

Ask HN: Single vs recurring payments for web apps - matt1

I'm working on a new web app right now and am trying to figure out what the best way is to charge for it.<p>For my previous web apps, I charged the user once when they signed up. There were no recurring payments. I reasoned that for the type of web apps I build -- tools -- that most people would prefer one larger payment vs a recurring small one.<p>I've been discussing it with a few other folks and they're encouraging me to try a monthly payment, pointing to the success that 37signals has had with it. Less people might sign up, but over time the extra revenue you make from them will make up for it.<p>I tend to to think of apps like Photoshop, Textmate, and Transmit and think "A recurring payment? No way." And yet somehow when I think of 37Signals, it doesn't seem so bad, but I can't put into words why one makes sense and not the other.<p>How do you decide? Has anyone tried both and compared the numbers?
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famfam
When you issue a single charge for a webapp, what kind of legal language have
you provided in the EULA that states something to the effect of "I can take
the webapp down whenever I want and you will no longer be able to access the
service you paid for"?

It's for that reason that paying for a webapp one time feels odd to me. It's
like purchasing a product, except the product can be taken away from me at any
time, which is unsettling.

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byoung2
I agree...it reminds me of the deal Sirius used to have where instead of
paying $12 a month for satellite radio, you could pay $499 one time per
device. I think Tivo had a similar deal. The problem was, when these services
were new, who knew if they would be around in 5 years, or whether a new
service would take their place. In the case of Sirius, HD radio now offers
similar service for free, and I prefer to download my TV shows rather than
record them. So I was wise not to pay upfront.

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riffer
There's something about human nature where we definitely prefer to make
recurring payments.

Think about 40 bucks a month for an alarm system, or 60 bucks for the gym.
That's roughly 5-7k over a ten year time span, and even if you adjust for time
value of money and the user having the cancellation option, at the end of the
day it's ridiculously easier to get people to make a monthly payment for those
sorts of services than it would be to get a one-time upfront multi-thousand
dollar payment.

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matt1
_There's something about human nature where we definitely prefer to make
recurring payments._

I think I'd rather pay a one time fee for software. My fear (and I doubt this
is only me) is that I'll forget about it and wind up paying for it long after
I've used it. Great for the services I pay for, but bad for me.

Is there any _software_ you pay a recurring monthly fee for? If so, what is
it? And if not, why do you think that is?

Consider a hypothetical example: You can pay $50 once for Textmate, or $8/mo.
Which would you prefer? How about $4/mo?

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riffer
I may not be the best example, because I am ridiculously frugal. There are
very few things I pay for beyond food, rent and travel, which is another way
of saying I pretty much exclusively use free tools. Incidentally, when my 30
day trial of Textmate ended, for some reason the software kept working and
rather than pay for it, or stealing it by continuing to use it, I just
switched to another editor.

That said, if I really wanted to spend money on Textmate, yes, I would prefer
to pay 50 bucks rather than either $4 or $8 monthly. At a $1 or $2 a month, I
would probably be indifferent. To some element there's an issue of how long
the purchaser will actually use the tool vs. how long they estimate they'll
use it.

I agree with you 100% that we develop countermeasures because we know that
these recurring monthly plans are dangerous. My sense is that we develop the
countermeasures exactly because the monthly plans are so effective at
separating us from our money, and that the countermeasures only partly offset
the tendency. Of course, for you may have an outright aversion to the monthly
plans, just as I have excessive frugality, but overall my sense is that for
most people monthly plans go over better than upfront charges in most
situations.

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fjabre
_I tend to to think of apps like Photoshop, Textmate, and Transmit and think
"A recurring payment? No way." And yet somehow when I think of 37Signals, it
doesn't seem so bad, but I can't put into words why one makes sense and not
the other_

Simple: 37Signals has server costs on an ongoing basis to maintain a customer
- Textmate/Transmit/PS do not. Most consumers understand it's a hosted
solution and are ok with paying a recurring payment.

If your solution isn't hosted and it's a onetime download kind of thing then
it would only make sense to charge them the one time.

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learnalist
Not sure how easy it is to do.

But surely, as the "webapp" you can also revoke a users subscription.

I have been thinking about "recurring payment" with an agreed, "we the webapp"
will cancel your paid access if you have been absent of the site "x days" or
more likely 2 months.

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ddemchuk
I prefer to pay recurring payments because it's incentive for the developers
to continue working on the project.

You could look into using quarterly or half yearly payments potentially,
similar to how Pandora does it, charging for the whole in one fell swoop.

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matt1
You raise an interesting point by pointing out that you like the incentive for
the developers because that's not something most people would consider (I
think). _Our_ opinions may differ a lot from ordinary people.

~~~
ddemchuk
Yeah, most people balk at the idea of paying monthly for something, even at
something like $10-$20 a month. My background is heavily mixed with Internet
Marketing kinds of guys, who are notoriously stingy with this stuff. But it's
easy to counter: if you have a $30 per month app, and someone complains, just
ask them "will this tool help you make $1 per day? if yes, then it's worth it"

Good luck with it

EDIT: misused day instead of month

