
Charge more for app subscriptions - tonyedgecombe
https://mronge.com/why-you-should-charge-more-for-your-app-subscriptions/
======
PaulDavisThe1st
This analysis is very US/Euro-centric.

Bumping the price from US$20 to US$100 might indeed allow you to focus more on
your _most dedicated customers_.

It also bumps the price way above anything that billions of people around the
world can pay for such a thing.

At Ardour, we have 3 subscription price levels:

    
    
       Regular: US$10/month
       Low Cost: US$4/month
       Developing World: US$1/month
    

We leave it to users to decide which category to select. Maybe you don't care
about people in Senegal or Bangladesh or the Phillipines. That's certain an
option, but some demonstration that this has crossed your mind is probably a
good idea.

It may also be important that on a technical level, our subscriptions are not
like e.g. Adobe's. Stop subscribing to this GPL'ed software and nothing
changes except for your ability to get updates for free.

~~~
sudhirj
I wrote a tool to calculate product or service prices for different parts of
the world based on the Big Mac Index (the price of a local mcdonalds lunch
burger). That method makes more sense to me because all your customers have a
similar point of reference.

McD is thought of as a premium product in some very poor areas, but on the
whole they aim for mass market affordability, which makes it a fair
comparison.

[https://bigmacpricing.com/](https://bigmacpricing.com/)

~~~
vosper
This is cool. I think it would be helpful if the input was in terms of units
of currency, rather than Big Macs.

Like: I want to charge €10 a month for my product in the EU. Use the Big Mac
pricing model to tell me what that is in Brazil.

According to your site, a Big Mac in the EU is €4.21 (is it really the same
across all EU countries?) which means €1 buys you 0.237 burgers. €10 is
therefore 2.37 burgers. At the current Brazilian price of 20.9 BRL per burger,
you should charge 2.37 * 20.9 = 49.53 BRL (at the time of writing Google says
€10 is worth 62 BRL)

~~~
sudhirj
Yup, I need that too. Will add it in.

The Euro zone is reported as a single economic zone in the index (it's
published by the Economist). I'm not sure if the prices are actually exactly
the same, but from an economic reference point of view, they ought to be. I'm
sure there are differences in the prices within each city that McD operates in
as well... the currency prices are probably an average.

~~~
dsomers
I assure you, a Big Mac in the Netherlands will cost more than a Big Mac in
Latvia.

------
valuearb
The higher revenues for onetime purchase show the weakness of subscriptions vs
the old upgrade model, and I wish Apple would understand it. Subscriptions
carry the fear of paying for something you won’t be using, or being nickel and
dimed for years on end.

Upgrades are a much simpler purchase decision. Am I using the app? Is it
offering a good value? Does the upgrade provide new features I want or need at
a reasonable price?

Some customers will say no to one of those questions at first, but eventually
change their minds. Like subscriptions this model matches revenues to usage,
so engaged customers support future development. iOS would be a much better
platform with easy upgrades vs. easy subscriptions.

~~~
Valkhyr
This. With very few exceptions (content subscriptions (e.g. Netflix) and
services that have a server-side component core to its functionality (e.g.
Dropbox)), I avoid subscriptions like the plague.

With applications, I don't choose between more or less expensive subscription,
but I'll chose your competitor who sells upfront.

~~~
dkersten
The way I see it: unless you’re putting in a bunch of monthly resources for me
(in terms of content creation or server resources), you have no business
charging me a recurring fee. If it’s essentially an offline app (or easily
could be) then I’m either paying up front or not at all. I’ve passed up on
many apps that I would have happily paid for (in some cases up to about $100),
but was unwilling to pay a subscription of any cost.

~~~
eddhead
ES Explorer, I'm looking at you

------
dguo
Whenever I read "charge more," I think of the implicit assumption that service
owners want to maximize total profit.

While I can understand that desire, there's no law of nature that says we have
to act in a profit-maximizing manner. A SaaS service could have a different
goal: running a sustainable business that benefits as many people as possible.

So they could choose to charge a deliberately low amount such that more people
can afford to or are willing to pay for it, while also charging a high enough
amount that the business is financially sustainable.

~~~
EduardoBautista
I can’t see how charging less would help with running a sustainable business.
I would imagine charging more would help with that.

~~~
Kaze404
Parent never said that. Charging less helps with the goal of having a
sustainable business that benefits as many people as possible because it
lowers the barrier of entry.

~~~
zepto
Maybe, but it’s also possible that if you charge too little, people subscribe
but don’t benefit, because they don’t use the service much.

Subscribing doesn’t necessarily imply benefitting, but the higher the price,
the more correlated these are likely to be.

~~~
Kaze404
If people don't use your product if they don't have the pressure of sunken
cost, then maybe they're not really benefitting either way.

~~~
zepto
The whole point of subscriptions is that they aren’t _sunken_ cost.

~~~
Shared404
If I subscribe to something for a month, and then feel compelled to use it
that month instead of some better tool because I paid for it, I would say
that's a sunken cost.

A time limited one, but still there.

~~~
zepto
Technically true, but seems like an exotic case, and proves the point that
sunk cost isn’t a substantial issue here.

~~~
Shared404
>Seems like an exotic case,

I've worked with enough people who used adobe because "I've already payed for
this month, so I have to use this" that I'm not sure it's that exotic.

And while sunk cost may not be a huge issue, it's definitely still there.

I'm not going to make any sort of comment on anything else in this thread,
because I don't really know what I'm talking about.

However, I don't see how it's possible for someone to derive more benefit from
an app overall by paying a higher subscription.

Your subscribers might correlate better with people who are benefiting, but
for an individual, either they [Pay less and have the same amount of possible
benefit] or [Pay more and have the same amount of possible benefit]. How does
it work out that they get better value from the second option?

------
Valkhyr
The way to fix app "subscriptions" is not to charge more (or less) but to fix
the customer-hostile structure of app "subscriptions".

The big issue with app "subscriptions" is that they don't actually work like
subscriptions.

Before the digital age, "subscription" used to mean (and for physical products
it still means) that you get regular delivery of something as long as you pay.
If you stop paying, you no longer get more stuff, but you get to keep whatever
you already received. You don't have to return your back issues of the
newspaper when you cancel your subscription. Arguably TV subscriptions have
always been an exception, but functionally they're not because you can record
TV.

App "subscriptions" are different. Developers like to emphasize how they fund
sustained future development of an app, but the reality is that when you
cancel you usually lose access even to current features (you arguably already
helped pay for).

The way app subscriptions _should_ work is that you can perpetually keep using
whatever version of the app was current when you stopped paying (Jetbrains
actually does this, and I salute them for it:
[https://sales.jetbrains.com/hc/en-
gb/articles/207240845-What...](https://sales.jetbrains.com/hc/en-
gb/articles/207240845-What-is-perpetual-fallback-
license-?_ga=2.179586276.1564311569.1599521489-1376937852.1598939461)).

The current model is really "app rental", and it's inherently customer-
hostile. Playing with the pricing does not fundamentally change that.

~~~
gnicholas
> _Developers like to emphasize how they fund sustained future development of
> an app, but the reality is that when you cancel you usually lose access even
> to current features (you arguably already helped pay for)._

I make a browser plugin that functions as a productivity/accessibility tool.
When I first started charging, I actually did grandfather in all our existing
free users and give them perpetual access to the then-existing feature set.
But it's not clear what it would mean to freeze people who had a paid
subscription and then terminated it.

If someone pays for one month, do they forever get access to the version that
they briefly paid for? How do I deal with customers who are upset that certain
websites have changed and no longer work with old versions of our plugins? I
would expect lots of questions from folks who want to know if this bug or that
bug had been fixed by later releases (and then they would briefly subscribe to
get perpetual access to the newer version).

Another commenter mentioned giving folks access to the version that existed a
year before they stopped paying, but if I release version 1, then 2, then 3,
someone might try out 3, stop paying, and then end up on 2. That seems
confusing and suboptimal for everyone.

~~~
maccard
The jetbrains model only kicks in after a year. If you sub for 1 month, and
cancel, you get nothing. If you sub for 12 months, you get a perpetual license
for the version that was relesed 12 months before you finished.

------
dwighttk
> The first thing you’ll notice is that people are much more willing to make a
> one-time purchase.

This X 100

I would rather pay you $50 with a major update every year that costs $50 than
$50/yr subscription. Because if the resubscription comes up and things are a
little tight I lose access to the app. Or if I don’t use the app I don’t have
to worry about accidentally autoresubscribing

~~~
GordonS
For desktop software, and mobile apps without a backend, I agree.

For everything with a backend though, I just don't see how it's a sustainable
business model to allow customers to keep using the backend in perpetuity. Of
course, a lot of consumers know knowing about the tech that's involved, so as
a software engineer I have a different perspective here.

~~~
dwighttk
sure, but don't tie in a backend if it isn't required (e.g. adobe) sell it as
a separate service.

------
cercatrova
I watched a very interesting video about selling to consumers as opposed to
businesses [0]. The key takeaway is that consumers' target price to pay is
actually $0. Therefore, any price above that, even a 3 to 4 dollar a month
difference, is seen as extremely annoying to them, because again, they
actually only want to pay nothing. This is why you should, if not charging
business, at least charge prices that are sufficiently high such that only
those who see the value in them will pay, which are usually in a different
class of consumers from bottom-feeders who look for the lowest price, ideally
0. An example is Superhuman, an email app that costs $30 dollars a month. Only
those who see the value in a fast, keyboard-driven email app will pay that
much.

[0] [https://www.youtube.com/watch?v=kEc-
qGK5cjY](https://www.youtube.com/watch?v=kEc-qGK5cjY)

~~~
input_sh
In an ideal world where people have a decent disposable income, those
arguments might be true.

In the real world, it's not that "people don't want to pay anything", it's
that people have a small amount of money to throw at things for a marginally
better experience. I sure like keyboard-driven apps, but I'm never going to
pay as much as I pay for my entire Internet package for _any_ online service.
Hell, all of them I pay for barely add up to $30/month.

Superhuman and similar are tools for rich people, equivalent to a Rolex or the
latest iPhone. Those with less income are assumed not to be its target
audience. I'd argue that they could double the price without losing more than
a single digit percentage of current users.

~~~
cercatrova
Yes, it seems your comment is reinforcing my point. Consumers like you don't
want to pay $30 and that's fine, you are not their target audience. You may
like keyboard-driven apps but you don't like them enough to pay $30, so in
terms of microeconomics, you don't believe you'll get as much value from the
tool as you'd spend. Again, that is fine, because the company should only
target customers who do realize your product's value.

One may say that the takeaway is basically, target prosumers and rich
customers who see the value of the product in order to make the most money.
That they are price insensitive is also great as a dev, because, yes, you can
increase the price multifold and not lose customers, which increases your
revenue overall.

~~~
crooked-v
The comment you're replying to is talking about actual amount of money
available for the consumer, not perceived value.

Or, in other words: if I look at an app and decide that it's perfect and I'd
really like to have it, but it costs $30/month and I need that money for gas
to get to work or to put into my kid's college fund, I'm not going to get it.

The kind of people who post on HN usually have enough money that just
$30/month isn't a problem, but what if there's 10 apps that do the same thing?
At $300/mo that's now a substantial budget item, and if I have anything
serious to save up money for, individual apps are going to be the first thing
to go.

~~~
cercatrova
Perceived value and realization of that value are the same thing to the
vendor. If you don't buy, then it doesn't really matter to those who sell. If
it does, then there may be some price stratification they could do to capture
that value, but it might be best to not target price-conscious customers at
all, due to their tendency to be a larger support concern than those who are
price-invariant; they are not worth the money they bring in.

------
makecheck
Until it stops _clearly_ rewarding scammers, I cannot support subscriptions in
any way. From the very start, these criminals figured out some great ways to
trick people into auto-renewing subscriptions at exorbitant rates for garbage
apps [1]. I especially love how they reached the “Top Grossing” lists (I sure
never have...must be nice to not have any morals).

[1] [https://techcrunch.com/2018/10/15/sneaky-subscriptions-
are-p...](https://techcrunch.com/2018/10/15/sneaky-subscriptions-are-plaguing-
the-app-store/)

Also, I just plain want to make things that lots of people can enjoy.
Subscriptions _certainly_ limit your audience so why is that better (and why
should that be the _only_ option or even the _preferred_ one?).

I know developers who asked for this in 2007 but can we please have “free
trial, pay at end of trial” and “paid major upgrades” as standard, store-
supported options, at long last? There was never anything wrong with these
models and they are _also_ great ways to make a living.

------
billpg
I use a podcast downloader/player daily. I paid something like £5 maybe ten
years ago for it.

Around a month or so ago, one of my feeds had weird description text that
caused the download button to be bumped off the visible area, meaning I
couldn't download that episode. I took a screenshot and reported it to the
developers.

When filing the bug, I wondered about that £5 all those years ago and I
imagined we'd both be happier if I had taken out a yearly subscription
instead. The developers would be motivated to keep me happy because I'd stop
paying if I didn't get my bug fixes done.

In the end, they promptly fixed the bug and pushed out an update by the end of
the day without taking any extra payment, so I'm not sure what point I'm
trying to make.

------
seanwilson
> Looking at the estimates for revenue per 10,000 visitors clearly shows as
> well, we would make 2x as much revenue at $100/year than we would at just
> $20/year!

Maybe I missed it, but it's worth pointing out that while in the table the
one-time cost makes less than the yearly pricing plans, that's only for the
first year - presumably the yearly plans come out ahead the next year and even
more the year after as long as the user retention is decent.

For my paid Chrome extension
([https://www.checkbot.io/](https://www.checkbot.io/)), I've experimented with
yearly only, then quarterly + yearly, then monthly + yearly plans. I think
quarterly plans are worth exploring (I don't see them often) as it means users
get longer to evaluate the service before they decide if they're going to
renew. They can be a pain to be clear about in pricing tables though.

------
egypturnash
Man I dunno, for the sector they're in, folks are pretty likely to already be
paying for a subscription to the Adobe suite, and honestly I think the whole
"subscription" thing is gonna strangle Adobe in the future when there's a
generation of artists who grew up using other tools that were buy once, use
until upgrading something else breaks it, and/or were easier to pirate.

Also I have a piece of hardware I bought from the Astropad folks and if the
app suddenly stops working because they demand a subscription I'm gonna be
pretty damn unhappy.

Part of the problem, of course, is that app stores have completely killed
"upgrade pricing". There's no good way for your existing users to give you
money for "hey we added some new features and fixed some bugs" without
bullshit workarounds like "okay the new version is a totally new app, go buy
it".

~~~
jrochkind1
> in the future when there's a generation of artists who grew up using other
> tools that were buy once, use until upgrading something else breaks it,
> and/or were easier to pirate.

In the future when? Isn't that _now_? Adobe changed to subscription model in
2013. Everyone that is paying subscription _now_ grew up with the buy-once
model, right? In the future, people will have grown up with adobe's current
subscription model.

~~~
egypturnash
Yeah I think it may be about now. And now that I think about it _very_ few of
the younger pro artists in my circles are using Adobe’s stuff, they’re using
Clip Studio or Procreate for the most part.

~~~
crooked-v
The Affinity line of apps are also pretty great, and have (I think) full
feature parity across desktop and iPad.

~~~
TheSpiceIsLife
Affinity Designer _not having DXF / DWG import export_...

Is preventing me from using it in a professional capacity.

I purchased Affinity Designer without checking for the feature, and people
have been asking for the feature for _at least 5 years_.

Edit to add the forum link I forgot to paste in:

[https://forum.affinity.serif.com/index.php?/topic/6756-dxf-o...](https://forum.affinity.serif.com/index.php?/topic/6756-dxf-
or-dwg-file-import-in-affinity-designer/)

~~~
egypturnash
I think a lack of support for spot colors was one of my sticking points,
personally. That and 20+ years of Illustrator work to pull resources out of to
make new images faster, and multi-year projects meticulously built to maximize
re-use and speed, and honestly that's the killer feature for me at this point
unless Adobe completely falls apart.

Not that Illustrator lacks its share of long-running requests, "rotate the
view" has been near the top of their publicly-voted bug/feature request site
ever since they opened it, and would be "picked up shortly" back in 2017.
[https://illustrator.uservoice.com/forums/333657-illustrator-...](https://illustrator.uservoice.com/forums/333657-illustrator-
feature-requests/suggestions/19196641-illustrator-rotation-of-the-artboard)

(And I know I was asking for it _years_ before they abandoned the old "here's
a hole to put your bugs and feature requests into" setup.)

------
m3kw9
Subscriptions for purely software updates seem like a steep price hike over
buy once and get updates for a long time. I really don’t like how devs are
under the guise of we need to make a living and start charging subscription
for such. I won’t buy that unless is totally indispensable

------
bitL
"Why you should avoid using subscriptions for your apps." User hostility 101.

------
pnw_hazor
Some people go way out the their way to avoid toll bridges. Especially, if the
bulk of their trip is otherwise toll free.

For me, if there is a free website app paired with a pay-to-play mobile app, I
will never buy (or subscribe to) the mobile app because I consider that a
bait-and-switch. If the whole stack was pay-to-play and I want the service
offered I will pay.

------
gnicholas
It looks like this is all based on survey data, which I have found to not
correlate particularly well with how people actually behave. Am I misreading
this (or not giving survey data enough credit)?

~~~
lebaux
My biggest issue is broad generalization, SaaS is not homogenous. I suspect
the author never meant for anyone to take it as universal truth, rather his
own observation of his speck of SaaS.

------
jwr
Pricing subscriptions higher has more side effects:

* you get users who care more about your app * you get users who will not place irrational demands ("I paid $0.99 for your app, now implement this feature or I want my money back!") * you get to focus on features that matter and long-term development, without having to implement shiny cruft just so that a "major version number upgrade" is justified * you have a sustainable business

I've reached a point where I am _worried_ if an app I use regularly does not
have a subscription model with reasonable pricing. Experience shows that this
means that sooner or later the authors will lose interest and abandon the app,
or go overly broad with features. I've seen this happen so many times that I'm
actually wary of even starting to use new apps at this point.

As for the "but it's too expensive" problem, well, perhaps you don't need all
those apps after all? There aren't that many apps that I use regularly and I'd
much rather limit the selection and then pay for those that I use and need.

------
semireg
I’m an indie dev that wrote a useful Electron app for designing and printing
labels (both rolls and sheets), data import, rendering batches of images, etc.
My competition is either free (DYMO/Brother) or $500 commercial software for
expensive printers.

So how do I price? For a year I had my price at $47.99 one-time and did OK. A
month ago I segmented my licenses/users into Personal (same price of $47.99)
and Business ($147.99) licenses. Business license has the ability to print
barcodes. Revenue increased w a slight decrease of units sold.

Then last week I launched a Business subscription at $14.99/month. Everyone is
still buying the one-time licenses. I don’t blame them... I generally avoid
subscriptions.

Soon I’ll be releasing a Shopify app/integration and I’m really curious how
that user group will respond. As far as I know, merchants are already used to
monthly costs so it just becomes the cost of operating their store.

I need a pricing consultant. Check out my pricing page at
[https://label.live/download](https://label.live/download)

~~~
tonyedgecombe
>Everyone is still buying the one-time licenses.

I'm not surprised, everybody can multiply $15 by 12 and see that doesn't add
up.

~~~
semireg
Can you help me understand how you, as a user, would prefer to see it add up?

~~~
tonyedgecombe
If something costs more to rent over the next 12 months than buy outright then
I am going to buy it outright.

------
taigi100
And here I am, in EU, thinking a very long amount of time before committing to
even a 5$ subscription.

------
throwaway4good
I recently downloaded "Jambl" which is a music/synth app for iPhone based on a
TikTok ad.

It immediately pushed me to start a 7.99 GBP a week subscription.

About 550 USD a year.

~~~
throwaway4good
Music Ally Startup Files: Jambl, the music-making app for non-musicians

[https://musically.com/2020/02/12/startup-files-jambl-
music-m...](https://musically.com/2020/02/12/startup-files-jambl-music-making-
app/)

"The rationale for aggressively pushing a £7.99-a-week subscription (the same
pricing as sister app Beat Maker Go) whilst showing freemium users unskippable
ads is that, by pushing away all but truly determined users, Jambl can get
feedback, iterate and make its app super-sticky – then shift to full-on
growth."

~~~
GordonS
Aren't they only going to be left with about 3 lunatic users, and perhaps 2
very rich ones that don't notice they're paying for it?

$550/y is a _lot_ for consumer software. Windows OS, O365, nope, I can't even
think of any other consumer software priced that high!

------
alexruf
Personally I like apps which provide both - a subscription and pay once model.
I have no problem paying monthly for an app I use on a daily base. But I don’t
want dozens of subscriptions for all my apps to run in parallel. The problem
is that a lot of apps with subscription models don’t provide enough value to
justify a monthly payment fee.

------
srg0
There is a problem with in-app subscriptions which is rarely brought up -

\- apple/google cut. OK for a $2 purchase. Not OK for recurrent payments. If
it is indeed a valuable service, it should have a web site. More often than
not online subscriptions will be priced more competitively. See Babbel
subscriptions in app and online.

------
dave_sid
Very good post. I wonder how much these percentages would differ between B2B
and B2C apps. I’m not sure I can imagine many people paying anything like $10
per month for a non-business app (not including Spotify, I see that as a
special case). I would understand it if the budget isn’t coming out of their
own pocket.

~~~
com2kid
The two fitness apps I use are $60/year and $30/year.

Headspace is ~$55/year and they have a ton of subscribers.

Plenty of language learning apps are over $100/year.

If the value is there, and especially if there is a direct comparable to a
non-app based service, people will pay.

~~~
dave_sid
That’s interesting you say your fitness apps cost 60 and 30 per year. Would
you say that’s another factor, and that yearly less frequent subscriptions and
more appealing than monthly?

------
londonatil
I believe that both the app store and Google play store charge 30% fees for
all app purchases except for subscriptions lasting over a year, which are 15%.

That further incentivizes developers to concentrate on the subscription model.

