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.
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.
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.
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.
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.
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)
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.
> 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.
> 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?
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.
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.
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.
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.
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
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
What's the alternative, if those companies need subscription revenue to exist?
Related: "Subscription fatigue and related musings" https://news.ycombinator.com/item?id=34949683
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.
No (betteridge's law). But the tech sector is the doom of the consumer :)
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.
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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.