I have a nice side project (a macOS app) that uses a one-time fee. But very often (while listening to some podcasts about bootstrapped products) it feels like it's either subscription-based or nothing. Is there no point in having a one-time fee product? Is that correct? Am I living in a SaaS bubble?
You just need to plan how that business model works and know that you won't have recurring revenue. Maybe that means you build companion apps, offer an optional subscription tier (often its cloud storage/device sharing based) or something like that.
I've thought of doing a subscription like service but its use case is more of a once-in-a-while style so an option there would be pay-per use instead of a subscription.
I run a SaaS that relies on one time payment. The income currently covers all the expenses, and leaves me some nice pocket money.
Is this model for everyone? No. The unique proposition of my service is actually the one time payment aspect. Does everything should be subscription? No. I avoid subscriptions as much as possible, unless there is a cost involved in running the service.
So YMMV. I wouldn’t pay a subscription for a MacOS app, unless there is an ongoing operational cost for the developer.
Feel free to email me (profile -> website) if you want to chat.
I think it’s when the developer keeps providing a service.
Think of
- being given a vacuum cleaner
- buying a vacuum cleaner
- renting a leasing a vacuum cleaner
- paying someone to periodically vacuum your house
But yes, I agree the OP doesn’t seem to be doing SaaS, either, given that they say the one-time payment covers all expenses (that cannot be true if they are having costs after the sale and that payment is for all time)
AI is changing the game - it halved my traffic - but so far it's still survivable. I intend to keep going until it's no longer tenable.
It had a good outcome though: I made a series of really useful upgrades to my health insurance advice. I am happy that the solution was to make a better product, not to squeeze my audience more.
So if it’s possible, I’d try to change your business model to something where people still need to visit your site to get their problem solved. Maybe referrals?
If I wanted to build software that I charge for, I have a laundry list of validated business ideas for it. It just isn't why I've started this website.
You could also copy many WordPress plugins, which charge a fee for the first year (which includes support and updates) but then expires afterward. So they can continue using the plugin but won’t get any new updates/support.
However the business is as it is
For software I really like the patreon model (like in some game communities) monthly subscription you could cancel after downloading and if you want updates you just get another month. Big portion will just pay monthly while they wait anyway. Best for all worlds.
Otherwise I would maybe recommend a yearly price instead of monthly. Especially if the monthly would be something small anyway. Easy to forget so most people will at least pay 2 years and you save a lot in transaction costs.
You can probably make a few millions off single payment. People have for decades before subscription. Games are still doing it and games aren't even built the agile way.
Additionally, there is a distinction between single and ongoing payment in the context of usability. Specifically, it makes little sense to sell a calculator program via a subscription fee but you also reach a limit of the possible customer base. Just like mobile applications. With subscription, you can keep milking the same customer for money indefinitely, but in such case you have to keep providing some services that is worth the payment.
Where are you seeing single payments become prominent in software?
You can have one-time licenses but updates require another license (ie: discounted). It is the same model of SaaS but with a different payment plan.
Unlimited/lifetime licenses are a way to either deliver a really bad product or create an unsustainable company.
The company was funded by "new sales". Development, support, admin etc was all funded by sales.
As our customers grew, so our costs grew. Support goes up, so fine, we'll offer support contracts. But users typically don't sign up for these (but call support anyway and get pissed if we blow them off, or bill them.)
We make "updates" and sell those. But to do that we must "add features" (customers expect all bug fixes to be free forever). Adding features which offer true value becomes harder. Upgrade sales drop off, but now we have lots of different versions in the field.
Obviously sales plateaus at some point. The list of people receiving value goes up, the potential market gets smaller.
In short, the source of revenue and the receivers of value are disconnected. This is not sustainable. You are one or two bad sales months from closing up shop.
The optimal strategy for this business model is to find the sales peak, terminate all support, and accumulate as much from residual sales as possible.
We switched to a subscription model. Now those receiving value (updates, fixes, support, training, features etc) pay a known amount at a known time. We can budget, they can budget. If sales disappear current development and support can continue. (Aka Covid). Income and expenses are aligned.
We sell to business not consumers. While consumers might not like subscriptions, businesses love them. They allow for much simpler procurement (no sudden support or upgrade bills), assurance of longevity, reduced capital costs upfront.
We can grow headcount based on known income. We can grow sustainably without requiring sales to match.
Subscriptions work because the match income to expenses. Those who receive value pay for it in a sustainable way. It's as simple as that.
Assuming the value in the sale is static (ie not something like DuoLingo but more like Tetris) I would say the approach here is to build something fast, (like a couple months), spend the rest of the year promoting and pushing it, then (more or less) abandon it to make the next thing.
By year 2 you're looking to spend money only on marketing that is demonstrably profitable, while relying on word-of-mouth for residual sales. Sales will eventually approach zero.
Rinse and repeat, with a new product each year. Avoid the trap of "just coding" - remember you need probably 5 times coding time in marketing.
Try and save up enough to cover the inevitable flop years.
Of course the goal is to find the increasingly rare "hit". With any luck, sometime in the first 30 years, you'll have a "great year". Try and see this as your retirement and spend it accordingly. Resist the urge to use it to improve your life-style.
I wish you good luck on your journey. It is a very crowded space, with many intrinsic barriers to success. But it can also be satisfying if you manage to find success.
Another thought, maybe your app has the potential to be extended, you can make extensions available as addons for a fee.
One time payments are fine when you are in a growing market like iOS in 2009. The only long time successful Mac Indy app that I can think of without a subscription is BBedit which has been around since 1990 and made every transition along with Apple.
You find a new market and/or build a new product.
The solution to "oops we sold one to everyone we can think of" is to invent new kinds of value, not ways to extort existing paid customers.
Software especially with Apple and always needs maintenance. Should people expect free updates?
Most software, especially in the world of mobile/desktop apps are usually feature-complete. The problem is that developers keeps redesigning and refactoring them to justify development, rather than focusing on another product or marketing efforts.
Free bug fixes are generally expected. But nobody forbids you from releasing v2 and charging for it again (for example with upgrade discount).
Or more recently should users expect a free upgrade when Apple deprecated 32 bit apps?
The Mac sees a lot less churn than iOS. But things do happen that cause apps not to work there. The most recent is that Electron was using a private API and all apps that used that version of Electron on Macs broke.
Nobody forbids you from selling your software with an asterisk that says "works on X.Y version of MacOS, future releases will require a new license".
And if no one new is buying your product, I think you need to ask yourself whether you have a sustainable business or a hobby.
Bug fixes, yes. Other updates, no.
Sell upgrades, develop new products, etc.
Sheesh.