11 ms·

I love local first, but I struggle with how to monetize truly local-first applications. I know that's not everyone's favorite topic, but I've got bills to pay a

I love local first, but I struggle with how to monetize truly local-first applications. I know that's not everyone's favorite topic, but I've got bills to pay and payroll to make. Our product is about 80% local-first, with live collaboration and image hosting needing a server. I plan to change that eventually, but I worry that jailbreaking the app in this way will lead to financial troubles. Obsidian's model seems nice: base app is free, and then payment for the networked portions like sync+publish. However, there's little data available on how well this works and how big of a TAM you need to make it sustainable. Or if it's even possible without an enterprise revenue channel. For those interested in building robust local-first + collaborative apps, I've been using Yjs for a few years now and have overall really enjoyed it. Multi-master collaboration also poses some stimulating technical and design challenges if you're looking for new frontiers beyond the traditional client-server model.

jckahn 2y ago
Local-first isn’t a good model for projects that need to monetize. I’ve given this a lot of thought as well. I think it only makes practical sense for apps that exist to serve a public benefit.
- braden-lk 2y ago
  Yeah at the end of the day, we'll do what lets us keep doing. It does suck that local-first seemingly does not have monetary alignment with public benefit though. A robust local-first app (if we're including syncronization too) is very expensive to make. It's become a bit easier in the past couple of years though.
- worldsayshi 2y ago
  Yeah it sucks that monetisation and long term user interest is so often diametrically opposed. I would like to make open core software for a living but local first would take away the last reasonable venue for monetisation in those cases.
- the_other 2y ago
  > Local-first isn’t a good model for projects that need to monetize. It worked all the way through the 80s, 90s, and most of the 00s. It brought Adobe, Ableton and many others to their dominant market positions, despite rampant piracy. It works for a lot of games, still. What’s changed?
  - skydhash 2y ago
    Developers shooting themselves in the foot by providing applications for free or 4.99 usd for user growth. Now it feels more like B2B at scale than B2C.
    - jckahn 2y ago
      Thank you for articulating this so well. This is the core of why local-first applications can’t be effectively monetized. Users expect the best things for free or very cheap, and that’s mostly incompatible with the local-first concept.
    - wolpoli 2y ago
      It didn't help that Apple provided the $0.99 price point for iPhone applications when the expectation for programs before was at least $20.
  - robertlagrant 2y ago
    For Adobe: they would like your subscription money every month rather than occasional upgrades.
  - endisneigh 2y ago
    Did it work? The companies were generating far less revenue.
    - anonymousab 2y ago
      "need to monetize" != Need to enshittify and squeeze every drop of blood from the stone. There's a large spectrum of extreme profits before every getting to that point.
- spacebanana7 2y ago
  Depends on who the target customer is. As an enterprise I'd love to pay for a local application wherever possible. Oracle and MS still make billions on what are effectively local database applications. For consumers projects - especially desktop - it's more difficult. Many would rather pirate software than pay a few hundred dollars a year for a licence. However, the advent of highly controlled app stores has mitigated this somewhat.
samuelstros 2y ago
Yep. Local-first is further commoditizing software. Users will refrain from paying a subscription if their app version works and they don't need updates. The good old buy-a-license with 1 year of updates will likely make a big comeback. Local-first software, at least in lix universe [0], does not have fixed recurring maintenance costs like running servers. The elimination of fixed recurring maintenance costs will lead to a proliferation of "hobby apps" that are undercut by price/make it free altogether. [0] https://github.com/opral/monorepo/blob/main/lix/README.md https://github.com/opral/monorepo/blob/main/lix/README.md
- braden-lk 2y ago
  Which is wonderful for users that want that and are savvy enough to understand the limitations! However, hobby apps will not be able to afford designers or support or long-lived servers. As long as the social contract is clear, it's a net win. The issue comes when end-users expect the same level of support and continued updates from hobbyists as they got from commercialized apps. Spoiler alert: They absolutely do, at least in B2C. (Or in this case, H2C?)
  - samuelstros 2y ago
    > The issue comes when end-users expect the same level of support and continued updates from hobbyists as they got from commercialized apps. Maybe. Doesn't change the fact that software will be more commoditized. If software switching costs get close to 0 [because data is owned and can be opened by any other app], pricing pressure will get intense. Investors love cloud SaaS because they can rent-seek and extract margins of >80%. It's unlikely that apps that do not own and lock-in customer data can rent-seek to such a degree. If they do that, users will switch to the next best solution.
    - braden-lk 2y ago
      The product is not just the program. People don't just care about function, they care about how the app makes them feel, how it affects how they think others perceive them, etc. -- the companies that can afford to market and make their experiences sexy will run laps around purely functional apps that can't, no matter how well they solve the problem (unfortunately). Good marketers and designers do not have the same proclivities towards working for free as developers do. The hope is that the markets are large enough that niche apps can carve out a healthy revenue with a more personal, "homegrown" experience. This is where my product lives, and so far it's worked well enough. Also, switching cost is never zero or even close to it. The user still has to click a button. I know it sounds like I'm being facetious, but coming from a large-scale B2C industry, a single button click is an enormous obstacle.
deleted 2y ago
[deleted]
WhyNotHugo 2y ago
You're not the first person that I hear having the exact same issue, and it's a very real one. IMHO, the problem isn't with local-first application themselves. The problem is that our economic system rewards players responsible for vendor-locking (and any sort of similar practices), while providing no support (or even livelihood) for folks focusing on delivering a great product free of artificial restrictions.
snowwrestler 2y ago
> Or if it's even possible without an enterprise revenue channel. Is any company making money in software without an enterprise revenue channel, aside from games? Do regular people “buy software” anymore?
- dghlsakjg 2y ago
  Lots of photo, art, music and other hobby software is for purchase rather than subscription. Off the top of my head Topaz Labs is a company that offers a suite of photo tools for purchase. They are aimed at both professionals and high end hobbyists.
- hosteur 2y ago
  Yes. I have bought several non-DRM games from gog.com. Edit: I also recently bought Sublime text, several Jetbrains products and some other utilities.
- rsync 2y ago
  Yes, I buy software … I bought iExplorer which lets me sanely treat my iPhone like an external disk … and I bought Mountain Duck which lets me mount remote sftp as a disk in Finder … … and some other things…
- c01nd01r 2y ago
  I once bought Paste (a clipboard manager for Mac). However, they later switched to a subscription model, and I decided not to make a new purchase. Then Raycast, which is free, came out, and I stopped using Paste altogether.
gritzko 2y ago
Ha. I just realized it is 10 years since me, Alexei and Oleg launched our CRDT demo on HN. Funnily enough, it featured this mouse-cursor trick as well. It was a demo of the lib. It was August 2014 if I remember correctly. The post was submitted by Dan Abramov. Nostalgie. That repo is long abandoned https://github.com/gritzko/swarm https://github.com/gritzko/swarm Did CRDTs and local-first advance much since 2014? There is a bunch of research, way more CRDT libs on GitHub, but (somewhat) successful businesses you can count on one hand. I guess, that is the actual challenge - figure out the business model.
- jitl 2y ago
  It seems there’s a lot more availability of collaborative text editing features in SaaS apps I think due to the availability of convergent rich text data structures. Those seem to have democratized that specific feature. But I don’t see “local-first” with user-owned data or true decentralized apps being successful as businesses yet.
blacklion 2y ago
> but I struggle with how to monetize truly local-first applications. How did companies like Adobe and Microsoft become giants with a lot of money BEFORE subscription services?
- underdeserver 2y ago
  They got big in a time when subscription services weren't the norm.
  - imchillyb 2y ago
    That’s a cop out answer and hardly the whole truth. Their business model was give away and capture. Give away much of the possible revenue stream in order to lock in students, learning centers, governments, offices, and hobbyists. That method of success has been well documented and replicated world wide. The above method is how Google’s horrible products are currently winning. Google is a serial murderer of its own products and services yet governments, schools, and companies fall over themselves to use Google products. Capture is a valid, and proven, revenue strategy.
    - jpc0 2y ago
      > Google is a serial murderer of its own products and services yet governments, schools, and companies fall over themselves to use Google products. I doubt Gmail is going anywhere anytime soon, even more so on the workspace plans and for our company anyway that's the biggest Google product we bought into, ignoring Adsense, which is also going nowhere anytime soon. Google drive also seems like one of those long support products but regardless for enterprise trusting a single cloud provider to host all your data is a disaster waiting to happen and most have on prem plus two clouds
- deleted 2y ago
  [deleted]
mritchie712 2y ago
Linear[0] is local-first and monetizes just fine. https://news.ycombinator.com/item?id=37491239 https://news.ycombinator.com/item?id=37491239
- braden-lk 2y ago
  Sorry, to clarify in my case: Monetizing consumer products. Selling to companies is indeed much easier.
- baobabKoodaa 2y ago
  Sure, and there are also developers who live off pure donations "just fine", but pointing this out is not useful. It's easier to build a cloud based subscription business.
- jFriedensreich 2y ago
  how does linear keep working if the company disappears?
  - socksy 2y ago
    This is not part of the requirements for localfirst, it's part of the eventual goals. Here linear meet the requirements because you can continue to edit offline, and if they have a server outage then you don't lose your data because you have a local copy. However a collaborative software is of course useless in the long term if you can't collaborate anymore.
    - jFriedensreich 2y ago
      that is absolutely false, this is the KEY differentiator over "offline first"
fearthetelomere 2y ago
Remember: it's local-first, not offline. When users subscribe they should be purchasing a license that renews periodically. Local-first apps should validate the license (based on its expiry) by connecting to the internet to ensure users are subscribed. If they're not subscribed or they don't have internet access, they cannot use pay-walled features. You should offer a free, fair, and robust export tool for those not subscribed, though unfortunately not many companies do this. What am I missing here? The drawback is of course when customers don't have internet access but are still valid subscribers, so they lose access to pay-walled features. One option would be to only offer annual licenses (infrequent license checking), another would be to offer a complementary 7 day license extension for the short-term until the user reconnects to the internet (grace period). Stop giving away your value proposition for free. Get paid fairly.
- lolinder 2y ago
  Part of the ethos of local-first is permanent ownership of software over subscription services. Sure, it's not technically in the name, but it's very much part of the background for TFA.
  - fearthetelomere 2y ago
    I see, I didn't know that. Why would one sell permanent ownership of a networked product? I've been seeing the rise of "lifetime" subscription levels (pay once) for SaaS products, but I'm curious as to what the actual long-term economics of it are. If your cost of operations is not a one-time cost per user, I don't see how you can avoid a subscription model.
    - lolinder 2y ago
      > Why would one sell permanent ownership of a networked product? You wouldn't. Maybe TFA has an extreme interpretation of local-first, but the entire point of the article is eliminating the last vendor-controlled server from certain kinds of apps so that the user can own the software forever. Obviously this doesn't work for all apps, and it sounds like OP may have one that needs some form of network component. In that case what you propose would work very well.
XCSme 2y ago
I build a self-hosted application (so I guess that qualifies as local-first), how I monetize it: one-time payment to get the product, then yearly (optional) paid support/updates. I am not too worried about piracy, as that is a battle you'll never win (games have been fighting this game for a long time). Create a good product that solves a real issue, get in front of people, and provide a good service, so that they are happy to support you in the future (either for updates on this product or for building new products).
- braden-lk 2y ago
  At the $800 - $2500 price range, that sounds awesome, but I'm in a market where $50 is considered outrageous. It's self-inflicted pain, I know, but we make it work.
  - XCSme 2y ago
    I actually also started with a very low price ($19 on CodeCanyon 13 years ago), but slightly increased the price over time to match the benefits. Lately, I've also switched who I target. Before I was going more for basic website owners, that maybe don't even have a business. There were many problems with this: those customers don't really need such detailed analytics, they maybe don't have the technical expertise to self-host, they don't care about privacy as much, they would rather go for free or very cheap solutions, etc. Now I'm focused more on business and web agencies, which also enables the higher price (for them this is actually cheap, as Hotjar for example has plans starting at $800/month, while this is a one-time payment). Going for the big customers is a lot easier than B2C, unless you have good distribution or get lucky to get viral.
  - XCSme 2y ago
    PS: I checked your landing page, your product and landing page look amazing! I'm not into RPGs, but it looks really good.
  - XCSme 2y ago
    Also, your product seems to be a good use-case for the current AI boom. You could upsell your current users with AI-generate assets for their game (characters, maps, etc). Host your own text-to-image model, and add an UI in your app. Maybe have a tokens-based system for paying for the generations.
deegles 2y ago
Why not have it phone home to verify a subscription or a license key? Plenty of apps used to do this back in the day.
- braden-lk 2y ago
  Certainly! It's what we do currently-- it's just not viewed as "true local-first" if you do this, as there's a server-auth-dependency by definition. Local-first has a bit of FOSS-esque philosophy mixed in. (Which I love! But... also gotta make money to keep the lights on.)
immibis 2y ago
Them being not monetizable by you is exactly the reason why I should use them. You could charge me for a copy of the software, but that won't last forever like subscription cloud crapware does.

jckahn 2y ago

Local-first isn’t a good model for projects that need to monetize. I’ve given this a lot of thought as well. I think it only makes practical sense for apps that exist to serve a public benefit.

braden-lk 2y ago
Yeah at the end of the day, we'll do what lets us keep doing. It does suck that local-first seemingly does not have monetary alignment with public benefit though. A robust local-first app (if we're including syncronization too) is very expensive to make. It's become a bit easier in the past couple of years though.
worldsayshi 2y ago
Yeah it sucks that monetisation and long term user interest is so often diametrically opposed. I would like to make open core software for a living but local first would take away the last reasonable venue for monetisation in those cases.
the_other 2y ago
> Local-first isn’t a good model for projects that need to monetize. It worked all the way through the 80s, 90s, and most of the 00s. It brought Adobe, Ableton and many others to their dominant market positions, despite rampant piracy. It works for a lot of games, still. What’s changed?
- skydhash 2y ago
  Developers shooting themselves in the foot by providing applications for free or 4.99 usd for user growth. Now it feels more like B2B at scale than B2C.
  - jckahn 2y ago
    Thank you for articulating this so well. This is the core of why local-first applications can’t be effectively monetized. Users expect the best things for free or very cheap, and that’s mostly incompatible with the local-first concept.
  - wolpoli 2y ago
    It didn't help that Apple provided the $0.99 price point for iPhone applications when the expectation for programs before was at least $20.
- robertlagrant 2y ago
  For Adobe: they would like your subscription money every month rather than occasional upgrades.
- endisneigh 2y ago
  Did it work? The companies were generating far less revenue.
  - anonymousab 2y ago
    "need to monetize" != Need to enshittify and squeeze every drop of blood from the stone. There's a large spectrum of extreme profits before every getting to that point.
spacebanana7 2y ago
Depends on who the target customer is. As an enterprise I'd love to pay for a local application wherever possible. Oracle and MS still make billions on what are effectively local database applications. For consumers projects - especially desktop - it's more difficult. Many would rather pirate software than pay a few hundred dollars a year for a licence. However, the advent of highly controlled app stores has mitigated this somewhat.

samuelstros 2y ago

Yep. Local-first is further commoditizing software. Users will refrain from paying a subscription if their app version works and they don't need updates. The good old buy-a-license with 1 year of updates will likely make a big comeback. Local-first software, at least in lix universe [0], does not have fixed recurring maintenance costs like running servers. The elimination of fixed recurring maintenance costs will lead to a proliferation of "hobby apps" that are undercut by price/make it free altogether. [0] https://github.com/opral/monorepo/blob/main/lix/README.md https://github.com/opral/monorepo/blob/main/lix/README.md

braden-lk 2y ago
Which is wonderful for users that want that and are savvy enough to understand the limitations! However, hobby apps will not be able to afford designers or support or long-lived servers. As long as the social contract is clear, it's a net win. The issue comes when end-users expect the same level of support and continued updates from hobbyists as they got from commercialized apps. Spoiler alert: They absolutely do, at least in B2C. (Or in this case, H2C?)
- samuelstros 2y ago
  > The issue comes when end-users expect the same level of support and continued updates from hobbyists as they got from commercialized apps. Maybe. Doesn't change the fact that software will be more commoditized. If software switching costs get close to 0 [because data is owned and can be opened by any other app], pricing pressure will get intense. Investors love cloud SaaS because they can rent-seek and extract margins of >80%. It's unlikely that apps that do not own and lock-in customer data can rent-seek to such a degree. If they do that, users will switch to the next best solution.
  - braden-lk 2y ago
    The product is not just the program. People don't just care about function, they care about how the app makes them feel, how it affects how they think others perceive them, etc. -- the companies that can afford to market and make their experiences sexy will run laps around purely functional apps that can't, no matter how well they solve the problem (unfortunately). Good marketers and designers do not have the same proclivities towards working for free as developers do. The hope is that the markets are large enough that niche apps can carve out a healthy revenue with a more personal, "homegrown" experience. This is where my product lives, and so far it's worked well enough. Also, switching cost is never zero or even close to it. The user still has to click a button. I know it sounds like I'm being facetious, but coming from a large-scale B2C industry, a single button click is an enormous obstacle.

deleted 2y ago

[deleted]

WhyNotHugo 2y ago

You're not the first person that I hear having the exact same issue, and it's a very real one. IMHO, the problem isn't with local-first application themselves. The problem is that our economic system rewards players responsible for vendor-locking (and any sort of similar practices), while providing no support (or even livelihood) for folks focusing on delivering a great product free of artificial restrictions.

snowwrestler 2y ago

> Or if it's even possible without an enterprise revenue channel. Is any company making money in software without an enterprise revenue channel, aside from games? Do regular people “buy software” anymore?

dghlsakjg 2y ago
Lots of photo, art, music and other hobby software is for purchase rather than subscription. Off the top of my head Topaz Labs is a company that offers a suite of photo tools for purchase. They are aimed at both professionals and high end hobbyists.
hosteur 2y ago
Yes. I have bought several non-DRM games from gog.com. Edit: I also recently bought Sublime text, several Jetbrains products and some other utilities.
rsync 2y ago
Yes, I buy software … I bought iExplorer which lets me sanely treat my iPhone like an external disk … and I bought Mountain Duck which lets me mount remote sftp as a disk in Finder … … and some other things…
c01nd01r 2y ago
I once bought Paste (a clipboard manager for Mac). However, they later switched to a subscription model, and I decided not to make a new purchase. Then Raycast, which is free, came out, and I stopped using Paste altogether.

gritzko 2y ago

Ha. I just realized it is 10 years since me, Alexei and Oleg launched our CRDT demo on HN. Funnily enough, it featured this mouse-cursor trick as well. It was a demo of the lib. It was August 2014 if I remember correctly. The post was submitted by Dan Abramov. Nostalgie. That repo is long abandoned https://github.com/gritzko/swarm https://github.com/gritzko/swarm Did CRDTs and local-first advance much since 2014? There is a bunch of research, way more CRDT libs on GitHub, but (somewhat) successful businesses you can count on one hand. I guess, that is the actual challenge - figure out the business model.

jitl 2y ago
It seems there’s a lot more availability of collaborative text editing features in SaaS apps I think due to the availability of convergent rich text data structures. Those seem to have democratized that specific feature. But I don’t see “local-first” with user-owned data or true decentralized apps being successful as businesses yet.

blacklion 2y ago

> but I struggle with how to monetize truly local-first applications. How did companies like Adobe and Microsoft become giants with a lot of money BEFORE subscription services?

underdeserver 2y ago
They got big in a time when subscription services weren't the norm.
- imchillyb 2y ago
  That’s a cop out answer and hardly the whole truth. Their business model was give away and capture. Give away much of the possible revenue stream in order to lock in students, learning centers, governments, offices, and hobbyists. That method of success has been well documented and replicated world wide. The above method is how Google’s horrible products are currently winning. Google is a serial murderer of its own products and services yet governments, schools, and companies fall over themselves to use Google products. Capture is a valid, and proven, revenue strategy.
  - jpc0 2y ago
    > Google is a serial murderer of its own products and services yet governments, schools, and companies fall over themselves to use Google products. I doubt Gmail is going anywhere anytime soon, even more so on the workspace plans and for our company anyway that's the biggest Google product we bought into, ignoring Adsense, which is also going nowhere anytime soon. Google drive also seems like one of those long support products but regardless for enterprise trusting a single cloud provider to host all your data is a disaster waiting to happen and most have on prem plus two clouds
deleted 2y ago
[deleted]

mritchie712 2y ago

Linear[0] is local-first and monetizes just fine. https://news.ycombinator.com/item?id=37491239 https://news.ycombinator.com/item?id=37491239

braden-lk 2y ago
Sorry, to clarify in my case: Monetizing consumer products. Selling to companies is indeed much easier.
baobabKoodaa 2y ago
Sure, and there are also developers who live off pure donations "just fine", but pointing this out is not useful. It's easier to build a cloud based subscription business.
jFriedensreich 2y ago
how does linear keep working if the company disappears?
- socksy 2y ago
  This is not part of the requirements for localfirst, it's part of the eventual goals. Here linear meet the requirements because you can continue to edit offline, and if they have a server outage then you don't lose your data because you have a local copy. However a collaborative software is of course useless in the long term if you can't collaborate anymore.
  - jFriedensreich 2y ago
    that is absolutely false, this is the KEY differentiator over "offline first"

fearthetelomere 2y ago

Remember: it's local-first, not offline. When users subscribe they should be purchasing a license that renews periodically. Local-first apps should validate the license (based on its expiry) by connecting to the internet to ensure users are subscribed. If they're not subscribed or they don't have internet access, they cannot use pay-walled features. You should offer a free, fair, and robust export tool for those not subscribed, though unfortunately not many companies do this. What am I missing here? The drawback is of course when customers don't have internet access but are still valid subscribers, so they lose access to pay-walled features. One option would be to only offer annual licenses (infrequent license checking), another would be to offer a complementary 7 day license extension for the short-term until the user reconnects to the internet (grace period). Stop giving away your value proposition for free. Get paid fairly.

lolinder 2y ago
Part of the ethos of local-first is permanent ownership of software over subscription services. Sure, it's not technically in the name, but it's very much part of the background for TFA.
- fearthetelomere 2y ago
  I see, I didn't know that. Why would one sell permanent ownership of a networked product? I've been seeing the rise of "lifetime" subscription levels (pay once) for SaaS products, but I'm curious as to what the actual long-term economics of it are. If your cost of operations is not a one-time cost per user, I don't see how you can avoid a subscription model.
  - lolinder 2y ago
    > Why would one sell permanent ownership of a networked product? You wouldn't. Maybe TFA has an extreme interpretation of local-first, but the entire point of the article is eliminating the last vendor-controlled server from certain kinds of apps so that the user can own the software forever. Obviously this doesn't work for all apps, and it sounds like OP may have one that needs some form of network component. In that case what you propose would work very well.

XCSme 2y ago

I build a self-hosted application (so I guess that qualifies as local-first), how I monetize it: one-time payment to get the product, then yearly (optional) paid support/updates. I am not too worried about piracy, as that is a battle you'll never win (games have been fighting this game for a long time). Create a good product that solves a real issue, get in front of people, and provide a good service, so that they are happy to support you in the future (either for updates on this product or for building new products).

braden-lk 2y ago
At the $800 - $2500 price range, that sounds awesome, but I'm in a market where $50 is considered outrageous. It's self-inflicted pain, I know, but we make it work.
- XCSme 2y ago
  I actually also started with a very low price ($19 on CodeCanyon 13 years ago), but slightly increased the price over time to match the benefits. Lately, I've also switched who I target. Before I was going more for basic website owners, that maybe don't even have a business. There were many problems with this: those customers don't really need such detailed analytics, they maybe don't have the technical expertise to self-host, they don't care about privacy as much, they would rather go for free or very cheap solutions, etc. Now I'm focused more on business and web agencies, which also enables the higher price (for them this is actually cheap, as Hotjar for example has plans starting at $800/month, while this is a one-time payment). Going for the big customers is a lot easier than B2C, unless you have good distribution or get lucky to get viral.
- XCSme 2y ago
  PS: I checked your landing page, your product and landing page look amazing! I'm not into RPGs, but it looks really good.
- XCSme 2y ago
  Also, your product seems to be a good use-case for the current AI boom. You could upsell your current users with AI-generate assets for their game (characters, maps, etc). Host your own text-to-image model, and add an UI in your app. Maybe have a tokens-based system for paying for the generations.

deegles 2y ago

Why not have it phone home to verify a subscription or a license key? Plenty of apps used to do this back in the day.

braden-lk 2y ago
Certainly! It's what we do currently-- it's just not viewed as "true local-first" if you do this, as there's a server-auth-dependency by definition. Local-first has a bit of FOSS-esque philosophy mixed in. (Which I love! But... also gotta make money to keep the lights on.)

immibis 2y ago

Them being not monetizable by you is exactly the reason why I should use them. You could charge me for a copy of the software, but that won't last forever like subscription cloud crapware does.