

Ask HN: [Pricing] Charging a one-time fee for a SaaS app? - sandeepshetty

Do you know anyone that charges a one-time fee for a SaaS app like pinboard.in does? When do you think/know it makes sense to let someone use your hosted app indefinitely for a one-time fee?
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patio11
Yeah -- I've always sold Bingo Card Creator on this model. It is _modestly_
less crazy than you think it is: if you're getting customers on an ongoing
basis, attrition plus the natural near-zero marginal costs of servicing
customers means the new customer keep the lights on and older customers get to
freeload indefinitely.

Suggestion: make something that will let you charge on a recurring basis. (I
once thought BCC could never sustain that. It probably could, if I had a mind
to implement it, but the pain involved isn't worth it to me.)

Starting from $0 revenue on the 1st day of every month sucks. Starting from
"I'll always have at least 90% of the revenue I did last month" is, on the
other hand, a wonderful thing for the business in every possible way.

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sandeepshetty
I've been thinking about this from the perspective of Customer Lifetime Value
(CLV). Charging a one-time fee based on historic CLV data, IMO, has three
advantages: 1. Customers perceive the indefinite nature of recurring payments
more expensive than a one-time fixed fee, 2. I'll have more cash upfront, and
3. I'll make more from customers that might have unsigned up long before the
average CLV point.

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patio11
_1\. Customers perceive the indefinite nature of recurring payments more
expensive than a one-time fixed fee_

This is, for better or worse, exactly the opposite of how customers actually
think.

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sandeepshetty
I'm seeing this behavior especially for addons. When customers are paying a
recurring fee for the main app and the costs of addons add up, they seem to
prefer a fixed one-time fee (not necessarily equal to the CLV).

~~~
SatvikBeri
Good data, thanks.

That said, there was a recent blog post about how one HNer dramatically
increased his revenue by changing his pricing model. Rather than charge for
features, he adopted a few tiers of service, each one targeted at one type of
customer's use case.[1] I don't know your exact situation, but that might be
worth trying as opposed to configurable add-ons. In general, speaking in the
language of use cases resonates with the buyer more, and is more likely to
result in a purchase.

[1]: [http://www.extendslogic.com/business/what-i-learned-from-
inc...](http://www.extendslogic.com/business/what-i-learned-from-increasing-
my-prices/)

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runako
This is a bad idea. Any customer who really likes & uses your app as-is will
eventually become unprofitable for you. Your "best" customers will use
resources you have to pay for every month, but you only collected N months of
revenue up front. You'll eventually have to decide to pull the plug and screw
your users (like Joyent/Textdrive's forever hosting). Even before that, your
financial incentives will be at opposites to the people who like your app the
most, which is a bad place to be.

Ideally, you want your customers' usage to align with more money to you over
time, not less.

If you need money now, offer your customers a discount for quarterly/annual
prepayments. You're more able to predict your costs out 12 months, so you're
less likely to make a fatal mistake here.

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thiagodotfm
Charge yearly a X%(go figure it out what works best) of what you would charge
one-time.

Charging a one-time fee is evil for the customer with common sense. If your
service stops growing, what about the customers that already paid for it?

You don't pay for updates in a SaaS app as it's in the cloud, so... I can only
truly see a recurring model working. UNLESS you know very well your userbase
and you know very deeply it's the only model that would work.

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dugmartin
I've thought of doing a slight variation on this for SaaS apps that are
project based - charge once for each project for something like six months or
one year access. I think it would work in situations where the customer only
needs use of the product for each project for a defined amount of time.

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Turing_Machine
If you've got ongoing expenses (e.g., bandwidth) you'll need to make sure to
charge enough that income from the one-time fee is enough to cover the monthly
bills + profit, in perpetuity.

Annuity tables (or the annuity formula) may be helpful here.

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onetwothreefour
Don't do it.

