1. Customers perceive the indefinite nature of recurring payments more expensive than a one-time fixed fee
This is, for better or worse, exactly the opposite of how customers actually think.
This is, for better or worse, exactly the opposite of how customers actually think.
That said, there was a recent blog post about how one HNer dramatically increased his revenue by changing his pricing model. Rather than charge for features, he adopted a few tiers of service, each one targeted at one type of customer's use case.[1] I don't know your exact situation, but that might be worth trying as opposed to configurable add-ons. In general, speaking in the language of use cases resonates with the buyer more, and is more likely to result in a purchase.
[1]: http://www.extendslogic.com/business/what-i-learned-from-inc...
When I decide whether or not to purchase or subscribe to something, I do the math to figure out which is cheaper in the long run. That being said, if the price difference is negligible and all else is equal, I would probably opt for a recurring payment.
Is it because a recurring payment implies they only have to pay as long as they are using the product?
I used it for the website: http://http://metalranchandfarmsigns.com/, which on average before Google killed me made $200 - $300.
In any case, my thinking goes like this: If I had to buy SEOmoz in one lump sum for rest of my life the value of the product to me is probably close to $5000. That's what I'd pay for a lifetime subscription just for MRFS.
I can either pay $5,000 (hypothetically) and have it forever, or slowly enter in at $99 a month. If I cancel within 4 years I win, if I cancel after 4 years SEOmoz wins.
I cancelled in a few months.