9 ms·

Ask HN: Are subscriptions the doom of the tech sector?

• nkohari 4y ago
  What's the alternative, if those companies need subscription revenue to exist?
  • fear_and_coffee 4y ago
    [dead]
  • Tagbert 4y ago
    And if customers are unwilling to pay more than a nominal fee for one-time purchase software.
• moomoo11 4y ago
  Subscriptions are great model. If something really gives me value I will keep paying for it in return for newer content/features. Why would I spend $200 on some software one time when it will become obsolete within a couple years? Or maybe I only use it a few times. I’d rather pay 10-20 a month for one month. And never use it again. Or keep using it. In this economy I went ahead and cancelled a few subscriptions and kept some. I feel zero obligations and it’s great. TLDR if it brings you value use it. If not don’t.
  • wyager 4y ago
    > Subscriptions are great model. Not for the user. I give $0/yr to digital subscription services with zero marginal reproduction cost (SaaS, video, etc.) and somewhere in the range of $250-1000/yr for pay-to-own software. Reasons: 1. Pay-to-own software is almost universally of a higher quality than rental software 2. I want to host my own software and data, so I'm not instantly screwed if the software company goes under or unilaterally decides to change the way they do business 3. Subscription management is a pain in the ass (in terms of the effort required to track down subscriptions, cancel them, make sure you aren't still getting charged, etc.) whereas pay-to-own requires close to zero mental overhead The primary risk with pay-to-own software is that it stops being maintained and the OS APIs the software uses gradually go out of date, but this is much easier to address than the corresponding risk for rental software: that the company folds or the product gets cancelled, and you lose everything instantly!
  • ghaff 4y ago
    Subscriptions do somewhat align developer and user interests. But it somewhat depends on the application. Some small utility that I use for some task a few times a year? I'll be pretty dis-inclined to buy a subscription for that. Something that's a core part of my workflow (or that I generally get regular utility from)? I'm much more open to a subscription--depending on the pricing of course.
  • drdaeman 4y ago
    From a consumer perspective, I disagree. If a program costs $200 but is something that is used very infrequently and doesn't worth $200 to me - then it's poorly priced or best sold (or re-sold) as a service rather than a program. Subscription here is just a service fee in disguise, so why not make things straight? Let me pay $20 one-time to process whatever I want it to, and be done with it. And if something works for me today and I don't foresee any need for updates then what exactly I'm paying for? Developers will to continue development, that I may or may not need and may or may not care about? Doesn't sound right to me, unless I feel benevolent and charitable for some reason. I get the subscription model if something needs active regular maintenance. Drivers do (heck, I'd buy that rather than seeing companies "we no longer support shit, go buy our new hardware instead"), financial software does, a weather app does. But, say, a camera or note-taking app would certainly continue to work without any maintenance until I upgrade phone, or OS, or want some new features (and then I can buy an upgrade or figure out how to fix it on my own), so I won't buy a subscription (or very much hate doing so if it's my only option besides simply not having something I need at all).
  • TACD 4y ago
    Subscriptions for simple usage only make sense for a true service with an ongoing cost to the provider; cloud storage, email, movie streaming, etc. A subscription for a general-purpose application is incongruous; you’re purchasing a finished product with no ongoing costs, like a pair of shoes or a book, and it should cost a one-off fee that reflects the cost that went into producing it. What subscriptions are theoretically paying for is *updates* — the ongoing cost of supporting new technology, fixing bugs, and adding features. Requiring additional payment for additional work is totally fine, and some apps successfully use this model (Agenda (https://agenda.com https://agenda.com) and Nova (https://nova.app https://nova.app) are two that come to mind, and I’d be interested to hear of others). Requiring ongoing payment just for continued usage is predatory and leads to a perverse incentive where developers don’t actually need to provide updates or new features; they’ve got you as long as you still need the app’s basic functionality. It’s rent-seeking behaviour and it will prove to be as toxic in the digital realm as it is in real life.
    • adventured 4y ago
      Paying to rent Photoshop to use it for a task is absolutely no different than paying to rent a tree stump grinder. It all depends on what your needs are as to whether such rentals / subscriptions make sense for you or not. Don't rent the thing in question if it doesn't make sense for your context. If you need to use Photoshop daily for the next three years, paying monthly might not make sense. If you need it for two months, it might make a lot of sense to rent it instead of buying it. > Requiring ongoing payment just for continued usage is predatory No it's not. You're not entitled to their property. If you don't like their payment terms, don't purchase their service. It's no different than purchasing a television one-off; don't pay $5,000 for a TV if you don't agree with the pricing. It doesn't matter if you're paying monthly or one time, the principle is identical. There are available alternatives to just about every type of software.
  • super256 4y ago
    > Why would I spend $200 on some software one time when it will become obsolete within a couple years? Or maybe I only use it a few times. I spent 80€ on Strongbox, and I think it was a similar amount for canarymail lifetime. Strongbox is a keepass2 client, canary is an email client. I expect this software to work without any issues for the next 10 years. Neither keepass2-databases nor imap/smtp will be meaningfully developed in the near future, therefore the maintenance for these apps is probably close to zero. Okay, actually, canary got Sequoia VC money recently and switched to a subscription model. Since then, they added stuff that is useless to me, but I don't care as long as my lifetime licence still works. The core functions likely won't change.
  • jmathai 4y ago
    I've grown weary of subscriptions. But I also think people who don't want to pay monthly would definitely be opposed to paying the equivalent one-time purchase. Remember, Adobe Photoshop was like $500+ before they made it available via subscription.
    • mirkules 4y ago
      When I used it, it was $300 IIRC. And I happily paid that price, knowing it would work for me for years to come. In the same vain, I paid $200 for Logic Pro X three years ago and it still does what I paid for. I’m about to spend $300 on Final Cut Pro. If Logic Pro went subscription only at, say, Photoshop prices at $20/mo, that would be the equivalent of $720 so far. Even though Logic is seriously awesome, I would not pay it and just go with something else. Edit: the $20/mo is the price only if you pay for a whole year. Otherwise it’s actually $31.50 per month. So you are either paying a lump sum of $240 (committing to a full year) or $31.50/month.
      • jmathai 4y ago
        I still use Photoshop CS3. It doesn't support retina and the dialogs are super grainy. I pray with each OS update that it continues working.
    • zamnos 4y ago
      If you pay $500 for Photoshop, and then never upgrade it, then that's $500. Even if you're using Photoshop 5 from 1998. If it's subscription, and you pay $20/month, you always get the latest version, but you'll hit break even in just over two years. The problem comes when life throws a couple lemons your way, and money gets tight. Something like upgrading Photoshop can be put off until there's money for it, because other things, like food or gas, comes first. If times are tough and the $20 that month means going hungry some nights, that's a rough fucking situation.
    • JohnFen 4y ago
      I will not do software subscriptions at any price for a number of reasons, but the primary two are: it's good avoid any fixed, recurring expenses wherever possible; and I don't want software that I use heavily to stop working when the company decides to drop it, and I don't want software I use heavily to change without my agreeing to it and it happening on my schedule. Also, long-term, the subscription costs more. I would much rather pay $500 for software once than pay an ongoing fee that totals the same amount.
  • Eddy_Viscosity2 4y ago
    Photoshop used to be a piece of software you could buy once and then use. You could pay to upgrade each year, or you could keep using your current version and not have access to the new features. Not anymore, its keep buying the new features whether you need them or not. Stop paying, and you have to stop using all of it. The consumer doesn't get a choice. The worst part I think about many subscription models, is that they can force changes on you that actually make the product WORSE. Hey this new version of the software does X, and I hate X. I want to keep using the older version but I can't and I have to pay to get something I don't want. If you HAD to subscribe to other things like software makes you, like you have to have an office chair subscription and you had to pay for whatever nonsense changes they made to your chair or you get no chair at all, you'd probably find that a bad deal. Especially if all the chair companies operated the same way.
    • adventured 4y ago
      > The consumer doesn't get a choice. The consumer always has an obvious choice: don't use Photoshop. It's not a monopoly product. Use something else. Consumers are not entitled to access to Photoshop as a birthright.
      • Eddy_Viscosity2 4y ago
        What if it is a monopoly product, as more and more products are becoming? It need not even be a monopoly, just a situation where the supplier has vastly more power than the consumer. Are they not allowed to see that its a bad deal and want better? There can be more options than just take or leave it. Suppliers are not entitled to screw over consumers as a birthright.
        • Synthezoid 4y ago
          No, no, no. To a free market apologist, there's no such thing as inelastic demand. Every item is a completely optional luxury item that you can choose to walk away from without consequence. Nothing is ever a Hobson's Choice. It's a great world, living in an Econ 101 textbook. The hilarious thing is that a core tenet of conservatism used to be that widespread private property ownership is the cornerstone of liberty. Rental models, which keep the maximum number of people in debt in the form of eternally-owed rent, were bad. In today's Ayn Rand-worshipping neoconservative free-market religious dogma, the core tenet is The Supply Side Gets What It Wants, NOW, And It's Your Fault If You Don't Like It. And the ultimate socioeconomic effects, any sort of principled view beyond "If the people it costs the most to don't like it, they can lump it", don't matter anymore.
• cobbaut 4y ago
  No (betteridge's law). But the tech sector is the doom of the consumer :)
• quadrifoliate 4y ago
  > However, they weren't even bringing enough value without subscription In theory, anyway, it's a good thing that they get cut if they are not bringing enough value. Sure, downturns are a time when this happens in earnest, but you'll always get people complaining about the service and claiming "We could save X dollars here" if it's not adding value. In practice -- sure, there's probably a lot of services that are low-value and got "floated" by the general upswing in the last couple of years. But to me, this is probably true of non-subscription applications and physical goods as well. People are going to be thinking twice about buying those as well during downturns, so the impact isn't limited or specific to subscription-based models.
• SQL2219 4y ago
  Having sold both subscriptions and CDROM based B2B software, I can tell you with confidence that it was easier to sell a $2,000 software package once, then a $200 monthly subscription. That was my experience in the B2B world about 20 years ago.
  • bombcar 4y ago
    There’s a definite niche in the $5-50 a month range where people can buy b2b software rentals that help their job without much paperwork. But once you hit consumer signups or bigger prices it gets much harder.
    • matwood 4y ago
      Many companies require receipts for anything > $50 on an expense report. Under that and employees will buy/try tools that help them with their job, and not have to justify it to anyone.
  • greazy 4y ago
    As an end user who has requested subscription licenses from my employer, this is also my experience. They are very very reluctant to purchase subscriptions, even if it's year to year cancel any time.
  • 369548684892826 4y ago
    > it was easier to sell a $2,000 software package once, then a $200 monthly subscription Good work selling a subscription after already charging a one-off fee!
• lockhouse 4y ago
  I personally really enjoy the incentives that subscriptions create for developers. If you expect me to keep paying for your software then I expect you to keep providing value. The other nice thing is the continuous revenue stream ensures that developer can continue working on enhancements, lowering the risk of it becoming abandoned. I also get to be on the latest greatest version at all times.
  • wyager 4y ago
    > If you expect me to keep paying for your software then I expect you to keep providing value. If you make paid software part of your workflow, you're going to keep using it whether they keep providing value or not. When someone else captures your workflow into their own infrastructure, there tends to be a high cost associated with extricating yourself.
    • enos_feedler 4y ago
      This is why I think public cloud and open standards for connecting to them will be so important going forward. Its okay for a developer to capture your workflow into their software, but it should be possible to run it in your infrastructure. You can still pay for the software subscription style, but use your infrastructure and pay metered
  • jclardy 4y ago
    Exactly - IMO any subscription service that is seeing flattening growth is likely focused too much on "growth hacking." Changing the text on your paywall can only do so much, as those subscribers will still churn if the product doesn't improve to meet their needs over time.
• benjaminwootton 4y ago
  Depending on the numbers, I feel more comfortable signing up for a subscription than a one off payment. With the one off payment it’s inevitable that they will bump the version number and eventually cut me off. With the subscription I can pay the smaller fee for as long as value is provided.
  • mirkules 4y ago
    If they can cut you off after having paid a lump sum, you never owned it to begin with.
    • ghaff 4y ago
      While you can use things like VMs with an old (insecure) OS, pretty much all of your software will stop running on your day-to-day hardware/OS at some point.
      • mirkules 4y ago
        That is true, but that happens on my terms. And there are also drawbacks on being on the very latest of everything. Examples include: becoming a de-facto beta tester for new features, having UI elements change non-intuitively at a critical moment, software becoming incompatible with older input, etc. You also have to choose between paying for the software or discontinuing its use permanently. With an old version, I can just go use whatever VM or machine I need to convert files, modify them, perform last-minute changes on my paper that’s due in the morning or whatever. I’ll also point out most of the subscription plans are annual, lump sum plans, otherwise your monthly is even higher. So you get the worst of both worlds: having to pay a de-facto lump sum (which renews automatically annually), and not having the right to use it once you cancel it.
        • ghaff 4y ago
          I actually get subscription fatigue (per the title of another post) and am pretty careful personally about adding another "money leak" as a friend of mine correctly calls them. I'm mostly just pushing back on the notion that, when it comes to software, there can generally be the same sort of perpetual ownership (or at least useful ownership) that one associates with, say, buying a physical book.
• twblalock 4y ago
  I suspect that quite a few subscription-based companies are going to have a hard time. They have no realistic alternative revenue models so they might fail. However, consumer-facing subscription models are not the majority of the tech sector. Most tech companies have other ways of making money, and the tech sector as a whole will be fine.
• paxys 4y ago
  Whenever you have a question of this sort, it's important to note that: 1. I personally don't like XYZ 2. My echo chamber doesn't like XYZ 3. Consumers at large don't like XYZ 4. XYZ will be the death of a company or the industry or the economy are all very different realities. In this particular case, I'm pretty confident in saying that it is actually 1 & 2. The tech sector will be just fine.
• aleksiy123 4y ago
  I know lots of people complain about subscription but for most services this seems a realistic pricing based onto the fact these services have recurring costs in the form of infra, maintenance, employees? On the other end the service is providing you recurring value otherwise you would just drop it.
  • wyager 4y ago
    > these services have recurring costs in the form of infra Only because these companies have forced us onto their cloud platforms in the interest of justifying/enforcing continuous payment. I don't want to use Adobe's crappy "infra", for example, and neither do 95% of their customers.
    • aleksiy123 4y ago
      Hosting your own infra is still a recurring cost given that hardware has an end of life. These servers also need employees to maintenance then and electricity to power them. There's really no such thing as pay once use forever for anything physical. You're just paying an estimated lump sum for the subscription revenue it would produce over it's life time
      • rednerrus 4y ago
        We used to buy software that ran on our machines. We expected a certain amount of support. Eventually you would have to go purchase version x+1 of the software.
        • aleksiy123 4y ago
          The support is priced in, its not like they are giving it away for free. And then you still had purchase the next version which sounds like an informal subscription with a longer period?
          • JohnFen 4y ago
• jclardy 4y ago
  > However, they weren't even bringing enough value without subscription or with ads This value is objective? Therein lies the issue with this argument. For some people, a spam blocking app is a waste of $2/mo. For another person, it saves them a ton of headache. I'm currently subscribed to 12 apps on my iPhone and I have 20 others that I let expire over the past year - I pay for them because I enjoy them and would like to support the developers and to continue using them. I have a ton of paid apps from years past that are now just junk, because the $5 the developer charged 10 years ago couldn't support development for 10 years of service. Subscriptions are the answer to that problem. Subscriptions will naturally go away if they don't work, but that also means those services/products go away as well. Also where is this data on flattening subscriber growth that you have access to?
• lapcat 4y ago
  Related: "Subscription fatigue and related musings" https://news.ycombinator.com/item?id=34949683 https://news.ycombinator.com/item?id=34949683
• deleted 4y ago
  [deleted]
• anon223345 4y ago
  For my business, if it’s a subscription, we actually invest money in building out the capability in house because subscriptions increase over time Like GitHub for example, I love it, it provides value, but it costs a ton if you have a lot of devs, and you can spin your own git server
  • jnwatson 4y ago
    If you think the value of GitHub is in the git server, you’re not using it right.
  • JohnFen 4y ago
    But GitHub is a service, not software. Subsciptions to ongoing services make sense.
• deleted 4y ago
  [deleted]
• didntreadarticl 4y ago
  I'm seeing a lot of basic kids apps on ipads that should just be 'pay once' but instead its a bullshit subscription specifically because they know mum and dad will forget about it and keep paying for months after the kid has stopped using the app
• bobleeswagger 4y ago
  There's plenty of folks out there, doing creative work, using legacy systems, that don't receive security updates, because you used to own your software when you bought it. Personally, I think we are about to see a huge resurgence in self hosting and returning to "old ways" that worked before subscriptions. One great example of the anti-pattern: Look at how GitHub has shit the bed since MS bought them. Tons of QoL developer features were pushed behind the enterprise paywall, actions was constantly down and having issues, and they did not innovate anything. Beware robber barons who innovate nothing and expect you to pay more.
  • JohnFen 4y ago
    > I think we are about to see a huge resurgence in self hosting and returning to "old ways" that worked before subscriptions. I've been seeing signs of that, a bit. Even my daughter, who is in no way any more computer-savvy than anyone else her age, asked me to help her self-host a number of things because she was fed up with subscriptions.
• cjbgkagh 4y ago
  I sell software with an inflation pegged maintenance component. It acts as a perpetuity and as interest rates are so low it makes the net present value (NPV) of the perpetuity very high to the point it dominates the initial purchase price. If real interest rates were not so low I could invest the initial purchase price and use the recurring revenue from that investment to cover ongoing costs. People’s expectations are anchored and it is hard to sell against that, they expect to pay X for the software price with a Y yearly maintenance. So we stick to industry standard where possible. The standard varies by country so we have country specific setups. I’m annoyed by subscriptions as well but mostly because I dabble in a lot of things and it’s expensive to have a ongoing subscriptions for something I may only use a few days a year. I generally try to get perpetual licenses and stick to old versions. The software I make is very niche and domain specific, users spend 70% of their work time on it and are vastly more productive with it. The end users also hate change so they’re very happy to keep paying so that someone will care about their problems and they don’t want upgrades for the sake of it.
  • tiffanyh 4y ago
    Do you also increase your price to new potential customers at the same inflation adjusted rate as existing customers? Because if not, how do you not get resentful existing customers who are long time buyers of your service who end up paying more per month than a new customer?
    • cjbgkagh 4y ago
      Yeah, the initial price is pegged to CPI inflation as well. So everyone is paying the same amount, I’ve grandfathered in a few old customers on sweetheart deals, it’s a lower cost substitutable good so my market is at the low end and sometimes they really don’t have much money. It’s an ignored segment and we’ll work our way up the value chain to the high end eventually. It’s a slow but steady process.
      • fidgewidge 4y ago
        Would you mind revealing what the segment is? Now I'm curious!
• rcarr 4y ago
  Monthly subscriptions should be reserved solely for software that is adding new content extremely frequently e.g music, movies, games etc. Not for regular software. For regular software you should be able to buy a license that gives you one to three years of updates and then you have to upgrade to the next major version if you deem it worthy of the money. It’s essentially still a subscription but on a longer time frame. People worry about growth but more people are being born every second who will eventually grow up to need software. And you don’t even have to wait that long because there’s still a lot of adults without computers who will eventually need software in the future when they become connected. The people crying about subscriptions being the only viable model are the people looking to get rich quick and are probably backed by some VC company that’s hounding them to increase users and profits. If your software is good, you’re in no rush to buy a yacht, and you have confidence that you’re still going to be around in 10 years time then you don’t need to mess about with subscriptions because you know you’re going to have revenue either through people recommending your product to others or reinvesting at each major version update. I try to avoid subscriptions wherever possible, and will always purchase yearly if it’s an option. But I get that monthly allows people who can’t afford the up front cost to join in too. I really don’t think it’s the way to go though. My only software subscriptions currently: - Feedbin (yearly) - Duolingo (yearly) - Amazon (yearly) - Zwift (monthly) - Netflix (monthly)
• waprin 4y ago
  Firstly, it's tough to avoid subscriptions on platforms like web and iOS because it's awkward to distribute a v1, then 2 years later a v2 as a new purchase, the way desktop software used to work. On web, you'd have to run multiple versions server-side which is tricky, on mobile you'd have to release a separate app which is not what the App Store UX is designed for at all. As a consumer, of course I have "subscription fatigue" and some apps when I get a $20 monthly charge I question whether I really need it. As an entrepreneur, it's all just customer lifetime value , there's a lot of factors to whether subscription or lifetime makes more sense. Recurring revenue is easier to build a business upon but given people have subscription fatigue, there's a lot of merit to looking for ways to sell one-off, despite the aforementioned challenges. With all this said, my biggest theory is that we _think_ people have subscription fatigue, but it's an illusion. What's really happening is that web software was VC subsidized for a long time, both directly (with sites like Facebook having no ads their first decade of existence), and indirectly (with many startups forgoing monetization favoring growth following companies like Facebook's lead). So people got anchored to web software being free/cheap for a long time. When most people say "I hate subscriptions, I don't want to pay $20/month, just sell me the one-off software!" So as a business owner you say, ok, then give me $200 for lifetime, and they say "$200 for an app, that's crazy! I want to pay $20 lifetime". This debate looks like it's about subscription when really it's a debate about price. And consumers have been psychologically anchored to apps being very cheap for a long time - nobody would bat an eye at a $14.99 book on Amazon but that's considered a hefty price tag for an app that might have taken a fair bit of design and development (in-demand skills). Last but certainly not least, most software is internet enabled these days. Not all of it, but a lot of it. It's risky as a business owner to offer a lifetime purchase for something that will have ongoing server costs. This is doubly true if there's an AI component that might involve expensive GPUs. As far as it being "counter-intuitive" to hike prices, the cheap money is gone, and businesses are realizing it's better to make a small number of paying customers happy then a large number of non-paying customers happy. If you're looking at this purely from a consumer perspective, you're sick of managing subscriptions, you're sick of getting billed for something you didn't use much, etc of course I relate. But if you put yourself in the shoes of software businesses, if people are going to complain and moan about paying $10 a month for an app because they think the most they should pay you is $20 their whole lives, you just can't build a sustainable business around those types of customers, when you have expensive design, development, marketing, and server costs.
• rkagerer 4y ago
  As a user/purchaser I hate subscription models. The only exception is when there really is distinctive ongoing value being delivered (eg. VPN provider). But my bar for what constitutes 'ongoing value' is high. I don't agree that it aligns incentives between me and the developer. I've found many of the subscription services I've signed up for tend to substantially degenerate in quality after a few years, as they start chasing a perceived larger market share by bloating with features I don't want and would be happy to pay more NOT to have (looking at you, Dropbox). By contrast, I'm still using lots of software I initially purchased decades ago (tools like Hard Disk Sentinel and Beyond Compare are great examples). I consider bugs to be manufacturing defects, for which fixes should be free (generally, minor version upgrades). Many parts of the world even have 'fit for stated purpose' laws to that end. If a car manufacturer sells you a lemon, they have some responsibility to fix the faulty parts (eg. recalls). When the developer adds new features I'm interested in, I'm happy to pay for them (traditionally, major version upgrades). I prefer having the opportunity to make my own decision about whether the new features are worth it, and keep using the old one if not. I own a ton of useful software, and I'd be broke if I had to pay for all of it on an ongoing basis. In a world where all software is subscription, we'd all be using the same handful of suites from the top vendors. Better for a rich and diverse ecosystem.
• grapesurgeon 4y ago
  [dead]
• rcarmo 4y ago
  I’ve simply stopped buying software or using any services that require subscriptions unless they are absolutely necessary or unique (like XMind). I can survive by buying updates to things like Parallels or my DAW every few years, but still look for alternatives nonetheless. I understand the developer side of the equation, but I have more important recurring payments to make (bandwidth, cloud services for self-hosting, energy, gas, school fees, etc.), so paying, say, €10 each, monthly, for half a dozen non-essential apps that I don’t use on a daily basis and don’t contribute directly to my goals just doesn’t add up—-I’d rather use a free alternative or do without, and many businesses will do the same, especially when faced with per-seat fees. There is, however, another factor at play—-many VCs evaluate businesses on the basis of ARR, and that often leads startups to make sure they have recurring revenue from the start and bake that into their operating model.
• stranded22 4y ago
  Stock market (at least UK) LOVE subscription models, much more than pay up front. I know this as our CEO continually tells us! It is continual cash flow and guaranteed money.