Why lifetime deals beat subscriptions for indie hackers
Because simply put, you'll need to acquire customers either way, whether it's LTD or MRR.
MRR is just LTD in installments.
Every customer has a lifetime value (nothing recurs forever).
So when you say MRR, you're really saying:
"What is the total value of installments per month at this point?"
All at once or in increments?
As a vendor, if you have the choice of getting a customer's LTV all upfront, versus in installments, which would you want?
Obviously you want it all upfront.
You should be maximizing LTV and dialing in your customer acquisition.
MRR or LTD are just vehicles to achieve that.
What about market size?
Now, I'd argue the LTD market is a lot larger than the MRR market.
The reason it's easier to sell LTDs vs. subscriptions is because the market is just bigger.
A lot of people hoard software they have zero intention of using, let alone use heavily.
Why forgo free money?
It's a lot easier to sell a $500 LTD vs. getting to LTV of $500.
Anyone who has run a SaaS business knows it's hard to crack $300-400 LTV.
LTD as a funding model, not business model
If you don't have the luxury of waiting for your MRR to pick up, you need to be scrappy and get cash upfront whatever way you can.
You have 3 choices:
-
Work and save up more for more runway;
-
Look for investors (angel/VC); or
-
Sell lifetime deals.
1 is slow, miserable, and you learn absolutely nothing.
2 is worse, you give up equity and some control to a bunch of deadweight parasitic nitwits.
3 is the only prudent funding model, because:
-
You're funded by customers who actually use your product;
-
You lose no equity and waste no time; and
-
They see it as "investing" in your product, and so they want to protect their investment by giving you relevant feedback.
The 3rd point is most important, because you need a critical mass of users to even get any sort of good flow of feedback.
LTDs are a cheat code to Product-Market Fit + virality + word-of-mouth marketing
In case you didn't know, feedback is like fuel for getting to product-market fit.
If you don't get a good flow of feedback from actual users, you waste time and don't grow.
Also, if your product has baked-in virality (why any indie would start a product WITHOUT virality is beyond me), then you also need a critical mass of users to jumpstart virality.
Virality can only work with high MAU, otherwise it's no different from a non-viral product.
And I haven't even mentioned how LTDs get the market talking about you.
In a sea of competitors that charge a monthly subscription (a.k.a. rent-seeking), using the LTD model can be a USP and is definitely a breath of fresh air that your target market will be clamoring for.
And I haven't even talked about YOUR motivation!
It must suck MASSIVE BALLS to slog and fight for an entire year only to get to $1-2k MRR, and that's considered "successful" for an indie!
Why not just make $50-100k upfront instead WHILE still getting closer to PMF?
Pride? 🤣
If you're poor and bootstrapping, you need to be ruthlessly pragmatic.
You have ZERO luxury of being ideological just because some other founder or VC said something else.
Financial anxiety is real and leads to a lower IQ.
You don't want to be there when starting a business.
When to switch to an MRR model then?
I'd say 12-18 months after launch, when the product is stable and has at least 70% PMF.
Keep raising your LTD price while keeping it open for subscriptions.
You'll know when you hit a tipping point when users prefer to subscribe instead.
At that time, you can even cull your LTD or maybe just offer it during special sale seasons.
Building MRR will be a lot easier once you have users first (driving both virality and word of mouth) AND some semblance of PMF.
Don't make it any harder on yourself than it has to be!
If you enjoyed this post, consider subscribing to my newsletter.
I send email once/week, and they're short (1-min reads).
Topic is "my most salient learning point in entrepreneurship of the week." 👇
https://birdsend.page/forms/9255/Mw7NC0sReJ
You may also keep in touch with me on X: https://twitter.com/therealjayber
This is a good read and raises an important question. With monthly subscriptions, you can pay for access when you need it and cancel when you don't. Lifetime access, with its high upfront cost, offers perpetual use. However, will people really be willing to pay such a high price upfront?
From a developer's perspective, lifetime access may not be sustainable in the long run. Effective money management becomes crucial here. If the company mismanages funds (e.g., spending on cars, personal items, etc.), it could lead to the downfall of the app. This would unfairly burden the customers who invested in lifetime access.
Of course, the success of either model also depends on the developers and how good they are at attracting new customers. Financial responsibility, combined with a strong ability to continually bring in new users, is key to ensuring the longevity and success of the app.
Balancing the initial cash influx from lifetime deals with sustainable growth from monthly subscriptions requires a nuanced approach. Ensuring a steady flow of feedback and maintaining user satisfaction is essential for both funding models.
Ultimately, the choice between lifetime deals and monthly subscriptions hinges on how well the developers can manage their finances and maintain a steady influx of new users.
Yes, in theory that's the selling point, but why in reality is it so much harder to sell a $10/mo subscription vs. a $200 LTD?
There's a reason there, and I've covered it before.
The perception of a subscription vs. a one-time purchase is very different in a consumer's mind.
One-time purchase is, well, once I paid for it, I can forget about it, it doesn't affect me anymore.
A subscription is perceived as a regular continuous annoyance, something that takes money out of your bank account each and every month.
Because of this perception, there's a huge producer surplus (i.e. gulf between what the market is willing to pay vs. what the producer is willing to accept) in the LTD market that founders would be silly not to take advantage of.
Agreed, but LTD jumpstarts it by flooding your user base with hundreds, even thousands, of new users, thus speeding up that process (compared to an MRR model).
Agreed 100%.
You need to get a steady influx of new users regardless.
If you can do it without LTDs, more power to you -- you don't need LTDs then.
But for the majority of founders whose traction is slow, LTD is the cheat code to growth and prosperity.
This is actually a good perspective, i really like this! This has opened my mind to LTDs.
I might try offering it too!
I can chime in here too, I've purchased 50+ LTDs now :) (Let me know if you want the list lol)
Most companies I buy from now say 'Lifetime access for the life of the product', which really clarifies the messaging. (Sometimes people assume it's lifetime access for the rest of their lives, and their children's lives, etc...haha)
Fwiw, I have lost a few LTDs with the companies going under/losing funding. It sucks, but it's part of the high risk/reward. It's on me (the customer) to do my due diligence on the seller and make the risk assessment if they will be around longer term.
I mentioned it in another comment above, but LTD customers are incentivised to provide more feedback than MRR users imo. MRR users give their feedback by churning, LTD users are 'bought in' to your company for life, so want to make it work long term.
Yes, MRR customers give feedback by churning... or after churning.
Hardly helpful at all if you're a founder.
You need someone who's your ICP who's locked into you for the long term, whose interests are aligned with yours, a.k.a. LTD users.
Great insights on lifetime deals! As an indie hacker, I've found LTDs invaluable for:
Quick revenue boost
Building a committed user base
Reducing churn concerns
Generating word-of-mouth marketing
Just remember to price carefully and limit availability. LTDs can provide the runway needed to refine your product and grow sustainably. Definitely worth considering for any indie SaaS launch!
Absolutely, LTD doesn't mean give the store away forever.
And also beware of "customers" who will pressure you to give more than you're willing to.
Great article that has given me some food for thought for my SaaS. What is PMF?
Product-Market Fit
It means your product 100% satisfies the market.
In other words, it's perfect for your target market.
Most apps don't get there, some apps get close, others remain far away and thus eventually die.
Ah, cheers
LTD are nice to grow and get the initial users.
Absolutely, not sure why so few indies do it.
100%. I've purchased 20+ of these LTDs now. It works great.
//
I didn't see it mentioned, but
I think the incentives are super interesting for LTD users. They are incentivised to give you (app creator) more feedback to create a better product over time to get MRR/get more from their LTD.
For the LTD's I buy, I go out of my way to give feedback and promote it where I can, since I know every MRR customer I refer is more runway for the company that started the product.
I think if you can communicate that with your end users, and turn them into promotors for your product, everyone wins. ("What feature can bring us more monthly users? Let us know!" "LTD users get a 40% affiliate chunk, higher than any of our other segments, you're the VIPs", etc)
You're right, I think people are underestimating how aligned the interests of LTD users and LTD founders are.
If you treat your LTD users like gold, they'll return the favor too.
We offer a LTD for fabform.io our form backend service. We are not using any third party service to sell our life time deals is this a mistake?
Yes and no.
Selling with a platform helps you get distribution.
It's almost impossible to sell thousands of LTDs on your own without partners.
However, beware that platforms like AppSumo and Rockethub take a big cut (50-80%) of your revenue, and they might also dictate your pricing and terms (i.e. pressure you to offer a wider feature set than you're willing to).
I could see AppSumo/Rockethub/SaasZilla being useful for a backlink too - @simplisticallysimple, thoughts?
I think they get redistributed quite widely, so you'd be getting social and directory backlinks.
Yes, the backlinks and redistribution effect cannot be understated.
LTD is the new trend in SaaS, I think. People are burned out from subscriptions. I think we need a tool that manages all the tech subscriptions across all tech platforms. :)
LTD is the new trend yes, sadly anyone can run an LTD, even big companies, so it's no longer a unique selling point for indies... anymore.
I think we can reframe it for indies as 'Early Believer' LTD. I tend to buy more from indies who have that branding, rather than established players.
Established companies that run LTD's make me question their ability to build new features that attract MRR customers. 😅
Early Believer, that's something new.
Though that might cut both ways, as LTD buyers who have been burned before might have their PTSD triggered with that sort of language IMO.
Yes. we have LTD on TapRefer.
This comment has been voted down. Click to show.
Wait, what?
I'd say you're in the minority if you think this.
Most LTD customers understand that indies don't have the best funding situations, and they're willing to invest in products and founders they believe in by fronting them with a large cash injection (while securing for themselves a lifetime account).
The founder who runs away with the money is a tiny minority, definitely not representative of founders who sell lifetime deals.
Most founders really do give a bona fide effort to build and grow their product, and indeed many do succeed in creating something great and sustainable.
I'm just speaking from my own experience, without quoting statistics about whether I'm in the minority or not. As a customer for decades, my primary goal in doing business is to purchase something I find valuable for a reasonable price. My primary goal has never been influenced by whether the business is indie, an NGO, community-founded, or anything else. The fact that a product is built by an indie company does add flavour to my purchase, but it is never the primary driving factor. On the other hand, I do support several indie companies, and the only reason is because they make good products. Again, this has nothing to do with whether they are indie or if I believe they need funds to grow. The same applies to more established companies; a good product is always the reason for my support. It's just that more established companies often have poor products.
Regarding cash grabs, from a customer's point of view, it happens to me all the time. My experience shows that the trend of cash grabbing is increasing significantly as everyone's living conditions deteriorate throughout the decades. More often than not, for businesses big or small, making a profit becomes their only goal. Customer experience, on the other hand, is just something they maintain only when absolutely necessary. Otherwise, they will not hesitate to reduce the customer experience as long as more money can be made.
Perhaps there are differences between being a regular customer and being an indie customer, but I believe that good products attract everyone, and a successful business should have good products. This applies to indie businesses as well.