Monthly subscription or one off payment? Discuss 💡
I recently ran a poll on Instagram to ask whether people would prefer to pay for an APP through a monthly subscription or a one off payment.
There were 200 votes, and only 3 was for monthly.
I gave examples;
Monthly: £3.99 per month
One Off: £15.00 one off
Would a one off payment option be feasible to sustaining an income?
My initial thought was if it was a monthly basis you'd always have money coming in from current customers Eg. 100 customers ;
£399 per month
Vs
£1,500 one off payment
My thought is if you use a one off payment option what if you have a dry few months? What happens then?
Would that work?
What's your thoughts on this?
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My rule of thumb: if you provide updates and patches you go monthly. If not, one time is overall healthier for everybody
That's a pretty good way to look at it in simple terms. Thank you
I would agree with @wkulikowski but add 'support' into the mix too. If you provide support and want to sustain any kind of scale, the recurring model is far more suitable.
I know most people are against subscriptions. But don't forget that ensuring lifetime access is a rather bold promise, especially when syncing is involved. Your users give you £10 once and you'll give them years of syncing. Are you sure this is sustainable?
Of course, charging £48 per year to store some simple database entries is a lot and I understand your reservation. So, I'd come up with some kind of combined pricing model. Charge a one-time fee for the enhanced features, but charge (a small amount like £5) yearly for storing and syncing data.
My thoughts on this topic:
-As a producer, the best for you is to have a subscription model. When the market accepts it, it makes more money. It's more stable. I would prefer if people subscribed to my software product rather than buy it!
-As a business/maker, you MIGHT have a case buying subscriptions. Just run the numbers through your business model. You're a business and it should be easy to calculate. I still hate subscriptions when I'm on the buying side. As a minimalist I have an innate disgust for fixed costs: my goal is 0.
-As a customer, I'll pretty much NEVER subscribe to ANYTHING. Subscriptions are a losing proposition in pretty much all cases. Big companies know this and the numbers are clear: company wins, customer loses. Subscriptions are about you forgetting to cancel. It's about you paying forever, whether you use it or not, whether you need the latest features or not.
Serif, creators of the Affinity suite of creative software is gaining traction against mammoth company Adobe because Adobe forced the subscription model down customers' throats. I was one of those who ditched Adobe in response, but it was easier for me since I'm not a professional designer, for whom it's not as easy to do.
But in spite of the market being almost held "hostage" to Adobe, a lot of designers are now starting to consider the Affinity suite (and others) not only because of it's high quality but because you can buy the whole damn suite of designer/photo/publisher software for a negligible one-time cost (I bought them all!) That's just one example of customer fatigue towards subscription models and the sheer fact that "buying" can save a TON of money. Heck, everybody I know could still use only Word 98 to cover all their editing needs, but now they pay for a never-ending MS Office subscription. Hate it.
I love this reply. My usage of Sketch went down when they moved from 1-time purchase to purchasing yearly updated.
Personally, I think you should go with 1-time pricing unless you start proving additional value like Sync, Web support, etc. With content apps, you get new content, with office apps, you get the service and also hosting. What is the value you are going to provide?
Brilliant reply thank you. The bit there about as a customer i'd NEVER subscribe to ANYTHING - I'm the same. I hate subscriptions. It's like another direct debit on my bank that I don't need, so I avoid, on the other hand, an affordable one off figure for something that really interests me, is fine.
This is the sort of thinking i'm going with, keeping the customer in mind, and putting myself in a buying position, do i really think people are gonna pay month-to-month for my app? Probably not, no. Are they gonna fork out £15 for an unlimited plan for lifetime access? My research, and from personal opinion, yes. Most likely.
It's a hard one As ofcourse i'd much rather prefer having e.g. 1000 recurring monthly subscriptions over 1000 one off payments, but really, it sort of equals itself out really, as far as a side project goes.
We agree. Of course, ME not buying ANY subscription products as a matter of principle doesn't mean it's not a good move for you. Look at the money nomadlist and others are making... I certainly might sell my product through subscription myself if I only think of my own bank account. It's unclear what percentage of the market are non-subscription buyers like us...I think people still buy... For now... You just won't have me as a customer, ha ha.
Your math isn't convincing - someone who uses the app for four months is in front with the one-off. If it's at all desirable, of course people are going to go for the one-off.
Sustaining an income is about covering costs plus getting a wage on top - can't answer the question without knowing if you have a fixed or per-user cost overhead.
Maths for subs pricing should be something like
MonthlySubsFee (eg: $2)
AnnualSubsFee = 10 x MonthlySubsFee
LifetimeSubsFee = 4 x AnnualSubsFee (multiplier highly debatable if people will be around a long time)
OR, to flip your thinking - lifetime users are your most loyal users. Why don't you want to get more value out of them?
see http://www.thecurveonline.com/ and read the book
Say 1% of your users love your product and want to reward you for it. Do you have any way they can do so?
I like the idea of giving users the chance to reward the dev / owner if they want to...
I've seen the "Buy me a coffee" sort of donation style reward which i could most probably implement in.
I know what you're saying with the maths and how i've worked it out but I was just being realistic. For the app I'm developing, a life time of (10*3.99 *4) is really not feasible. No one is gonna pay £120+ for an app I guess in my case anyway. I feel like £15 is a more justified number to ask for without "taking the piss". the £3.99 was a similar figure too, I thought it was quite realistic if i went down the monthly route.
In a way i think i prefer the one-off payment option. I could always change up the business model down the line once i get initial interest with one-off-payments.
Thanks for your feedback, that was awesome
I'd say it's highly specific to the product.
Offering a utility-like product (used often, forever) --> monthly.
Offering a one-off transformation product (event, book, course) --> one-off payment.
Gotta pick pricing that makes sense.
Love this answer, thank you!
That really depends on the underlying value proposition actually. Very difficult to tell without context.