Free lifetime software upgrades are bad for customers | Hacker News Reader

Free lifetime software upgrades are bad for customers

formisfunction.posterous.com

14 pointsaepstein7 comments

Good advice for one-man shops. I was in the same situation and came to the same conclusion. Sold ~$200,000 in licenses to my software before sales started slowing down. I promised free lifetime upgrades so lost motivation to do a major new version:

1) I couldn't sell it to my existing customers, they're getting it free

2) Many of the existing customers came from a handful of niche websites where the product/audience fit was great, but their audiences are only so large so I've already sold version 1 (with the free upgrade) to most of them

Eventually I put the product up for sale on Flippa and took $90,000... which if I stopped development is probably all I would have earned over a longer period.

Plus, it's a long term capital gain, so I'll end up paying less tax on the sale versus earning it over time as ordinary income.

This is why the Saas model works so well. Churn rate is everything in a subscription business so your motives are closely aligned with your customers. You continually improve the software to keep the customers happy and the churn rate low.

I am going through this problem right now.

I told customers the price and it would not move and all updates will be free, however I am about to release the second version of the product.

It is significantly more stable, faster, more features, better designed, and one of the best applications I've ever made.

I want to recoup the time spent on it, not to mention my sales from v1 have started to drop and I want to bump that up again. Maybe I'll release it as version 2 for pay but initially at a discount? I do not know. Suggestions?

Here's an idea: release a scaled back version of your new v2 as a free upgrade, and then take the full version with a majority of the extra goodies they're going to want and put it out as a separate product. Then, give existing customers a 30-50% discount off the "new product".

Release both the free upgrade and the new product at the same time, so they'll feel like they're getting something for free, as well as a discount to grab the new product.

Valid point but should all upgrades be non-free? The most notorious free upgrade systems are the open source communities. They are mostly back by a company (eg Canonical, Red Hat) with paid developers, but take for example RHEL, who benefits immensely from the open source version Fedora where the community of non-paid developers have a passion for the project.

I guess if you have passion, does the amount of money matter?

Completely agree, money isn't the only motivating factor for continued development. But it's easy to get burned out on big projects (see TextMate 2), or move on to other projects.

With time being such a valuable resource for any developer, unless the product is a side hobby or the dev has special circumstances (rich, etc), money is a big factor in deciding what to work on.

Give me free "point releases" or maintainence releases. Make a "named" release a big deal with significant upgrades so I feel good about spending more money.

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