
Ask HN: How to Convince Customers to Switch from One-Time Fee to Subscription - m33k44
How would you convince customers from an industry who are used to paying one-time fee for a product to move to a subscription based model? What would be your compelling argument(s)? What approach would you use to nudge them towards a subscription model?
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waste_monk
Do what Jira does - your license is good for support and releases out to one
year (or whatever) from renewal, but the core software and the entire
ecosystem built around it is constantly moving. Nothing stops working if you
don't renew your licensing, but the world moves on without you.

Why should your customers subscribe if the current one-time fee gets them
everything they need? that's just poor business. But if it brings value, and
the cost is reasonable, they'll happily keep renewing.

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gknoy
Consider adding a new tier of value. As a customer, suddenly having to pay
more (forever) for something will feel like a bitter prospect, unless it is
positioned as something better I am opting into. I don't know what your
product is or your target market (can you share more details?), but consider
adding "Pro" features, or a service tier that adds warranty or enterprise
support.

(I have no personal experience with this except as a customer of things that
have subscription vs free tiers.)

Patrick McKenzie (known here as 'patio11) has blogged extensively about SAAS-
related things, including pricing [0], [1]. If you haven't read his stuff, you
may find them helpful.

0: [https://www.kalzumeus.com/2012/08/13/doubling-saas-
revenue/](https://www.kalzumeus.com/2012/08/13/doubling-saas-revenue/) 1:
[https://www.kalzumeus.com/2012/09/21/ramit-sethi-and-
patrick...](https://www.kalzumeus.com/2012/09/21/ramit-sethi-and-patrick-
mckenzie-on-why-your-customers-would-be-happier-if-you-charged-more/)

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mindcrime
Some reasons you can use:

1\. Better alignment of incentives. Since your company now needs them to keep
renewing a subscription on some regular basis, there's even more of an impetus
for you to deliver great value to them.

2\. Paying in inflated future dollars, which are less valuable than today's
dollars. (This is assuming you let them "lock in" today's price by signing up
for a lengthier subscription. Whether or not you require some degree of pre-
payment here is a knob you can tune. See #5 below)

3\. More predictable costs for the customer

4\. May allow customer to move something from being a capex to an opex, which
can be advantageous in some circumstances (getting approvals for capital
expenditures is often lengthy, difficult, etc.)

5\. You can create a lot of flexibility by fiddling with the length of the
subscriptions, discounts for pre-payment, different rebate strategies for
early cancellation (in the case of pre-payment), etc. So in theory you should
be able to compose a model that will be palatable to most customers.

I'm sure there are many more, but those are the top ones that come to my mind.

~~~
Wowfunhappy
> 1\. Better alignment of incentives. Since your company now needs them to
> keep renewing a subscription on some regular basis, there's even more of an
> impetus for you to deliver great value to them.

Is this accurate?

I actually see it as the reverse. Before, software creators had to improve new
versions enough that upgrading was worth the cost. Now that I'm forced to keep
paying regardless, the software creator is no longer incentivized to actually
improve their product.

I think it's notable that Photoshop CC in 2019 isn't all that different from
Photoshop CS6 from 2012, at least relative to CS5 etc before it.

~~~
mindcrime
Hmmm... I don't use Photoshop for anything, so I can't speak to that specific
aspect. I'm approaching this from the point of view of enterprise software /
SaaS services, and not desktop productivity software. It may be that the
dynamics are different in the latter realm.

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debacle
Just do what AutoDesk, Adobe, and Microsoft have done - cost the subscription
model so that it doesn't make sense to purchase a one-time license.

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mortivore
Value added in the subscription model. If it's just the same product, then I'm
not going to switch.

