriber base in perpetuity. It's this idea of having a growing pile of money that exist because of what already happened, versus having constant revenue that must continue to be depended upon indefinitely.
    - Gigachad 4y ago
      It’s much easier to get users to stay subscribed than it is to get them to actively buy every period.
      - asdff 4y ago
        You don't need to get them to buy every period if they paid a lump sum up front. That's the whole point. Money is capable of growing for you, so take advantage of that fact in your business model and unshackle yourself from subscriber dependency.
- xboxnolifes 4y ago
  In the perfect world where every monthly subscriber would be willing to pay 20-100 times (or more) the amount for a one-time, up-front purchase, sure. But that's not reality.
phkahler 4y ago
Repeat business at your local pub is recurring revenue. SaaS is just collecting rent.
intelVISA 4y ago
SaaS is also quite easy to churn out as a lone SWE, think most of us prefer to make our own income than toil on legacy CRUD apps all day.
lotsofpulp 4y ago
> In some sense, every business dreams of wanting to be a recurring revenue business. As do individuals. The only thing preventing it before was the expense in enforcing licensing terms. Today’s software and cloud hosting makes that much more trivial.
dustinmoris 4y ago

c-linkage 4y ago

You are correct, but I also hate that "recurring revenue" is the right answer. Not only does a subscription fee act as a constant resource drain (as opposed to a one-time charge) but it further pushes society into the zone of "you won't own anything and like it". Human life and the ability to interact with others and our environment should not be reserved to those that can sustain a high velocity of money. Focusing on a consistent cash flow makes financial management easy but makes everything else suck. It optimizes for the wrong metric. UPDATE: You can also look at subscription fees as a tax on productivity. If I pay once for Adobe software I can amortize that over the entire time I use it, and eventually the monthly cost will reach nearly zero. With a subscription fee I can never amortize the software, meaning the fee is effectively a tax. And if I stop paying the fee I completely lose my ability to use the product.

WA 4y ago
On the other hand, you can regard one-time fees as subscriptions in disguise, because hardly any useful software can be used forever. File formats change, collaboration changes, operating systems change. Yeah you could run your bought-once MS-DOS accounting software in a VM forever, but most useful software has a clear expiration date, especially if you try to collaborate on data.
- josephg 4y ago
  Even knowing that, I much prefer software I buy and own forever. I have too many subscriptions already and I feel icky knowing there’s all these leeches draining money automatically from my bank account every month, with not enough visibility. A few weeks ago I was looking at iPad apps to help me learn piano. They all want a $15/month subscription or something, and I hate it. I know what I’m like - I’ll subscribe then forget and end up spending $100 for an app I use twice. I ended up getting an in person music teacher instead. It’s more expensive, but it feels better spending the money like that. Software I buy then own (or even, pay for once a year for updates like Jetbrains) feels better because each renewal feels like an active, conscious choice.
  - birdman3131 4y ago
    I have a file manager for my phone. (File commander) They have a pro version that I would gladly pay for but the only way to get it is as a monthly subscription. So I just don't buy it.
    - cercatrova 4y ago
      For apps like those, I just find cracks online and install those apps with all pro features included.
    - ThunderSizzle 4y ago
      Why would a file manager that runs locally and doesn't require tons of flashy features have a monthly subscription? It's so stupid. I prefer the Jetbrains model of pay subscription or license, but subscriptions become cheaper as you had more time subscribed (IIRC, 30% discount on 3rd year)

asdff 4y ago

You would think lump sum is better. Monetizing sooner means you can put that money into other investments sooner that will generate greater return for you overall than having it dripped out to you at a fixed schedule.

sofixa 4y ago
No, because the lump sum can't be depended upon, it's unpredictable. Will you have 50 buyers this month or none at all because it's holiday season? Or maybe you'll saturate your market niche. You can't plan anything ahead.
- asdff 4y ago
  You can say the same for whether or not you will net a subscriber next month or have cancellations. What I'm saying is that if your license is priced correctly, that revenue the consumer pays up front can go into a fund that exists to perpetually support this software indpendent of having to maintain an appeased subscriber base in perpetuity. It's this idea of having a growing pile of money that exist because of what already happened, versus having constant revenue that must continue to be depended upon indefinitely.
  - Gigachad 4y ago
    It’s much easier to get users to stay subscribed than it is to get them to actively buy every period.
    - asdff 4y ago
      You don't need to get them to buy every period if they paid a lump sum up front. That's the whole point. Money is capable of growing for you, so take advantage of that fact in your business model and unshackle yourself from subscriber dependency.
xboxnolifes 4y ago
In the perfect world where every monthly subscriber would be willing to pay 20-100 times (or more) the amount for a one-time, up-front purchase, sure. But that's not reality.

phkahler 4y ago

Repeat business at your local pub is recurring revenue. SaaS is just collecting rent.

intelVISA 4y ago

SaaS is also quite easy to churn out as a lone SWE, think most of us prefer to make our own income than toil on legacy CRUD apps all day.

lotsofpulp 4y ago

> In some sense, every business dreams of wanting to be a recurring revenue business. As do individuals. The only thing preventing it before was the expense in enforcing licensing terms. Today’s software and cloud hosting makes that much more trivial.

dustinmoris 4y ago