In an economic downturn where people look more careful at their spending, isn't it counterintuitive that more and more companies introduce subscriptions or hike prices up?
The only exception is when there really is distinctive ongoing value being delivered (eg. VPN provider). But my bar for what constitutes 'ongoing value' is high.
I don't agree that it aligns incentives between me and the developer. I've found many of the subscription services I've signed up for tend to substantially degenerate in quality after a few years, as they start chasing a perceived larger market share by bloating with features I don't want and would be happy to pay more NOT to have (looking at you, Dropbox).
By contrast, I'm still using lots of software I initially purchased decades ago (tools like Hard Disk Sentinel and Beyond Compare are great examples).
I consider bugs to be manufacturing defects, for which fixes should be free (generally, minor version upgrades). Many parts of the world even have 'fit for stated purpose' laws to that end. If a car manufacturer sells you a lemon, they have some responsibility to fix the faulty parts (eg. recalls).
When the developer adds new features I'm interested in, I'm happy to pay for them (traditionally, major version upgrades). I prefer having the opportunity to make my own decision about whether the new features are worth it, and keep using the old one if not.
I own a ton of useful software, and I'd be broke if I had to pay for all of it on an ongoing basis.
In a world where all software is subscription, we'd all be using the same handful of suites from the top vendors. Better for a rich and diverse ecosystem.
The other nice thing is the continuous revenue stream ensures that developer can continue working on enhancements, lowering the risk of it becoming abandoned.
I also get to be on the latest greatest version at all times.
If you make paid software part of your workflow, you're going to keep using it whether they keep providing value or not. When someone else captures your workflow into their own infrastructure, there tends to be a high cost associated with extricating yourself.
People’s expectations are anchored and it is hard to sell against that, they expect to pay X for the software price with a Y yearly maintenance. So we stick to industry standard where possible. The standard varies by country so we have country specific setups.
I’m annoyed by subscriptions as well but mostly because I dabble in a lot of things and it’s expensive to have a ongoing subscriptions for something I may only use a few days a year. I generally try to get perpetual licenses and stick to old versions.
The software I make is very niche and domain specific, users spend 70% of their work time on it and are vastly more productive with it. The end users also hate change so they’re very happy to keep paying so that someone will care about their problems and they don’t want upgrades for the sake of it.
Because if not, how do you not get resentful existing customers who are long time buyers of your service who end up paying more per month than a new customer?
Why would I spend $200 on some software one time when it will become obsolete within a couple years? Or maybe I only use it a few times.
I’d rather pay 10-20 a month for one month. And never use it again. Or keep using it.
In this economy I went ahead and cancelled a few subscriptions and kept some. I feel zero obligations and it’s great.
TLDR if it brings you value use it. If not don’t.
Not for the user.
I give $0/yr to digital subscription services with zero marginal reproduction cost (SaaS, video, etc.) and somewhere in the range of $250-1000/yr for pay-to-own software.
Reasons:
1. Pay-to-own software is almost universally of a higher quality than rental software
2. I want to host my own software and data, so I'm not instantly screwed if the software company goes under or unilaterally decides to change the way they do business
3. Subscription management is a pain in the ass (in terms of the effort required to track down subscriptions, cancel them, make sure you aren't still getting charged, etc.) whereas pay-to-own requires close to zero mental overhead
The primary risk with pay-to-own software is that it stops being maintained and the OS APIs the software uses gradually go out of date, but this is much easier to address than the corresponding risk for rental software: that the company folds or the product gets cancelled, and you lose everything instantly!
If a program costs $200 but is something that is used very infrequently and doesn't worth $200 to me - then it's poorly priced or best sold (or re-sold) as a service rather than a program. Subscription here is just a service fee in disguise, so why not make things straight? Let me pay $20 one-time to process whatever I want it to, and be done with it.
And if something works for me today and I don't foresee any need for updates then what exactly I'm paying for? Developers will to continue development, that I may or may not need and may or may not care about? Doesn't sound right to me, unless I feel benevolent and charitable for some reason. I get the subscription model if something needs active regular maintenance. Drivers do (heck, I'd buy that rather than seeing companies "we no longer support shit, go buy our new hardware instead"), financial software does, a weather app does. But, say, a camera or note-taking app would certainly continue to work without any maintenance until I upgrade phone, or OS, or want some new features (and then I can buy an upgrade or figure out how to fix it on my own), so I won't buy a subscription (or very much hate doing so if it's my only option besides simply not having something I need at all).
What subscriptions are theoretically paying for is *updates* — the ongoing cost of supporting new technology, fixing bugs, and adding features. Requiring additional payment for additional work is totally fine, and some apps successfully use this model (Agenda (https://agenda.com) and Nova (https://nova.app) are two that come to mind, and I’d be interested to hear of others).
Requiring ongoing payment just for continued usage is predatory and leads to a perverse incentive where developers don’t actually need to provide updates or new features; they’ve got you as long as you still need the app’s basic functionality. It’s rent-seeking behaviour and it will prove to be as toxic in the digital realm as it is in real life.
If you need to use Photoshop daily for the next three years, paying monthly might not make sense. If you need it for two months, it might make a lot of sense to rent it instead of buying it.
> Requiring ongoing payment just for continued usage is predatory
No it's not. You're not entitled to their property. If you don't like their payment terms, don't purchase their service. It's no different than purchasing a television one-off; don't pay $5,000 for a TV if you don't agree with the pricing. It doesn't matter if you're paying monthly or one time, the principle is identical. There are available alternatives to just about every type of software.
I spent 80€ on Strongbox, and I think it was a similar amount for canarymail lifetime.
Strongbox is a keepass2 client, canary is an email client. I expect this software to work without any issues for the next 10 years. Neither keepass2-databases nor imap/smtp will be meaningfully developed in the near future, therefore the maintenance for these apps is probably close to zero.
Okay, actually, canary got Sequoia VC money recently and switched to a subscription model. Since then, they added stuff that is useless to me, but I don't care as long as my lifetime licence still works. The core functions likely won't change.
Remember, Adobe Photoshop was like $500+ before they made it available via subscription.
In the same vain, I paid $200 for Logic Pro X three years ago and it still does what I paid for. I’m about to spend $300 on Final Cut Pro.
If Logic Pro went subscription only at, say, Photoshop prices at $20/mo, that would be the equivalent of $720 so far. Even though Logic is seriously awesome, I would not pay it and just go with something else.
Edit: the $20/mo is the price only if you pay for a whole year. Otherwise it’s actually $31.50 per month. So you are either paying a lump sum of $240 (committing to a full year) or $31.50/month.
Also, long-term, the subscription costs more.
I would much rather pay $500 for software once than pay an ongoing fee that totals the same amount.
The worst part I think about many subscription models, is that they can force changes on you that actually make the product WORSE. Hey this new version of the software does X, and I hate X. I want to keep using the older version but I can't and I have to pay to get something I don't want.
If you HAD to subscribe to other things like software makes you, like you have to have an office chair subscription and you had to pay for whatever nonsense changes they made to your chair or you get no chair at all, you'd probably find that a bad deal. Especially if all the chair companies operated the same way.
The consumer always has an obvious choice: don't use Photoshop.
It's not a monopoly product. Use something else. Consumers are not entitled to access to Photoshop as a birthright.
It's a great world, living in an Econ 101 textbook.
The hilarious thing is that a core tenet of conservatism used to be that widespread private property ownership is the cornerstone of liberty. Rental models, which keep the maximum number of people in debt in the form of eternally-owed rent, were bad. In today's Ayn Rand-worshipping neoconservative free-market religious dogma, the core tenet is The Supply Side Gets What It Wants, NOW, And It's Your Fault If You Don't Like It. And the ultimate socioeconomic effects, any sort of principled view beyond "If the people it costs the most to don't like it, they can lump it", don't matter anymore.
But once you hit consumer signups or bigger prices it gets much harder.
They are very very reluctant to purchase subscriptions, even if it's year to year cancel any time.
Good work selling a subscription after already charging a one-off fee!
On the other end the service is providing you recurring value otherwise you would just drop it.
Only because these companies have forced us onto their cloud platforms in the interest of justifying/enforcing continuous payment. I don't want to use Adobe's crappy "infra", for example, and neither do 95% of their customers.
There's really no such thing as pay once use forever for anything physical.
You're just paying an estimated lump sum for the subscription revenue it would produce over it's life time
Also, and this is the huge problem with subscriptions, it's rather common that I need to work with old data that can only be dealt with by older versions of software. Subscriptions lead to a kind of rot, because you can't save the old versions of the software for future needs.
I pay your subscription forever but you have to pay me a lump sum right now.
I charge a one time fee of $B to people to use in perpetuity, but require that when they’re not actively using it (or build it into my resell layer software) that a seat is released for someone else.
The assumption is that even though people pay the lifetime fee they won’t actually use it for a lifetime. Some might use it for 20 years and some for 5 days.
In that margin you hope to make a profit where SUM($B) > SUM($A).
Most of finance is financial products that look like this in one way or another.
This is the real problem, Adobe made kick ass software that was so good it cut off their future revenue stream, so they decided to rent it out instead of letting people own it. Fine, that’s their decision, just like it is mine not to continue paying for something I use once a month as a photography hobbyist.
You're not wrong that owning your own equipment can be viewed in a similar manner as renting with the lump sum payment amortized over time.
But... when you do it yourself you can much more easily tailor costs that make sense for you.
I have essentially stopped paying for almost any online subscription SAAS product that I can replace with a self-hosted version or a desktop install. I have cut more than 200 bucks a month out of my budget (fairly easily, honestly - replacing recurring costs for things like evernote, myfitnesspal, photoshop, google photos, calendly, ifttt, etc).
I threw some old desktops into a microk8s cluster in my basement, and spent about $1000 on a decent NAS + drives.
I broke even in 6 months. Two years in and I've saved more than 3 grand.
The subscription costs are HUGELY inflated for my needs, and there's no way to bring them down in most cases, because SAAS companies lock features to tiers in a way designed to maximize revenue.
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Basically - my strong opinion is that SAAS is so popular right now because it's a terrible deal for most buyers. Companies make more money with less work.
I think it's taking buyers a minute to figure out JUST how shitty the deal they're getting truly is. But trust me - SAAS is a shit deal in most cases.
The only time SAAS isn't a terrible deal is when you can buy a single month, do the task, and cancel. If you need to be using a tool repeatedly over time - you're WAY better off buying up front than you are leaking money every month to a SAAS company.
In your case you've traded off your time to save money and it probably makes sense for you because you have the skills to do it.
But for others, the fact that these services are managed is the value for them. They are willing to pay a premium for and it even might make sense. Given that these customers are continuing to grow are they really mispricing?
Probably not, but I certainly wouldn't find it ethical. I see the same problem here, except the shortage is artificial scarcity of a digital product.
People worry about growth but more people are being born every second who will eventually grow up to need software. And you don’t even have to wait that long because there’s still a lot of adults without computers who will eventually need software in the future when they become connected. The people crying about subscriptions being the only viable model are the people looking to get rich quick and are probably backed by some VC company that’s hounding them to increase users and profits. If your software is good, you’re in no rush to buy a yacht, and you have confidence that you’re still going to be around in 10 years time then you don’t need to mess about with subscriptions because you know you’re going to have revenue either through people recommending your product to others or reinvesting at each major version update.
I try to avoid subscriptions wherever possible, and will always purchase yearly if it’s an option. But I get that monthly allows people who can’t afford the up front cost to join in too. I really don’t think it’s the way to go though.
My only software subscriptions currently:
- Feedbin (yearly)
- Duolingo (yearly)
- Amazon (yearly)
- Zwift (monthly)
- Netflix (monthly)
I understand the developer side of the equation, but I have more important recurring payments to make (bandwidth, cloud services for self-hosting, energy, gas, school fees, etc.), so paying, say, €10 each, monthly, for half a dozen non-essential apps that I don’t use on a daily basis and don’t contribute directly to my goals just doesn’t add up—-I’d rather use a free alternative or do without, and many businesses will do the same, especially when faced with per-seat fees.
There is, however, another factor at play—-many VCs evaluate businesses on the basis of ARR, and that often leads startups to make sure they have recurring revenue from the start and bake that into their operating model.
In theory, anyway, it's a good thing that they get cut if they are not bringing enough value. Sure, downturns are a time when this happens in earnest, but you'll always get people complaining about the service and claiming "We could save X dollars here" if it's not adding value.
In practice -- sure, there's probably a lot of services that are low-value and got "floated" by the general upswing in the last couple of years. But to me, this is probably true of non-subscription applications and physical goods as well. People are going to be thinking twice about buying those as well during downturns, so the impact isn't limited or specific to subscription-based models.
This value is objective? Therein lies the issue with this argument. For some people, a spam blocking app is a waste of $2/mo. For another person, it saves them a ton of headache. I'm currently subscribed to 12 apps on my iPhone and I have 20 others that I let expire over the past year - I pay for them because I enjoy them and would like to support the developers and to continue using them. I have a ton of paid apps from years past that are now just junk, because the $5 the developer charged 10 years ago couldn't support development for 10 years of service. Subscriptions are the answer to that problem.
Subscriptions will naturally go away if they don't work, but that also means those services/products go away as well.
Also where is this data on flattening subscriber growth that you have access to?
1. I personally don't like XYZ
2. My echo chamber doesn't like XYZ
3. Consumers at large don't like XYZ
4. XYZ will be the death of a company or the industry or the economy
are all very different realities. In this particular case, I'm pretty confident in saying that it is actually 1 & 2. The tech sector will be just fine.
However, consumer-facing subscription models are not the majority of the tech sector. Most tech companies have other ways of making money, and the tech sector as a whole will be fine.
Examples include: becoming a de-facto beta tester for new features, having UI elements change non-intuitively at a critical moment, software becoming incompatible with older input, etc. You also have to choose between paying for the software or discontinuing its use permanently.
With an old version, I can just go use whatever VM or machine I need to convert files, modify them, perform last-minute changes on my paper that’s due in the morning or whatever.
I’ll also point out most of the subscription plans are annual, lump sum plans, otherwise your monthly is even higher. So you get the worst of both worlds: having to pay a de-facto lump sum (which renews automatically annually), and not having the right to use it once you cancel it.
Like GitHub for example, I love it, it provides value, but it costs a ton if you have a lot of devs, and you can spin your own git server
Personally, I think we are about to see a huge resurgence in self hosting and returning to "old ways" that worked before subscriptions.
One great example of the anti-pattern: Look at how GitHub has shit the bed since MS bought them. Tons of QoL developer features were pushed behind the enterprise paywall, actions was constantly down and having issues, and they did not innovate anything.
Beware robber barons who innovate nothing and expect you to pay more.
I've been seeing signs of that, a bit. Even my daughter, who is in no way any more computer-savvy than anyone else her age, asked me to help her self-host a number of things because she was fed up with subscriptions.
As a consumer, of course I have "subscription fatigue" and some apps when I get a $20 monthly charge I question whether I really need it.
As an entrepreneur, it's all just customer lifetime value , there's a lot of factors to whether subscription or lifetime makes more sense. Recurring revenue is easier to build a business upon but given people have subscription fatigue, there's a lot of merit to looking for ways to sell one-off, despite the aforementioned challenges.
With all this said, my biggest theory is that we _think_ people have subscription fatigue, but it's an illusion. What's really happening is that web software was VC subsidized for a long time, both directly (with sites like Facebook having no ads their first decade of existence), and indirectly (with many startups forgoing monetization favoring growth following companies like Facebook's lead). So people got anchored to web software being free/cheap for a long time.
When most people say "I hate subscriptions, I don't want to pay $20/month, just sell me the one-off software!" So as a business owner you say, ok, then give me $200 for lifetime, and they say "$200 for an app, that's crazy! I want to pay $20 lifetime". This debate looks like it's about subscription when really it's a debate about price. And consumers have been psychologically anchored to apps being very cheap for a long time - nobody would bat an eye at a $14.99 book on Amazon but that's considered a hefty price tag for an app that might have taken a fair bit of design and development (in-demand skills).
Last but certainly not least, most software is internet enabled these days. Not all of it, but a lot of it. It's risky as a business owner to offer a lifetime purchase for something that will have ongoing server costs. This is doubly true if there's an AI component that might involve expensive GPUs.
As far as it being "counter-intuitive" to hike prices, the cheap money is gone, and businesses are realizing it's better to make a small number of paying customers happy then a large number of non-paying customers happy.
If you're looking at this purely from a consumer perspective, you're sick of managing subscriptions, you're sick of getting billed for something you didn't use much, etc of course I relate. But if you put yourself in the shoes of software businesses, if people are going to complain and moan about paying $10 a month for an app because they think the most they should pay you is $20 their whole lives, you just can't build a sustainable business around those types of customers, when you have expensive design, development, marketing, and server costs.
True, and this hints at one of the reasons why I do not use SaaS.
> On mobile you'd have to release a separate app which is not what the App Store UX is designed for at all.
Not really, and least for Android. It's tricky in the app store, but there's no reason why you have to use the app store. You could sell the apks directly. I've actually purchased a few apps that way.
But I understand that apps stores are a trap for both customers and developers, and it's hard to escape it. It's one of the big reasons why I consider app stores harmful.
For me, price really doesn't enter into it. It's the mechanism of subscriptions, and all the downsides of it, that keep me from buying them.