> It’s not just Bloomberg and media — it’s software too. I used to write everything in Ulysses, a syncing Markdown editor for OS X and iOS. I paid $70 to buy the apps, but then the company switched to a $40 a year annual subscription, and as the dozens of angry reviews and comments illustrate, that price is vastly out of proportion from the cost of providing the software (which I might add, is entirely hosted on iCloud infrastructure).
I have noticed this as well, that a not-small number of software programs have turned from "give us one money for this version" to "give us slightly smaller amount of one money per month, but do it in perpetuity if you want to keep going with the data you've entered."
That, to me, is crap and is incredibly frustrating, especially when the subscription model is coupled with a data lockout threat. A task manager, a word processor, even a drawing program...none of these ought to require a subscription to be able to use. Sure, have a subscription service for something that needs upkeep, like a syncing service (but get out of here if all you do is just lump it into the user's iCloud storage) or a data feed. But it's almost insulting to say "we used to charge you $50 once, now we're charging you $29.95 per month forever (if you want to see those notes in two years, and no, we don't have a data takeout API); it's such a deal!"
That means I always will have access to my projects and to the level of functionality I start with. But I keep getting upgrades as long as I keep paying, and they get the steady revenue stream that means they don't have to play weird marketing games.
I'm pretty sure that if the fallback license was to the most recent version you're entitled to during your subscription way more people would take leaps between the end of a subscription and the start of the next one (though Jetbrains offers you a further discount if you don't do so).
They're playing on loss aversion and the endowment effect. It feels worse to lose something than to never have it, so people are more willing to pay to keep it than they would be to pay to buy it if they were never given it in the first place.
In the end, though, when I discovered this was how it worked at the end of my PyCharm subscription, it left me quite a bitter taste in my mouth, and I just stopped purchasing any JetBrains products. These kind of details are akin to trying to trick people via putting stuff into EULAs nobody reads, and for me at least, it gives the distinct feeling that they're trying very hard to screw me over, so I try to not frequent nor support those kinds of businesses, IMHO.
I've been using them for awhile and I felt they were really up front about what they were doing, but I don't know if they've always been as transparent.
Initially JetBrains didn't even want to offer rollback licenses when they went to subscription only model a few years ago.
There was a big uproar among programmer communities (including here on HN) and after few weeks of deliberation a compromise of sorts was reached.
Despite offering a nice product line, JetBrains did lose a bunch of goodwill including mine. But goodwill does not pay the bills.
> The trick is that at the end of your yearly subscription you have already upgraded to a newer version, so falling back to the perpetual license means downgrading, which is both often a practical problem and (perhaps most importantly) something that I think many have an emotional aversion to.
> a particularly hamfisted attempt to grab an almost negligible amount of money
OK, so maybe it's not as negligible an amount but it feels petty and I'd not pay money to a company that pulls stunts like that on its customers.
Also, how would you account for it? You can't retrospectively change the nature of purchase from subscription to a one-off sale! That would be audit hell for their accountant.
But that is denial of service that I legitimately paid for. Either they should provide the updates till end of subscription or refund the collected update fees pro-rata (viz. if I cancel after 9 months of purchase, 3 months of excess update fee collected should be refunded).
With that you get a trial of all updates for a year. If you don’t like the trial you don’t pay and revert to the version you paid for.
Your way also makes sense, but they both seem reasonable to me. And I don't really care much, in that I renew when I'm regularly using their product, as I want to support them. If I just had to open an old project for something, then I don't mind exactly which old version I'm using. (And if I somehow did, I could just put it in 30-day trial mode.)
Long to short, the "rebate" was paid ~60 days prior to the end of the 12 months. The remaining 60 days' purchased will only be rebated if they renew.
I presume this is in the small print somewhere. None the less, it's complete crap.
I received my rebate after I had let my membership lapse without any issue. You can use the rebate even without an active membership. You can even walk up to the customer service counter and get your rebate amount in cash if you want. I ended up getting pizza and took the rest as cash back.
You can even walk up to the customer service counter and get your rebate amount in cash if you want.
"The Reward is issued approximately 3 months prior to the member’s renewal date in a Renewal Statement and reflects rewards earned up until the issue date. A member must be an active, paid Executive Member when the Reward is earned and issued to receive the Reward. To receive a refund for the Executive upgrade fee the membership must be canceled or downgraded to a Gold Star or Business Membership and any 2% Reward issued or accrued will be forfeited. Any additional savings and services exclusively for Executive Members will be rescinded."
Some lag from the latest version seems fair, e.g. 6 months before the latest major version is perpetual...
You are absolutely right! That's exactly how it should work but it's surprising that they don't do it that way. I can give you an explanation from accounting perspective: When the sale happens, the accountant would record the sale in their Books of Account as "Unearned/Prepaid Revenue" (as a liability). It makes sense as you have taken money "in advance" for a sale but haven't delivered the updates yet and hence you cannot claim it as Income. Every time you put out an update, you can claim a portion of the "Unearned/Prepaid Revenue" as "Revenue" and push it from liability to "Retained earnings" account as Income. When the year expires (note that the year is for the user not the financial year) the accountant would claim the remaining Unearned/Prepaid Revenue as Revenue/Income.
I wonder how they manage their Books of Accounts if they have defined that the license falls back to the earlier version. What they are doing doesn't make sense from an accounting perspective as well!
I'm not a certified accountant either but I took the course just to understand workings of my business.
> they can change to allowing the user to keep the latest version they upgraded to without serious consequence
It'll be in their best interests if they did.
> you can just as easily sell "product version X with one year of updates" which is very common as well, and mark that as revenue right away
You definitely can. But you end up overstating your revenue and in turn your profits. The downside to that is you end up paying high taxes (unless you can minimize your profit by showing a ton of expenses as well). If it was instead treated as Unearned Revenue (which is a liability), you would be stating your true income and showing lower profits and thereby paying lower taxes.
Take for instance the case where your customer purchases a multi-year subscription. This causes a higher cash flow (assets go up) but you won't be overstating your income (as liability goes up by classifying it as Unearned Revenue instead of owner's equity). The liability can be reduced by claiming it as revenue over a multi-year period. If it was marked as revenue at the time of sale, the owner's equity (retained earnings) would go up. That would mean showing higher income which results in higher profits and you end up paying high taxes.
Remember that with unearned revenue you can carry it over to multiple financial years and spread your income between them. You lose out on this important tax saving component if you mark as revenue right away. This also has the advantage of portraying a true picture of your business in your books of accounts.
Don't upgrade until after renewing the subscription for next year.
I wasn’t aware that the perpetual fallback license only covered the latest version at the time of subscription/renewal. That’s less than ideal, but apart from that, I think they’ve pretty well nailed the subscription-based model. It’s actually the _only_ software I’ve used where I feel the subscription model terms were actually an improvement over what I had before.
I graduated from college and to see their lowest cost package was ~300 USD IIRC was infuriating.
I went full Netbeans for PHP. It does the job, the debugger works, and it doesnt cost me a yearly fee.
Android Studio is free.
Individual licenses can be used for commercial purposes just like a business license. AFAICT, the only difference is that a business license can be used by any single developer within an organization at a time, while the individual license can only be used by the named licensee.
There's also a 25% discount for new/recent graduates, which eases the sticker shock a little bit for new graduates.
Unfortunately, Office 2010 already has issues opening files made with 2013, 2016, etc. Most of my PCs are on 2013 as I was able to grab several HUP licenses at the time. I seriously doubt 2013 will be 100% compatible in another year or two, and 2016 will be the minimum version one needs in a work environment where you're collaborating on docs made with newer versions.
I have no doubt that Microsoft has employees on the payroll who have no other function than creating annoying incompatibilities to encourage users onto the 365 treadmill.
Again, the cynical part of me assumes that MS employs full-time staff to ensure that Libre Office, Google Docs, and other apps that work with MS Office will never be even 95% compatible.
And from my experience, even simple spreadsheets and formatted Word docs don't display properly when opened in Google Docs or Libre Office, and large, complex business docs with macros and esoteric formatting don't have a chance.
There are a few developers in every place I've worked who use Libre Office because they're on Linux or refuse to pay for Office. And you can tell when they collaborate on a doc with MS Office users because it renders poorly when they send it back. It doesn't bother me, but I've seen how folks in management, marketing, etc. consider it unprofessional and assume the developer is just lazy or can't use Office well.
The one silver lining is that Linux users can use Office 365 online for less complex docs; it's not a full replacement for offline versions, but it's a better alternative than Libre for those of us who believe it better to be compatible with others even at the cost of a 365 subscription.
E.g. I start paying month-to-month at 2016.2, after 12 months I have a license to 2016.2. But say after the first month, 2017.1 comes out. Then after 13 months I now have a license for 2017.1.
Why can't all subscriptions work like those old license schemes do?
There's obviously a middle ground, like being able to at least use the version you paid for indefinitely but having to pay a smaller price to upgrade. But which direction a pricing structure goes also depends a lot on the niche and type of software.
Citing the worst examples of "subscription abuse" isn't really an argument either. Of course you can find examples on each end of a spectrum. But as far as most software pricing goes, if it's so bad, then people wouldn't pay.
However, that is not the case. Everyone stops using your app at some point. So you don't need to support users forever, you just need to support them for some finite amount of time. Some users might use your app for a few years, some use your app just for a few weeks. Some users will email you half a dozen times, but most will never email you. Your app price should be priced so you can afford to support the average user.
And another thing that people forget: When your user base is growing, the amount of word of mouth recommendation you get also grows, and you automatically start selling more licenses, so your revenue also grows.
Pay-once and subscription aren't really that different in practice. Pay-once even has an advantage: You get all the money up front. And that's awesome if you are planning to grow your company.
There's also a flaw in this logic: It assumes that all apps require some kind of server provided by the developer in order to run.
Once upon a time, standalone software was standalone and could run in perpetuity without requiring anything more of the original developer. It's still entirely possible to write software like this, there's just a trend away from it due to the prevalence of always-on internet connections and the ease of keeping some of your application server-side as a form of copy protection.
“Thanks for contacting us! Our standard license includes support for 12 months after purchase. I’ve attached an offer for our extended support contract. I’m looking forward to your response!”
The extent at which some users subsidize the app for others is just one of the decisions you need to make when deciding on a pricing structure, not a rebuttal.
This logic applies to literally any one-time purchase that includes a warranty, yet the consumer goods sector has managed it somehow. What's really happening is a deterioration of the idea of "owning" software. I'm sure it's great for the publisher, but it's almost all downside for the user. I'm still using an email app that was acquired and shut down by Google in 2012 and it continues to work just fine. On PC I use WinRAR from 10 years ago with no issue. I can't imagine having to pay for all of these little apps on a subscription basis and then having to find alternatives when the creators get acquired/go bankrupt because the subscription is no longer supported.
Edit: To add to that, if the cost of the subscription is to provide me with superior support, will publishers selling me these subscriptions be removing the warranty disclaimer from their EULA? Probably not, right?
 Yes, you never "owned" it, but licensed a copy - but in practice it was similar to owning a physical good.
> But as far as most software pricing goes, if it's so bad, then people wouldn't pay.
And yet people keep paying ransomware for access to their important files.
Except bits don't rot?
I do feel that I get value for my money and with the yearly fee I get all the updates (which are important in the ever changing world of web development), but sometimes it still feels like protection racket.
This is actually my favourite licensing technique I have come across for software.
If they started charging just for use they wouldn't need neither an excuse nor a justification.
I really don't see your point.
If you could explain further why you think sublime would need an excuse for charging a monthly fee I would really appreciate.
Actually they'd need both.
And companies are not so dumb as not to understand this. Any company that started charging or went into a subscription model, offered both excuses and justifications for doing so.
You might be think "it's a free country, it's their product, and they can do anything with it".
Which is true in a trivial way (they're allowed by the law to do anything they like in that area), but it's also wrong.
Wrong in that in practice they're not really free: to survive they are bound to the market and their customers responses.
So they're free only as much as they're OK with pissing their user base and potentially losing sales (or have most of them go for some other product, and kill their own user base -- e.g. Quark xPress vs Adobe Indesign, and tons of other similar examples).
If the problem is access to files, then they could just have a free converter tool to some standard format.
The way things should work is like this: Subscription for when you want to use the software and open format data files that you're always easily able to export and download.
If a company goes out of business or does something stupid then another one will pop up to handle your needs. This aligns incentives correctly while still allows a healthy dose of competition.
The "middle ground" has been the most common model for desktop app pricing for decades. You buy version X of a product. When the next major version is released you pay an upgrade price.
In fact, the "middle ground" has been the norm for the majority of software apps over the history of desktop computing. It's the SaaS subscription model for cloud-hosted software that is the new deviation. But that cloud-based subscription model is now leaking into desktop apps (like the Adobe suite).
Also, Adobe's tools have always been among the most pirated software out there. People who needed to do occasional work wanted Photoshop but there was just no way they were going to drop $700 on it. Nowadays, Adobe just charges them an $11/mo fee. That makes it much easier and I know several instances where this newer model has resulted in real income for Adobe, from what would've otherwise been pirate installs.
People are much more willing to pay a small fee several times than a massive fee once. The subscription makes them feel like they have more control and they can cancel when they don't need the product anymore (not always true because some of Adobe's subscriptions have annual lock-ins). It reduces the friction from "figure out how to pay us more than your car payment" to "just send us the cost of a trip to Starbucks, it will only take a couple of minutes and you'll be merrily on your way".
This dramatically changes the incentives re: piracy. Instead of spending hours trying to find a cracked build from a site that won't pwn your PC so that you can save hundreds of dollars, you just pay a few bucks and speed through with a known-good version (plus a clean conscience).
It's almost a side benefit that subscriptions frequently represent additional lifetime value v. a "pay once" model.
Mobile app stores killed that model, when they made continuous, perpetual updates the norm. At the time, everybody was too busy pointing out the implications of going from 50$ to 50ct when the even bigger change was a farewell to major version upgrade sales.
But there, after a few cycles of companies ruining themselves by hiring in the short-lived money surge of growing an app to saturation, parts of the industry seem to have found their way to quite reasonably priced subscriptions.
Continuous, perpetual updates are definitely NOT the norm in mobile apps.
Some get some bug-fixes and the occasional new feature, but any major update lands a version 2.0.
Far more (the "long tail") are just abandoned (like all those thousands of 32-bit apps being deprecated in the iOS store).
2015 - you sold v1 for $5.00
2017 - you start selling v2.
You sell v1 for $5.00 but in the description tell everyone not to buy it.
You sell v2 for $5.00 but direct people who have already bought v1 to buy the bundle of v1 and v2 that you price at $8. Anyone who has already bought v1 can buy the bundle for $3.
N * (N + 1) / 2
Not very satisfactory, but very prevalent.
And, I'd say, given the low price of apps, it might be just right to not offer any special discount for an upgrade. You could always reward older users some other way.
A user can buy the base version, then a few months later when you create a release that allows processing widgets through the program twice as fast, they can update for a small fee. This would force the developer to create updates that would be easy to communicate the benefits of to the consumer.
It'd be a bit more difficult to figure out pricing for new users over time and which version they receive, but it would allow they old pricing model without forgoing the benefits of incremental development over time.
That could quickly devolve into supporting a large number of distinct versions of the software, which would be difficult and costly. Nobody wants to do that.
Not to mention that, if this versioned software is a platform (for example, WinXP and its service packs you mention), downstream vendors would also need to QA and support their software on all actively supported versions of said platform.
I use various bits of successful software like Transmit and Alfred that let you update until the next major version in which you must pay again.
The reality is that having everyone on the same version drastically simplifies not just security, but also interoperability. It isn't 1998 anymore. The default is internet connectivity and we should stop pretending our apps are secure when they are not.
Now you do you, and I'll use Goldwave v4.0 for basic audio edits - exactly the same tool I used in 2000, one that works well and I never had to re-learn.
I despise tools that capriciously change in my hands. Extra "security" is not worth the productivity hit.
Again, Internet connectivity isn't my default. Dropbox can handle that, and that software gets all the updates. The tools I use to make stuff I put in Dropbox better all be offline and never changing unless I say so.
That applies to the office suite, DAW, graphics editor, etc. I haven't seen anything their online features could give except a cloud lock-in.
You may value extra security, often necessitated by the very virtue of the software being online. And I value the ability to use without having to think about whether the signal is strong and my card payments went through.
The reality is that the interests of the users are often not aligned with the interests of software vendors.
That being said I do think truly securing an application requires first having a secure platform. Otherwise users could indefinitely demand mitigations at the application layer until it contains most of its own OS.
A good example is the Adobe Creative Suite 6 Master Collection which was so expensive to buy in Australia that it was cheaper to fly to the US, buy a copy and fly back. Now, you can get a years subscription to Creative Cloud for 'All Apps' for about 1/5th of the price of what CS6 MC was in Australia. It is still expensive, and after 4 or 5 years you will have spent more but thats significantly longer than Office 365 which costs about 2/3rd the price per year of a copy of Office 2016 outright.
In the US, companies have product liability to correct defects for the lifetime of the product, subject to routine limitations. 
So companies create business models to compensate for this limitation.
Companies figured this out with software decades ago, so it’s certainly possible (eg, Microsoft).
I explained why I find the description fitting. You could at least entertain us with why "future users pay for your upgrades" does not fit in the context of one-time-paid "perpetual license" software beyond disagreeing with the phrase I chose to name the predicament.
Many many companies still allow this, but I think if you want support you should be paying a support fee (e.g. monthly subscription).
"that price is vastly out of proportion from the cost of providing the software"
That's just an unfounded assumption by the author. He says he knows this, even though he doesn't know how many developers are working on it, what they get paid, how much time each release takes, how large the code base is, or how many users the product has. Essentially, he has made up a cost in his head, and decided that the costs must be less than his fantasy. For all we know, he's one of 2 users, and the cost for keeping his editor available is $100k/yr/user.
This also completely ignores the fact that prices for software aren't generally set using cost plus pricing.
Ay, there's the rub. The problem is also related to price anchoring : People  accepted the price of $70 for the perpetual value provided by the app (including cloud syncing), but balked at $40/year. The latter price makes the app more expensive over 2 years, and the developer promising updates doesn't have quite the impact to justify the change in the eyes of the angry customers.
If the app initially cost, say, $160, maybe the newer pricing would've been better accepted. I hear Adobe and Microsoft are doing quite well with the subscription models...
 The people who bought it. This is important, because it ignores all the people who thought this wasn't good value. Maybe some of the initial non-purchasers became subscribers. Market analysis is hard.
if you need 'em for your career, then make the person providing your career pay for it.
if you're self-employed, then use an open alternative.
The production cost is one of the metrics customers use to decide if a price is fair or not, to them. There are other metrics, like the time that can be saved by using the product (ie. some way to quantify the product "use value"), but the production cost is often quite useful to detect abuses--and boy, aren't there a lot of attempts of such abuses.
only approximately, and only if the consumer really knows the cost.
Think jewlery (like diamonds), or expensive brand name goods like designer clothing. The production cost for those goods is "low", but the charge is in marketing and status symbol representation (which is modified via marketing).
So this looks like a case in point, where having a rough ideas of the production cost (some parts hand-made, made in France/Italy/England, expansive material like quality cashmere etc.) is important.
But the point is he's a consumer and he isn't pricing by value - he's pricing by costs.
That is in itself a great argument for the subscription model. Consumes receive value from continued use over time, so why not fit revenue to the same shape?
They did do this. From the footnote to to their original announcement
Recent purchases of the Mac app will unlock up to 12 months of free use, and purchases of the iOS app will unlock up to 6 months of free use. Your individual free-use duration is calculated from your actual purchase date, respectively, and if you bought Ulysses on both platforms, we will add together both periods.
Of course, in the long term, customers will revolt, and do so swiftly, and without mercy.
Instead of the several thousand dollars you would have had to pay for the various softwares in the lineup up front, you just pay $50 a month. Which is reasonable of you previously used more than just Photoshop and maybe upgraded every 3 to 4 years.
If the end result is a similar cost, I would much rather keep my capital in the business and make a monthly payment.
I do some vector design work maybe once a month. I'd love to buy a license for Illustrator, if it cost whatever it used to cost before Creative Cloud. I would use it for a long time.
But 50€ per month is too much. So I bought a license for Affinity Designer instead. It covers most of my needs, and it's no subscription. I also bought a license for Sketch, since the subscription is optional.
I'd love to use the same tools as professional designers, but they've become too expensive.
Here’s the reality. I used to pirate Adobe software because there was no way I was going to pay 1500k or whatever Photoshop was. Adobe got $0 from me.
Now I subscribe to get access to Photoshop. Adobe now gets £100 from me a year. I’m not the only person I know who went through this.
Of course, cheaper alternatives always existed. Adobe’s adoptance of subscription pricing hasn’t changed that.
Software used to be an investment. At university, our physics department had a lot of old computers standing around, whose only purpose was to run some specific legacy software that was no longer maintained, but still worked perfectly.
During my time there, I convinced the theoretical physics department to buy a few Illustrator licenses so we could make better diagrams. I think the academic license cost 300€ per seat. They probably never updated, but I'd assume they still have a PC somewhere with one of those licenses installed, and if someone has a PDF from Inkscape with an incorrect Color Profile, they could still use that machine to fix it.
I think you underestimate how many people use old software out there. Sure, we tech folks update every year, but people who work outside of the tech bubble don't always upgrade a system that's working perfectly fine.
If you need more than just photoshop, the deal is even better.
A year of updates.
A lifetime of Sketch
Your license comes with a year’s worth of updates.
Once that year is up, you can keep using the last
version of Sketch you downloaded, forever.
* There is no incentive for feature creep caused by having to "sell" the next version to your current userbase every so often.
* The developer does not have to keep supporting old versions forever.
If you have no idea how much income you are going to make, stuff become a hell of a lot more complicated, unless you have a substantial cash reserve available - not a luxury that everyone has. The directors spend a hell of a lot more time running around banks begging for short term financing, cutting costs and planning out 100 different potential scenarios.
If I had to run another business, I would definitely look to running some kind of subscription scheme..
And if you get a reputation as a hostage holder, you will likely spawn competition that avoids your negatives.
I’m sure you will get some residual low hanging fruit in the form of people that buy subscriptions and don’t care enough to cancel.
Doesn’t seem like a winning business model though.
But, generally this will be to a much more predictable level that if you are relying on upfront sales. Unless you really mess up your product, if someone subscribed last month, you can generally predict that there is a, say, 95% chance that they will still be subscribed next month.
If it is a one off payment, then you know you aren't getting any income from them and you just have to hope your sale people are going to do their job next month.
It has nothing to do with lock in. That's a bit of a red herring. You can have just the same (or more) chance of a repeat subscriber by creating a really good product as you will with some kind of hostage strategy. As you say, not a winning business model.
My experience here comes from more business to business where a months worth of expenses would be covered with 1-2 sales. I had times when the sales people would just disappear on extended unannounced holidays or decide to move to a different job without informing anyone. With our business strategy relying so heavily on upfront sales to maintain the cash flow, it was not a fun position to be in!
Things may well be different with consumer products where sales volumes are in the thousands of units.
You realise that your post sounds like the stereotype of every bad manager ever? "How much harder could it be to build the new feature if we did X, Y, Z? Surely you can get it done in just three days?"
If you sell a one time license to somebody there is no incentive for the seller to keep making the product better, to care keep caring for you.
With a subscription model - especially a non-annually-paid one, they have to keep working to keep you.
It's also a way more sustainable business model and probably the only thing which can replace ads in practice. If a service like facebook gets a load of money out of you per year, there's no way they would switch to a one-time fee instead. If it were to be replaced by a subscription though, then you're still a constant money flow for them, which would work much better.
For Facebook - I don't think forced subscription would work. People would be forced to think about how much they value the service (a less ubiquitous one at that).
1. Operating system
2. Programming IDE
3. Password Manager
4. Well I pay subscription for Netflix and Spotify but that's not really for the updates. Partly for new content, partly operating costs.
5. Facebook (I'd prefer to cover the operating costs by subscription, I really dislike ads)
6. Email - same as above
Also, actually I'd like all the services I use to provide feature updates now and then and continue trying to innovate.
Edit: also, if you do feature updates every now and then. Like it was with Windows or Photoshop. Then you end up having to support a lot of parallel versions with security and bug fixes which is wasted work really.
But - if those preferring a perpetual license were to be a strong minority, there would be no business incentive to make products in such a way.
This one is a total non-starter for subscription pricing. I'm not willing to use software that will potentially cut access to all my accounts if I stop paying them monthly.
Do you have any example of file managers or PDF readers with a subscription-based model?
not exactly subscription, but you buy a major version, and each new major version is a new purchase.
Ultimately - because the person who owns the rights for the software wants to keep charging them and since it's their software they decide what is charged for it, end of story.
If it's not a good deal for you, go somewhere else. There's no point arguing about prices beyond that. There's no 'should' in prices - only what people want to charge and what people want to pay.
In reality, those companies who don't do scummy things like attempt to lock your data or similar, will be out competed by those who do.
I strongly disagree on this one. If they want to sell you version 2.0 (upgrade), they better make sure those new features are worth their money.
With a subscription model, you either keep paying them or you lose it all. Why would they improve their product when you're already paying them x/month?
Some time ago I bought Affinity Designer because I don't want to pay Adobe for a subscription. And going back to that website, one of the first things they promote is "No subscription. Only €54.99".
Seems obvious that any big player that is switching to subscription only, is leaving a gap for smaller companies that support people like us.
Even Apple somewhat relies on this, except it's been in 2 year intervals. It's the point of so called "planned obsolescence."
So if you're an indie developer, you only have a few options.
1.Go through the rat trap of doing ads and trying to grow a huge userbase with marketing etc..., which everyone hates but most tolerate because it's free.
2. Charge a 1 time fee and hope that you price it right to support long term development and sustainment, knowing that you'll probably limit your market significantly.
3. Charge a recurring low(er) fee and draw a balance between losing a lot of very price sensitive people and having to run a marketing campaign and ad system.
No good option there but subscription seems to have the most benefits. By the way, everything needs upkeep.
As a software (SaaS) developer, I find this comment outright bizarre. I find it is hard to make a living with $50/month subscriptions, if you write niche software (and believe me, you DO write niche software, you are not Dropbox), much less support an entire company.
Have you actually done the numbers before writing that "price is vastly out of proportion"? Just take the total cost (roughly 2x salary) of several people, divide by that $40/year and see how many subscriptions you come up with. I'm getting ~25000 subscriptions for 5 employees, just to break even, and we haven't even touched the marketing required to get 25000 subscriptions.
Users are balking at the price because it's garbage to expect them to support some gigantic business for a simple thing. This is very common (1Password has over 75 employees!!!) and the sense of entitlement developers have to try to force their users to support a grandiose business, no matter how bloated and unnecessary the people are, isn't sustainable.
You are underestimating the complexity of writing, maintaining, documenting, supporting and marketing apps of this size. I think my guess of ~5 people is about right, they might be able to do it with a smaller team, but probably not less than 3. I'd say 2 developers and one person to do marketing/support is a minimum.
Furthermore, only devs complain about the "proportion of providing the software". Didn't especially Indie devs here on HN take their time to learn the lessons of value-based pricing?
I do charge monthly for my app. It's 30 bucks a year for a B2C app. Expensive some might say, fair for others. But I can at least confidently tell that most users use my app every single day. And people who won't use it for more than a few months came away way cheaper than if the one-time-fee was 30-40 bucks to start with.
Oh and providing an app as a one-time-fee for $5 or some ridiculous undervalued price that is considered "acceptable" simply doesn't work in niches.
People tend to think that the costs of a software business are just the time of the single developer that writes the software. And they also calculate the cost of that time as what developers actually get as their salary. But this is not how you run a business, not by a long shot.
This gap in understanding has been widening recently, because of the completely unsustainable app store pricing.
Also, I wonder whether this will lead to a slower development of the software. Before you’d have to create a leap forward to impress people to buy the new version, if the old version was still good enough.
Carrot Weather App is another good one. Pay $5 once to get a really polished weather app with some basic "cloud" functions thrown in, like notifications to a phone device, some fun "achievements," and a pretty good weather data feed. If you want the super-accurate feed or if you want more advanced notifications and mobile device access (e.g. repeatedly on your Apple Watch), pay up for the subscription because it costs the dev more. And, if you stop paying, that $5 you initially paid is still valuable because the underlying app still works.
$4 a year (or $10, if you don't dismiss the 'ultrapremium club' popup and buy that by mistake) plus the $5 one time is not remotely what I would consider worth paying for a weather app unless Carrot was out in the wild building weather stations.
You'll also note that Carrot's website nor App Store description even mention the existence of this buy-up (except on the support page - but why would I look at the support page for an app I was thinking about buying?) or the pricing. They also deceptively show a photo of the Apple Watch showing weather, which is technically correct (the best kind of correct) - but the Apple Watch doesn't update in the background (or give you weather notifications) unless you pay for a subscription. Because weather apps that don't update are really useful.
Also, it doesn't "cost the dev more" to send updates to a watch instead of the phone (they're going through the phone anyway,) so I don't buy your justification for paying more for it. It's just a way to market segment and try to scam more money from people who have already paid above market for a weather app. You get Weather Underground data with the 'cheap' sub... but only on the phone. If you want it on the watch, you have to get the expensive sub. This also makes no sense. There's no way in hell wxug is charging extra based on the target device.
Stop paying? When you aren't "current" you can either pay up... or downgrade to your perpetual version "owned".
Most subscription software is a terrible deal in comparison. I have tried to avoid subscription software as much as possible. But we have a family subscription for 1Password because $REASONS. We pay $60 per year for (in comparison to Office) a small software product, with small cloud storage, of which we only need a couple of megabytes for storing encrypted passwords.
Also, I wonder whether this will lead to a slower development of the software.
Most likely. Once you are locked into some proprietary data format, it is often more expensive to move to an alternative, and it is easier to subscribe. Once a substantial part of the user base has a subscription, there is no more need to entice users with a new version.
Subscription software does not benefit the user.
Each market is different, but when I look at an area like Photoshop or Illustrator, the competition keeps getting better. In some areas they aren’t even competing.
The workflow of a game artist will have them going through a bunch of different products to get to an end result. A lot of those steps can have alternatives. If a vendor has some proprietary format that doesn’t work with anything else they never even get a user base.
If a subscription is funding continuous development, and th company is doing a good job, and I use the software daily it doesn’t bother me. If I use it twice a year, I’m going to be looking hard at alternatives.
Subscriptions from Adobe were meant to soften the initial sale, but Adobe's own rigidity with the subscription schemes on release shot them in the foot, as organizations had to wait a long time for a model to come out that met the needs of small/medium businesses who previously could have made due with a few perpetual licenses. The storage was pretty sad even at the time of the switch, so that wasn't a compelling sales point either.
I think Adobe just didn't pull the numbers they were expecting when they switched, and now they're stuck with this model and infrastructure they don't know what to do with.
>Creative revenue in the first quarter of fiscal 2018 was $1.23 billion, up from $942.2 million in the first quarter of fiscal 2017 and representing 30% year-over-year growth.
So not only are they still selling, but subscriptions increased 30% over the past year. Clearly it's working for them so much that they're finding success doing the same thing for the document cloud:
>Document Cloud revenue in the first quarter of fiscal 2018 was $231.0 million, up from $195.9 million in the first quarter of fiscal 2017 as we continue to transition Document Cloud to a subscription-based model.
This is actually my way of making decision to buy a subscription-based product. It must provide comparable service. Office 365 single user license costs around 70$/year. Now:
- Evernote is asking 60$/year. Seriously? One note is already offering same service with 1TB storage.
- Pocket is asking 45$/year. WTF? It is just a bookmarking service which is already offered by one note web clipper.
- Proton mail is asking 50$/year for 5GB mail box. Dude, Office 365 offers 50GB add-free mail box. However NSA is able to read your emails, which is not the problem here. At least MS is not selling my information to advertisers.
Other than streaming services, It is getting really difficult to find any subscription-based product that gets close to Office 365.
Depends on software, subscription and benefits...
I think Office and Jetbrains are softwares done "right". They continually release updates - quarterly?... continually add new features...
I think more companies get it "wrong" than get it "right"... but done right, the company has reasons to keep developing - no new stuff? no continued monies. no new monies.
I am not sure if that would be bad, though. Often enough, I feel that software vendors either just change the UI so they can show non-technical people how "improved" their new version is (MS Office), or they introduce arbitrary incompatibilities, so you need the most recent version to edit files that have been created/modified with that new version (I'm looking at you, Autodesk!).
With a subscription model, at least these vendors could focus on changes that actually provide value to their customers rather than making arbitrary changes just to make people buy a new version they might not really need.
In the knowledge-based industry such as software the cost of labor has the biggest share in cost structure. And unlike materials, the labor itself is a subscription. Social policies that make firing hard make it even more so. No wonder that revenue structure also tends to shift towards subscription-based models.
I thought this was absolutely ridiculous since the custom markdown would have simply gotten written as plain text. I asked why they're limiting the user like that and got even more ridiculous response: apparently they didn't want other people to get confused in case I ever shared the files that were outside their own file based schema. This non sequitur infuriated me enough to ditch the software.
None of it made any sense until they announced the subscription model.
You will generally make far more money charging $5/mo forever than you will charging $50 once for identical software. Not to mention the steady cash flow.
An extreme example, but I always pirated Photoshop (as did probably half the people who ever used Photoshop). But now I pay $60/mo for it and a bunch of the other Creative Suite apps. I never would have paid whatever the 4-figure price was even when I was getting paid to make graphics at work. But I'll gladly pay $60/mo to have access to everything now even though I don't get paid for any graphics or video work.
I’m always annoyed about whiny iOS developers complaint about how they cannot make money without obnoxious schemes like this or gambling mechanisms. Software ISVs in olden times had a tiny market, huge expenses around retail channels and distributors, etc. They made money.
> I have noticed this as well, that a not-small number of software programs have turned from "give us one money for this version" to "give us slightly smaller amount of one money per month, but do it in perpetuity if you want to keep going with the data you've entered."
Like Sketch App which used to be just US$99 and is now US$99/year. Although in this example, "slightly smaller" doesn't apply
Your license comes with a year’s worth of updates. Once that year is up, you can keep using the last version of Sketch you downloaded, forever.
That sounds ok to me.
Now imaging a world 15 years from now where Adobe totally goes under due to competitors making much better programs. Their servers go away and now, and you can't even start your licensed software without running it through a debugger and trying to crack the license check.
This is not how prices are set. They are set on the willingness and ability to pay. Water costs nothing to produce but if I have it all you will pay me everything you have.
For example if their main competitor went bust and not a single atom changed inside this company, they could charge you more.
Do they have a monopoly or is it hard to migrate? These are the conversations the people who set the price are having. They are not talking about people being upset if they still pay.
This. If you sell an app and service together, you can charge a recurring fee. If your app is more traditional, then a one time fee for the app is appropriate. Note, this does not mean that you can just add a service willy nilly like and start charging a recurring fee. That's crap.
Alternatively, same restaurant has some really popular plates, fancy looking things. Owner sees a way to generate revenue, so he sells the plates for $5 and a recurring fee of $1 per month. That's it, nothing else. Why would I want this? What's in it for me?
Why must there be something for you? The thing in it for you is the same as before: the plates. If they're no longer worth it for you, that's fine, but that's the same if the owner had kept the same model but simply raised the prices or reduced the size of portions. I don't see why that's "crap" or "inappropriate".
The only exception I see is people who already bought a plate; I fully agree they should be allowed to keep using it as-is for free, since otherwise that's a breach of an existing agreement. But there's no such agreement between the owner and prospective buyers.
You seem to be taking issue with my word choice, but I stand by that choice. The second scenario is a crappy deal. It's "Crap" for the consumer. I don't know anyone in their right mind who would go for deal number two willingly.
If I am paying for software that I use to be more efficient and increases my profits, I am OK with a subscription model, or whatever model is offered. This is, as long as the cost of the software is considerably lower than the value bump I get from using it.
With discretionary spending, it takes a lot for me to buy a subscription. If I spend more than X% of a given month consuming what that subscription provides, I will consider buying it. Otherwise, I am fine not consuming that particular service at all.
I subscribe to a few magazines and Spotify. I read content online from many sources, but will not buy a subscription to each one of them. None of them are valuable enough for me to subscribe.
If there was a way to pay, say $20 per month, and have a set of credits that I could redeem at Washington Post, The Economist, New York Times, Bloomberg, etc, on a per-article basis (I make the decision after the first paragraph or two) I would jump at that right away. The system would need to be very user friendly and almost friction-free.
blendle.com offers basically exactly what you're asking for. (Not in any way affiliated with the site, just an occasional user)
i think this model doesn't work (but i'm willing to be pleasantly surprised). Imagine you read 10 articles a day, 30 days a month. That's 300 articles - that's about 6.6 cents an article, spread across many different organizations.
Those articles will need a readership in the 10,000's per article for any sort of return on investment with those sort of prices. Granted, a high quality article is going to be able to reach that, but there's limited time per person to read, and that 10 articles per day read is on the high end - most people read much less than that.
the data will be useless other than as a source of information. If you have data for an online vector editor, the vector data can be legally taken out via a common format (such as json), but there'll be no importers for this shape of data.
Any business can easily construe a common machine readable format that's also completely custom, and unimportable anywhere else, to satisfy the letter of the law.
If they frequently change this format to break those implementations or clearly make it much more complex than it needs to be, that can also have legal repercussions.
"Information provided under Articles 13 and 14 and any communication and any actions taken under Articles 15 to 22 and 34 shall be provided free of charge".
(Article 15 is the Right of access by the data subject.)
You can only charge for subsequent copies or when "requests from a data subject are manifestly unfounded or excessive".
See also the ICO FAQ on the subject: https://ico.org.uk/for-organisations/guide-to-the-general-da...
Many of Adobe’s core products have languished at the same time as many of the features that set them apart in the past are become less differentiating. The photo editing/vector drawing space is becoming more commoditized.
I haven't seen anything at all that comes close on a cheaper model.
Frankly, the writing has been on the wall for something like at least 10 years and surely came into life once Adobe announced the CS 5.5 subscription model in 2011.
And what can be done about that ?
Even if some other software has the same or even slightly better abilities at a lower cost, the overall cost of switching is much greater. Especially if someone else is paying for the tools.
Until some software appear that make user's competition more efficient and they are forced to learn new ways to not get out competed.
Then the cycle starts all over again.
only if there's no competition, or there are substantial barriers to entry (such as regulation).
The net effect is that large swaths of society and indeed the world get the internet services for free, subsidized by purchases made by richer westerners, purchases and services they themselves could never afford. This model works well with the economic structure of web publishing, where marginal cost of serving an existing page to a new customer is essentially zero - even for the obese, media rich pages the author is referring to.
Once you move to a flat fee, this massive redistribution ceases. There is a clearly defined model of customer, say, those living in the middle class of an OECD country, that is targeted to maximize revenue, and a paywall is put in place that excludes 95% of the rest of the world. These are people for which 9$ might represent a tenth of their wage, and who might not even have access to modern banking through which to purchase internet services.
The open web was created by hacker ethos, but paid for using ads; a flat tax against widely variable income is strongly inequalitarian and exclusionary.
> Once you move to a flat fee, this massive redistribution ceases
I think this largely disregards the effects of targeting. A lot of the things (payday loans as the prime example) advertised to people less well off are reverse redistribution, exploiting the financial situation / needs of viewers.
This is a false dilemma. There are many options before succumbing to a payday loan. Depending on where you live, there are a myriad of housing assistance, energy assistance, medical bills assistance, and food assistance programs on the city, county, state, and federal levels. Heck, even bankruptcy can be better in some situations. It really does depend on the situation.
The other problem here is availability of information. Everyone is 100% aware of payday loans and the temporary relief it can provide you (advertising), not everyone is aware of the upwards of 20+ programs someone in need can participate in, and it can be exhausting to apply and follow up on everything. Again, the reason the payday loan industry is so successful is they are preying on human nature to take the quick and easy way, but to say they are some sort of last option is not true at all.
And, of course, that must be the very individual who wants those "immersive experiences, well-designed pages with fonts, graphics, photos, and videos coming together into a compelling format."
No one is saying that the fee should be flat. There are ways of selling roughly the same service for different prices - just look at air travel.
I'm not going to pretend that this is the end all solution. But both the open web and journalism cannot survive in the present state. We have to adapt.
Seems like there is a market for deeper analysis done stratchery, the information and couple of others, but it barely sustains a few writers, hardly able to compete with the large scale newsrooms of WSJ, WaPo, NYT, ...
The issue with your observations is that Gigaom isn't known widely outside of big tech. So I don't feel it's fair to compare their failure to the possibility of a mainstream outlet attempting this.
My thinking is, that if they couldn't get it to work in a specific category, then it would be even harder to make it work in more general one.
In general, a very few people care about any topic enough to purchase deeper analysis of it. I'm not sure that this would work as a business model in general.