Very good post. I wonder how much these percentages would differ between B2B and B2C apps. I’m not sure I can imagine many people paying anything like $10 per month for a non-business app (not including Spotify, I see that as a special case). I would understand it if the budget isn’t coming out of their own pocket.
That’s interesting you say your fitness apps cost 60 and 30 per year. Would you say that’s another factor, and that yearly less frequent subscriptions and more appealing than monthly?
I watched a very interesting video about selling to consumers as opposed to businesses [0]. The key takeaway is that consumers' target price to pay is actually $0. Therefore, any price above that, even a 3 to 4 dollar a month difference, is seen as extremely annoying to them, because again, they actually only want to pay nothing. This is why you should, if not charging business, at least charge prices that are sufficiently high such that only those who see the value in them will pay, which are usually in a different class of consumers from bottom-feeders who look for the lowest price, ideally 0. An example is Superhuman, an email app that costs $30 dollars a month. Only those who see the value in a fast, keyboard-driven email app will pay that much.
In an ideal world where people have a decent disposable income, those arguments might be true.
In the real world, it's not that "people don't want to pay anything", it's that people have a small amount of money to throw at things for a marginally better experience. I sure like keyboard-driven apps, but I'm never going to pay as much as I pay for my entire Internet package for any online service. Hell, all of them I pay for barely add up to $30/month.
Superhuman and similar are tools for rich people, equivalent to a Rolex or the latest iPhone. Those with less income are assumed not to be its target audience. I'd argue that they could double the price without losing more than a single digit percentage of current users.
Yes, it seems your comment is reinforcing my point. Consumers like you don't want to pay $30 and that's fine, you are not their target audience. You may like keyboard-driven apps but you don't like them enough to pay $30, so in terms of microeconomics, you don't believe you'll get as much value from the tool as you'd spend. Again, that is fine, because the company should only target customers who do realize your product's value.
One may say that the takeaway is basically, target prosumers and rich customers who see the value of the product in order to make the most money. That they are price insensitive is also great as a dev, because, yes, you can increase the price multifold and not lose customers, which increases your revenue overall.
The comment you're replying to is talking about actual amount of money available for the consumer, not perceived value.
Or, in other words: if I look at an app and decide that it's perfect and I'd really like to have it, but it costs $30/month and I need that money for gas to get to work or to put into my kid's college fund, I'm not going to get it.
The kind of people who post on HN usually have enough money that just $30/month isn't a problem, but what if there's 10 apps that do the same thing? At $300/mo that's now a substantial budget item, and if I have anything serious to save up money for, individual apps are going to be the first thing to go.
Perceived value and realization of that value are the same thing to the vendor. If you don't buy, then it doesn't really matter to those who sell. If it does, then there may be some price stratification they could do to capture that value, but it might be best to not target price-conscious customers at all, due to their tendency to be a larger support concern than those who are price-invariant; they are not worth the money they bring in.
I’ve backed people on patreon and never accessed the rewards. I’ve bought humble bundles that I never played the games or read the books. I have, on occasion, bought apps just because I liked the idea and wanted to support the developers. I sponsor people on GitHub whose projects I like but don’t actually use.
Not everyone is aiming to pay $0 for everything. Some of us like to support things we like our values even if we never actually use them ourselves.
Sure. You're not like most consumers however, and a business cannot rely on consumers like you in order to stay alive.
Services like Patreon are also different in that the product is not the rewards, those are just the bonus, the product itself is giving support to the creator. Imagine if you'd buy a service like Patreon that just takes your money and gives nothing to the creator, I'd assume not, so you can see how the product is creator support.
Consumer: Pay $ZZZ/mo for internet, used to $1/yr apps, etc
Business: No idea what the internet bill is, doesn't see corp credit card bill, and for purchases for some level of value, used to do initial procurement flows for $100+/mo, a bit more or $1K/mo, pretty real for $10K+/mo (ex: ROI calc), ... but approval flow for < $100/mo is a "hey-o mgr, this site look alright to you?"
Over the last couple of years, my income has gone up a lot, from "barely scraping by, >50% of my income spent on rent" to "comfortable, can make any small purchases I like without worrying".
This has led to a huge change in my attitude to buying things like app, books, games, movies. If it's a small company/author who cares about their product/book etc. and charges a reasonable amount, I want to pay for what I'm using. Before, I pirated, searched for zero cost stuff, because it was either that or reduce the quality of the food I ate. Now, I can support the people that make the amazing things I use, and I want to support them. I don't think I'm especially unusual in this regard.
I guess the difference is that now, a $5 app purchase is close to zero in its affects on my bank account, a $20 app purchase needs only a few seconds consideration. However, if I see a $1-$10 a month subscription for simple app with very little cloud functionality, that's still a hard no from me because it seems like blatant greed.
I am with you on that. I buy apps if they provide value to me. If it has a one-time purchase option next to a subscription, even if it is $30 - $50, I pick the one-time purchase.
If it's a journaling app, a calendar app, a habit tracker or a drawing app and it wants me to pay monthly, it's a hard 'no' for me as well unless it has a cloud component that I feel justifies the price. There is mostly nothing in it that justifies paying monthly, it's just an offline app.
"But developers need a salary too" - yes, then price your app accordingly and charge for upgrades. Subscriptions make me feel if I stop paying I lose the app and can't access my data any longer. That, and subscriptions pile up.
If I subscribe to one app it's not a big deal, but if I subscribe to 10-20 apps and they all cost monthly, it adds financial stress on me and stuff I 'have to keep in my head'.
Subscriptions also add cognitive load. If I pay upfront and later stop using the app, oh well. If I pay a subscription and stop using the app, I have to remember to unsubscribe.
That's fine. You are entitled to buy what you want as a consumer, just as a seller is entitled to sell to whom they want. Typically vendors should sell to their target market, and not everyone is in their target market.
Man I dunno, for the sector they're in, folks are pretty likely to already be paying for a subscription to the Adobe suite, and honestly I think the whole "subscription" thing is gonna strangle Adobe in the future when there's a generation of artists who grew up using other tools that were buy once, use until upgrading something else breaks it, and/or were easier to pirate.
Also I have a piece of hardware I bought from the Astropad folks and if the app suddenly stops working because they demand a subscription I'm gonna be pretty damn unhappy.
Part of the problem, of course, is that app stores have completely killed "upgrade pricing". There's no good way for your existing users to give you money for "hey we added some new features and fixed some bugs" without bullshit workarounds like "okay the new version is a totally new app, go buy it".
> in the future when there's a generation of artists who grew up using other tools that were buy once, use until upgrading something else breaks it, and/or were easier to pirate.
In the future when? Isn't that now? Adobe changed to subscription model in 2013. Everyone that is paying subscription now grew up with the buy-once model, right? In the future, people will have grown up with adobe's current subscription model.
Yeah I think it may be about now. And now that I think about it very few of the younger pro artists in my circles are using Adobe’s stuff, they’re using Clip Studio or Procreate for the most part.
I think a lack of support for spot colors was one of my sticking points, personally. That and 20+ years of Illustrator work to pull resources out of to make new images faster, and multi-year projects meticulously built to maximize re-use and speed, and honestly that's the killer feature for me at this point unless Adobe completely falls apart.
Not that Illustrator lacks its share of long-running requests, "rotate the view" has been near the top of their publicly-voted bug/feature request site ever since they opened it, and would be "picked up shortly" back in 2017. https://illustrator.uservoice.com/forums/333657-illustrator-...
(And I know I was asking for it years before they abandoned the old "here's a hole to put your bugs and feature requests into" setup.)
We've never taken features away and put them behind a subscription paywall, and we never intend to! So don't worry about that!
Also hardware allows us to have the upgrade pricing model you described. If we make a hardware device that's even better than the Luna you have now, you can choose to upgrade! Escaping the App Store model has been a really refreshing part of making hardware.
> in the future when there's a generation of artists who grew up using other tools that were buy once, use until upgrading something else breaks it, and/or were easier to pirate.
I'd like to believe it but I don't think its true. Adobe has done quite well out of subscriptions and I expect that to continue.
Some time ago I wanted to do something in photoshop and the old < $100 home version they used to sell would have done the trick. But they wouldn’t sell it to me anyone, instead wanting me to pay a subscription, which I was unwilling to do for an ”a few times a year” task. So I looked for alternatives and found Affinity Photo. Now I doubt that I will ever pay for photoshop.
Isn't the monthly subscription model even better for tasks you only do a few times a year, since you can subscribe when you want to use it and deactivate when you're done?
No, because I would have to pay for a full month to just use it once (Photoshop, IIRC, is $20/m so it would only take 5 uses to be up to the $100 I would have paid).
We leave it to users to decide which category to select. Maybe you don't care about people in Senegal or Bangladesh or the Phillipines. That's certain an option, but some demonstration that this has crossed your mind is probably a good idea.
It may also be important that on a technical level, our subscriptions are not like e.g. Adobe's. Stop subscribing to this GPL'ed software and nothing changes except for your ability to get updates for free.
Regional price discrimination is nothing new, but I haven't heard of making it buyers' choice before - why aren't you using IP or some other method of determining region?
The obvious answer is that it's defeatable, but if the alternative is then to make it a radio button (trivially 'defeatable'), that's clearly not it.
It's not intended to be non-defeatable. It's intended to recognize enormous disparities in income worldwide (and sometimes even within the same city).
The user/buyer who elects to use a one-time payment gets to pick their own price, too: the default is pre-seeded based on OECD data on the cost of a mid-prize restaurant meal for two without alcohol, combined with IP address.
Our motto has been (thus far): it doesn't matter if everybody pays for it, it only matters if enough people pay for it.
A hint towards their answer is when they said "(and sometimes even within the same city)". Because it's important to them to allow for non-location-based price adjustment, they simply leave it up to the user.
That makes sense as 'pay what you think it's worth'/'can afford', both of which I think I've seen, but a city isn't both 'developing world' and not based on individuals' income or whatever.
And now I quote that, is that the real wording? 'Regular' vs. 'developing world'? Idk, I won't speak for others, but I wouldn't phrase it like that myself.
The wording thing is a fair point. I haven't noticed them juxtaposed in that way. Perhaps we'll change them to something less descriptive of the intended "audience". The "Low Cost" name does this at present. Thanks for pointing it out.
> The obvious answer is that it's defeatable, but if the alternative is then to make it a radio button (trivially 'defeatable'), that's clearly not it.
Do people really do this? I use Paddle for subscription payments and they offer regional pricing plus they charge country specific tax and VAT processing at checkout. If a business tried to get around this, wouldn't they be at risk of accountancy issues?
Yes, they do, since as the commenter I replied to points out, otherwise you're either pricing yourself out of, or leaving money on the table in, some markets.
The cost of mobile data in the USA is 1-2 orders of magnitude higher than in India, for example. You can't charge the same for some mobile app subscription in both markets and not lose out vs. discriminating.
> We leave it to users to decide which category to select. Maybe you don't care about people in Senegal or Bangladesh or the Phillipines. That's certain an option, but some demonstration that this has crossed your mind is probably a good idea.
Is there some automated way you could come up with reasonable pricing based on IP detected country?
I use Paddle for payments and they offer localised pricing - you either enter the country specific prices manually or you enter e.g. the USD price and it sets a price for each country based on converting this by the exchange rate. Is there a better way than using the exchange rate?
Right now, most IP address detection mechanisms will place me in Albuquerque, NM. In reality, I'm about 70 miles from there. In the circle defined by that radius, there are families who barely earn $10k/yr and single individuals who earn millions per year.
So IP address is not particularly useful in determining the "right price".
That said, and as mentioned below, we do use IP address and OECD data on the cost of dining out to pre-seed the one-time payment option (the user is free to edit it as they wish).
Netflix, Adobe etc. would never be able to go with what's essentially a "pay what you like" or "pay what you claim you earn" subscription if that's what you're getting at. Isn't there something more practical than this?
If the goal is "never leave money on the table", your strategies will be very different than if you goal is "raise enough income to do something you want to do".
To whatever extent Netflix or Adobe are attached to the former goal, then certainly they are not going to offer pay-what-you-say-you-can.
Whether that's the best goal for them to have, either for themselves or for society at large, is an entirely different question.
> If the goal is "never leave money on the table", your strategies will be very different than if you goal is "raise enough income to do something you want to do".
The pay-what-you-say-you-can approach is problematic when you want to "raise enough" when you can't rely on people to be truthful about what a fair price is though. I can easily imagine this killing a niche app that's not making thousands of sales.
Yet things like humble bundle have been very successful. Sometimes you have to put cynicism aside and trust that people will support you for it. It doesn’t always work out, of course, but society will be better for it.
But in the end you have to decide what is right for you and if your app is super niche then maybe it’s not the way you wish to go.
This is incredible. Thank you for not forgetting about half the planet's population like most services do.
I'd like to point out that https://sloppy.io (not sponsored) recently helped me out with regional pricing. On top of being a great service, I can tell the people running it actually care.
I really appreciate this approach. I thought about charging a low rate of $1/month, but with Stripe
processing fees of $0.30 + 2.9% and Memberful fees of 4.9%, I was going to be charged something like $0.38, leaving me $0.62 per $1.00 transaction.
Have you found a way around this or just accepted the essentially 38% tax on those $1 monthly transactions?
UPDATE:
The Ardour community says they use PayPal because of the micropayments rate [0], which PayPal says is 5% (6% for crossborder transactions) + $0.05 USD per transaction [1].
Oh goodness, I have no idea. I was doing it through a web page, but I could imagine if I turned it into an app, the app stores might charge for it. They may even charge for it for accessing the website, but I doubt it.
Based on the saga from Epic and Floatplane[0], if your product is digital or mostly digital, Apple will enforce IAP purchasing which is a 30% cut to Apple. If it's something mostly physical, like packages or food delivery, you are allowed to implement your own CC processing screen.
You also can't link to your website via any means if you can subscribe via the website. Even support articles can't link to the main website.
Just to clarify, what you're saying above applies to apps that are distributed through the iOS App Store, correct? In other words, all of that does not apply to websites that have no presence in the App Store and are just accessed through browsers, right?
Absolutely. I’m surprised nobody’s mentioned this. Apple will let you choose a different price for every country. At Band Mule, we just have one low price. The thing is, we are also freemium. But the feature base in the free offering is good enough for most users and has no ads other than an occasional reminder that they can upgrade to premium to allow an extra audio playlist within the app.
So the key for us is, actually make it free for most, and not a crappy free, good enough that they may never feel the need to upgrade. The premium level gives some bonus features, nice-to-haves.
Disclaimer: I'm Indian, I'm writing from my experience here. I can't speak for any of the three countries you mentioned, but I think you can extrapolate.
In the Indian market most of these apps are just free and ad supported, by which I mean they are filled to the brim with banner ads and every action requires going through an interstitial ad.
As for this, though:
> where are all the local apps taking over the world with their low prices?
There's a ton of shovelware made in developing countries on the Play store, it's just not good. Most of them have bad UI, bad UX and/or the ad problem I mentioned earlier, making them unappealing to anybody who can afford an alternative.
There's also the fact that apps made locally target local customers for region-specific use cases, so you're not likely to find them useful if you're not from the region (and that is, if you can find them at all in the Play store without any marketing targeted at you!) I know of a few decent to good apps that have to do with Indian accounting etc, and they're making good money at low prices but nobody in the US is going to use them because they're made with the Indian GST and accounting principles in mind. An implication is that these apps don't follow US/EU regulations. There was an Indian-made fertility app that was collecting data that was flagrantly in violation of GDPR (https://privacyinternational.org/long-read/3196/no-bodys-bus..., search for "Maya by Plackal Tech".) To them, the additional work required to be GDPR compliant is not worth it, given that the domestic market is big enough for them at the early stage.
> If the answer is yes, where are all the local apps taking over the world with their low prices?
They're out there, but you've never heard of them because to market them to Western public you have to pay Western prices for ads, and it's out of reach for the most of 3rd world indy devs. And at the local markets it's hard to sell even at very low prices, as customers tend to be more careful with their expenses even at $1/mo prices. In poor(er) countries it's not just that people earn less proportionally while still keeping the same relative buying power. A lot of stuff that you need is not proportionally cheaper, and often it's even more expensive if it's from import or market is small, so people have less money to spend both in the total and relative terms... and because of that free/bootleg versions are the number one choice for any software. And all of that results in lowering the bar, poor overall quality of software products, as it just doesn't make much sense to invest time in polishing products too much, it will not pay out.
I wrote a tool to calculate product or service prices for different parts of the world based on the Big Mac Index (the price of a local mcdonalds lunch burger). That method makes more sense to me because all your customers have a similar point of reference.
McD is thought of as a premium product in some very poor areas, but on the whole they aim for mass market affordability, which makes it a fair comparison.
This is cool. I think it would be helpful if the input was in terms of units of currency, rather than Big Macs.
Like: I want to charge €10 a month for my product in the EU. Use the Big Mac pricing model to tell me what that is in Brazil.
According to your site, a Big Mac in the EU is €4.21 (is it really the same across all EU countries?) which means €1 buys you 0.237 burgers. €10 is therefore 2.37 burgers. At the current Brazilian price of 20.9 BRL per burger, you should charge 2.37 * 20.9 = 49.53 BRL (at the time of writing Google says €10 is worth 62 BRL)
The Euro zone is reported as a single economic zone in the index (it's published by the Economist). I'm not sure if the prices are actually exactly the same, but from an economic reference point of view, they ought to be. I'm sure there are differences in the prices within each city that McD operates in as well... the currency prices are probably an average.
Nope, not at all. Even prices within the country are not the same, e.g. in Croatia the price on the seaside is a bit higher than the prices in Zagreb (the capitol). For comparison, in Zagreb BigMac is under 3 euros, while in say Barcelona it's around 4e. In Denmark it's close to 5, if I remember correctly. It's following fairly closely the local salaries and taxes.
Probably will, but I’m struggling to see why folks would want an API for data that doesn’t change much at all. I could publish all the numbers as a JSON, not sure if anything else is necessary.
BigMac index looks like nice idea but it is wildly off eventually. It's price converted to the common currency will vary by tens of percents, while actual purchasing ability by country will vary by hundreds of percents or more. This index unfortunately fails at it's main and sole purpose.
In fact the majority of times BigMac index is mentioned in media is in the reverse calculation - assuming that BigMac price is more or less "fair" per country journalists calculate how actual salaries or prices in the country stray away from this indicator, to show severity of economic problems.
So pretty much all measures or indexes are inaccurate in that light. The reason I like it is that it takes a product that’s priced proportionally to local labour and commodities, is globally recognisable and serves as an easy frame of reference.
For products and services that have near zero marginal costs. Saying something is worth 2 cups of coffee, for instance, is useful but our coffee prices might differ by an order of magnitude. But McD is always a middle class lunch wherever they run.
The other alternative I can think of is Coca Cola. That would also be an interesting index.
That price is not really based on mass market affordability though. The UK GDP per capita is $43k USD and the US is $63K USD. The average salary in the UK is $38k/year and the average salary in the US is $63k. By all measures the UK is a significantly less wealthy country.
Perhaps Microsoft choose their pricing based on other measures.
"average" is a particularly weak measurement of almost anything. As is often noted when <insert-world's-richest-person-here> walks into a bar, on average everyone in the bar is a millionare.
You can't make a direct comparison of "wealth" by looking at salaries. You have to take into account purchasing power parity, for a start. But then you also have to find a way to include the somewhat non-linear results of tax rates and services provided by those taxes.
For example, the typical US family of 4 spends $23k a year more on healthcare than the equivalent family in France.
Just an information so may you do not rely too much on the Mac index.
The Mac is expensive in my country, for instance, just because of crazy tax rules. It's fancy to eat on Mac Donalds here. It does not tell us about purchasing power in any way. I wish it would be that simple.
The article is written by the CEO of Astropad which is a tool that allows you to turn an IPad into a secondary, touch display for Macs. The users of Astropad must own both a Mac and an IPad, so people in developing countries are most likely not the target demographic.
I have both a Mac and iPad and, I'm in a developing country. Paying $100/year for a utility like this a bit too much.
Exchange rates aside, I'm coming from register once, pay to upgrade world. When deciding not pay means losing access to the app, not to the latest version only; It's very hard for me to fork the cash.
Whenever I read "charge more," I think of the implicit assumption that service owners want to maximize total profit.
While I can understand that desire, there's no law of nature that says we have to act in a profit-maximizing manner. A SaaS service could have a different goal: running a sustainable business that benefits as many people as possible.
So they could choose to charge a deliberately low amount such that more people can afford to or are willing to pay for it, while also charging a high enough amount that the business is financially sustainable.
Parent never said that. Charging less helps with the goal of having a sustainable business that benefits as many people as possible because it lowers the barrier of entry.
If I subscribe to something for a month, and then feel compelled to use it that month instead of some better tool because I paid for it, I would say that's a sunken cost.
I've worked with enough people who used adobe because "I've already payed for this month, so I have to use this" that I'm not sure it's that exotic.
And while sunk cost may not be a huge issue, it's definitely still there.
I'm not going to make any sort of comment on anything else in this thread, because I don't really know what I'm talking about.
However, I don't see how it's possible for someone to derive more benefit from an app overall by paying a higher subscription.
Your subscribers might correlate better with people who are benefiting, but for an individual, either they [Pay less and have the same amount of possible benefit] or [Pay more and have the same amount of possible benefit]. How does it work out that they get better value from the second option?
>I can’t see how charging less would help with running a sustainable business. I would imagine charging more would help with that.
I believe you focused on the wrong half of the sentence. This is the part that they mean:
>that benefits as many people as possible.
The benefit is the utility people get.
So say you run a matchmaking app. You can charge $500 to create a happy couple and create 1,000 happy couples (you have just 1,000 customers worldwide) or charge $1 to make a happy couple and have 75,000 happy couples.
If you look at your profit, $500k is way higher than $75k. Plus you only have to deal with 1,000 users which you might do by hand whereas 75,000 overwhelms you personally so you have to hire dedicated customer service reps. The 75k users require bigger hosting and service fees.
At the end of all this you net just $20,000 from your 75,000 users whereas you would have gotten $450,000 if you had charged $500.
So why would you pick a $1 price point?
Because you enjoy hearing from the 75,000 happy couples you created, getting sent their wedding pictures, heartfelt thanks, etc.
You think you are giving a service, and you'd rather give it to 75,000 people than 1,000 people.
That's what OP means by "help as many people as possible." The higher the price, the fewer people can afford it. If you want your app to help more people, you have to lower the price.
Of course! You can choose to charge anything you want, not only for your product but for your salary too! There is no law, man-made or otherwise preventing you to do so. Actually there is a law preventing you to charge too little for your own work but it is what it is.
The implicit assumption there is that the app will have a good return on investment if you spend more development time on it.
Sometimes, a product is as good as it is going to get, and you are chasing diminishing returns by continuing to add new features. You often see this with mature commercial software, where teams need to justify their expense by redesigning and upgrading things that don’t need to be upgraded.
Maybe we should stop developing that piece of software, and instead put the resources to something new.
Some people go way out the their way to avoid toll bridges. Especially, if the bulk of their trip is otherwise toll free.
For me, if there is a free website app paired with a pay-to-play mobile app, I will never buy (or subscribe to) the mobile app because I consider that a bait-and-switch. If the whole stack was pay-to-play and I want the service offered I will pay.
> Looking at the estimates for revenue per 10,000 visitors clearly shows as well, we would make 2x as much revenue at $100/year than we would at just $20/year!
Maybe I missed it, but it's worth pointing out that while in the table the one-time cost makes less than the yearly pricing plans, that's only for the first year - presumably the yearly plans come out ahead the next year and even more the year after as long as the user retention is decent.
For my paid Chrome extension (https://www.checkbot.io/), I've experimented with yearly only, then quarterly + yearly, then monthly + yearly plans. I think quarterly plans are worth exploring (I don't see them often) as it means users get longer to evaluate the service before they decide if they're going to renew. They can be a pain to be clear about in pricing tables though.
The higher revenues for onetime purchase show the weakness of subscriptions vs the old upgrade model, and I wish Apple would understand it. Subscriptions carry the fear of paying for something you won’t be using, or being nickel and dimed for years on end.
Upgrades are a much simpler purchase decision. Am I using the app? Is it offering a good value? Does the upgrade provide new features I want or need at a reasonable price?
Some customers will say no to one of those questions at first, but eventually change their minds. Like subscriptions this model matches revenues to usage, so engaged customers support future development. iOS would be a much better platform with easy upgrades vs. easy subscriptions.
This. With very few exceptions (content subscriptions (e.g. Netflix) and services that have a server-side component core to its functionality (e.g. Dropbox)), I avoid subscriptions like the plague.
With applications, I don't choose between more or less expensive subscription, but I'll chose your competitor who sells upfront.
The way I see it: unless you’re putting in a bunch of monthly resources for me (in terms of content creation or server resources), you have no business charging me a recurring fee. If it’s essentially an offline app (or easily could be) then I’m either paying up front or not at all. I’ve passed up on many apps that I would have happily paid for (in some cases up to about $100), but was unwilling to pay a subscription of any cost.
What are your feelings on applications which have a server-side component which isn't necessary to it's functioning? For example JetBrains products with their plugin store or Unity with the asset store?
Easy upgrades are already a thing, though... just gate new functionality behind IAP, at a low cost per set of related features. Maybe toss in any general quality-of-life improvements as part of the free functionality, too. Call it the "Paradox DLC" model.
Upgrades are still a good option but I didn't discuss them in the article because they aren't supported on the App Store.
One caveat with upgrades is it's difficult to maintain many version of the same app. Now with frequent hardware and OS upgrades (yearly!) it's even more expensive than ever to maintain many versions.
What does Apple need to understand? I don't believe there are any rules about publishing MyApp2.0 and then heavy advertising it in your previous versions.
One pain is sandboxing makes it difficult to migrate data from v1 to v2. You need to build an elaborately kludgey data export/import feature by hand, in both versions.
More importantly, how do you charge upgrade pricing? Any user who encounters 2.0 on the store is charged the same price, whether they own 1.0 or not. There is no easy way to give 1.0 owners a discounted price.
There are elaborate kludges to work around these limitations with a great deal of work. Apple could make producing upgrade versions easy, like they’ve done with subscriptions, so devs can focus on improving their product value instead of purchasing mechanisms.
There is other side to the story. If your app requires a backend server, it is financially prudent to pay a recurring fee that way hosting charges are taken care of and you can be somewhat sure the service will last as long as there are enough users.
There are plenty of games and apps that are dead because the developers no longer make new sales and the previous money is all spent and the business become unviable and they shutdown the servers.
Recurring charges gives the incentive for the developer to fix bugs and maintain the codebase and not abandon it completely once they loose interest, if original developer looses internest recurring revenue makes the code/service valuable so that a new developer can buy who makes enough in maintaining it.
If the app/service you bought does not have enough paying users to even pay for hosting servers or a part time developer time to maintain it, then no revenue model will save it anyway.
Subscriptions for purely software updates seem like a steep price hike over buy once and get updates for a long time. I really don’t like how devs are under the guise of we need to make a living and start charging subscription for such. I won’t buy that unless is totally indispensable
> The first thing you’ll notice is that people are much more willing to make a one-time purchase.
This X 100
I would rather pay you $50 with a major update every year that costs $50 than $50/yr subscription. Because if the resubscription comes up and things are a little tight I lose access to the app. Or if I don’t use the app I don’t have to worry about accidentally autoresubscribing
For desktop software, and mobile apps without a backend, I agree.
For everything with a backend though, I just don't see how it's a sustainable business model to allow customers to keep using the backend in perpetuity. Of course, a lot of consumers know knowing about the tech that's involved, so as a software engineer I have a different perspective here.
Until it stops clearly rewarding scammers, I cannot support subscriptions in any way. From the very start, these criminals figured out some great ways to trick people into auto-renewing subscriptions at exorbitant rates for garbage apps [1]. I especially love how they reached the “Top Grossing” lists (I sure never have...must be nice to not have any morals).
Also, I just plain want to make things that lots of people can enjoy. Subscriptions certainly limit your audience so why is that better (and why should that be the only option or even the preferred one?).
I know developers who asked for this in 2007 but can we please have “free trial, pay at end of trial” and “paid major upgrades” as standard, store-supported options, at long last? There was never anything wrong with these models and they are also great ways to make a living.
The way to fix app "subscriptions" is not to charge more (or less) but to fix the customer-hostile structure of app "subscriptions".
The big issue with app "subscriptions" is that they don't actually work like subscriptions.
Before the digital age, "subscription" used to mean (and for physical products it still means) that you get regular delivery of something as long as you pay. If you stop paying, you no longer get more stuff, but you get to keep whatever you already received. You don't have to return your back issues of the newspaper when you cancel your subscription. Arguably TV subscriptions have always been an exception, but functionally they're not because you can record TV.
App "subscriptions" are different. Developers like to emphasize how they fund sustained future development of an app, but the reality is that when you cancel you usually lose access even to current features (you arguably already helped pay for).
The way app subscriptions should work is that you can perpetually keep using whatever version of the app was current when you stopped paying (Jetbrains actually does this, and I salute them for it: https://sales.jetbrains.com/hc/en-gb/articles/207240845-What...).
The current model is really "app rental", and it's inherently customer-hostile. Playing with the pricing does not fundamentally change that.
Just to clarify, with the Jetbrains model you don't get to keep the current version, your fallback license is for the version that was available 12 months prior to the date you decided to stop paying.
(Presumably this is so you can't upgrade for a month, then cancel, and end up with a perpetual license for the current version.)
This is roughly how the collectorz.com desktop apps work. Once your service plan expires, you lose the ability to update and some cloud features, but you can always use the version you currently have (or update to the last version that was available within your service plan). If I open Movie Collector, which I had a paid subscription for but let lapse, and try to update, I get:
Your current version: 18.4 build X
You can update to version: 19.5 build X (Note: your update plan expired on 2019-XX-XX)
If you renew your update plan, you will be able to update to version: 20.6 build X
I do similar with my B2B security software too (which doesn't have a cloud component).
We have an optional software maintenance, which gets you software updates and support for the duration of your subscription. If you don't renew your subscription, you get to keep using the last version that was available at that time.
Sometimes if a lapsed customer later buys a lot of new licenses relative to the number they already have, I just reinstate their maintenance for free, because it feels like the right thing to do
> Developers like to emphasize how they fund sustained future development of an app, but the reality is that when you cancel you usually lose access even to current features (you arguably already helped pay for).
I make a browser plugin that functions as a productivity/accessibility tool. When I first started charging, I actually did grandfather in all our existing free users and give them perpetual access to the then-existing feature set. But it's not clear what it would mean to freeze people who had a paid subscription and then terminated it.
If someone pays for one month, do they forever get access to the version that they briefly paid for? How do I deal with customers who are upset that certain websites have changed and no longer work with old versions of our plugins? I would expect lots of questions from folks who want to know if this bug or that bug had been fixed by later releases (and then they would briefly subscribe to get perpetual access to the newer version).
Another commenter mentioned giving folks access to the version that existed a year before they stopped paying, but if I release version 1, then 2, then 3, someone might try out 3, stop paying, and then end up on 2. That seems confusing and suboptimal for everyone.
The jetbrains model only kicks in after a year. If you sub for 1 month, and cancel, you get nothing. If you sub for 12 months, you get a perpetual license for the version that was relesed 12 months before you finished.
Works the other way too, though. When I subscribe to a magazine, I don't get shipped their entire back catalogue. This causes the problems that gnicholas describes. If I did, why subscribe for a year, when I can subscribe for a month at the end of the year?
There is another model featuring 4 levels, that I find interesting: 1 month, 6 months, 12 months AND life-time. We saw that some apps are starting to adopt that model and were thinking doing the same. Even though the life-time price is on a different level, this 4th option might cater to a specific group of people that don't like subscriptions.
There's a lot of apps like that (you pay a recurring license fee), but there's also a lot of apps that sell a subscription for their online / cloud segment, e.g. note taking apps so that your data is synchronised across devices. That seems more fair than the periodical license fee. Usually those apps work just fine without the subscription as well.
I also have a "smart" thermostat in the house, it was a one-time purchase, but they offer a subscription for bonus features like detecting when you're outside and turning down the thermostat then.
That said, I'm not actually very comfortable using it anymore, all of my home temperature and humidity data is being sent to their servers and sold on (I'm sure) as statistical data. I get remote control (from my phone) and (actually interesting) temperature / historical charts. Only per day though, I would like to see weekly/monthly/annual data.
>The current model is really "app rental", and it's inherently customer-hostile.
Additionally, it doesn't generally speaking fit the actual usage and that is something that irks the customers.
Take car rental as an example their pricing (right or wrong) more or less used to be on a per day basis with a certain (logical ) amount of km included per day and excess km paid extra at a given rate.
Now they are mostly on a per day basis with "unlimited" kms included.
The amount of the "unlimited" is clearly calculated on historical data/averages, etc. and the result is most of the times an affordable rate, often considered fair by everyone that actually runs it for a near to the average distance.
You still have a few that rent the car for several days and drive it for only a fraction of the distance and a few people that take great advantage by driving the car for a much greater distance in a short period, but they are a limited amount of "extremes".
With an app, as you say in an "app rental" agreement, you probably have a much larger amount of people that will use it very rarely and (if it is a good tool) a much larger amount of people that will use it every day, all day.
It looks like this is all based on survey data, which I have found to not correlate particularly well with how people actually behave. Am I misreading this (or not giving survey data enough credit)?
My biggest issue is broad generalization, SaaS is not homogenous. I suspect the author never meant for anyone to take it as universal truth, rather his own observation of his speck of SaaS.
I’m an indie dev that wrote a useful Electron app for designing and printing labels (both rolls and sheets), data import, rendering batches of images, etc. My competition is either free (DYMO/Brother) or $500 commercial software for expensive printers.
So how do I price? For a year I had my price at $47.99 one-time and did OK. A month ago I segmented my licenses/users into Personal (same price of $47.99) and Business ($147.99) licenses. Business license has the ability to print barcodes. Revenue increased w a slight decrease of units sold.
Then last week I launched a Business subscription at $14.99/month. Everyone is still buying the one-time licenses. I don’t blame them... I generally avoid subscriptions.
Soon I’ll be releasing a Shopify app/integration and I’m really curious how that user group will respond. As far as I know, merchants are already used to monthly costs so it just becomes the cost of operating their store.
"The rationale for aggressively pushing a £7.99-a-week subscription (the same pricing as sister app Beat Maker Go) whilst showing freemium users unskippable ads is that, by pushing away all but truly determined users, Jambl can get feedback, iterate and make its app super-sticky – then shift to full-on growth."
I believe that both the app store and Google play store charge 30% fees for all app purchases except for subscriptions lasting over a year, which are 15%.
That further incentivizes developers to concentrate on the subscription model.
Pricing subscriptions higher has more side effects:
* you get users who care more about your app
* you get users who will not place irrational demands ("I paid $0.99 for your app, now implement this feature or I want my money back!")
* you get to focus on features that matter and long-term development, without having to implement shiny cruft just so that a "major version number upgrade" is justified
* you have a sustainable business
I've reached a point where I am worried if an app I use regularly does not have a subscription model with reasonable pricing. Experience shows that this means that sooner or later the authors will lose interest and abandon the app, or go overly broad with features. I've seen this happen so many times that I'm actually wary of even starting to use new apps at this point.
As for the "but it's too expensive" problem, well, perhaps you don't need all those apps after all? There aren't that many apps that I use regularly and I'd much rather limit the selection and then pay for those that I use and need.
Personally I like apps which provide both - a subscription and pay once model. I have no problem paying monthly for an app I use on a daily base. But I don’t want dozens of subscriptions for all my apps to run in parallel.
The problem is that a lot of apps with subscription models don’t provide enough value to justify a monthly payment fee.
I use a podcast downloader/player daily. I paid something like £5 maybe ten years ago for it.
Around a month or so ago, one of my feeds had weird description text that caused the download button to be bumped off the visible area, meaning I couldn't download that episode. I took a screenshot and reported it to the developers.
When filing the bug, I wondered about that £5 all those years ago and I imagined we'd both be happier if I had taken out a yearly subscription instead. The developers would be motivated to keep me happy because I'd stop paying if I didn't get my bug fixes done.
In the end, they promptly fixed the bug and pushed out an update by the end of the day without taking any extra payment, so I'm not sure what point I'm trying to make.
There is a problem with in-app subscriptions which is rarely brought up -
- apple/google cut. OK for a $2 purchase. Not OK for recurrent payments. If it is indeed a valuable service, it should have a web site. More often than not online subscriptions will be priced more competitively. See Babbel subscriptions in app and online.
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[ 3.3 ms ] story [ 223 ms ] threadHeadspace is ~$55/year and they have a ton of subscribers.
Plenty of language learning apps are over $100/year.
If the value is there, and especially if there is a direct comparable to a non-app based service, people will pay.
[0] https://www.youtube.com/watch?v=kEc-qGK5cjY
In the real world, it's not that "people don't want to pay anything", it's that people have a small amount of money to throw at things for a marginally better experience. I sure like keyboard-driven apps, but I'm never going to pay as much as I pay for my entire Internet package for any online service. Hell, all of them I pay for barely add up to $30/month.
Superhuman and similar are tools for rich people, equivalent to a Rolex or the latest iPhone. Those with less income are assumed not to be its target audience. I'd argue that they could double the price without losing more than a single digit percentage of current users.
One may say that the takeaway is basically, target prosumers and rich customers who see the value of the product in order to make the most money. That they are price insensitive is also great as a dev, because, yes, you can increase the price multifold and not lose customers, which increases your revenue overall.
Or, in other words: if I look at an app and decide that it's perfect and I'd really like to have it, but it costs $30/month and I need that money for gas to get to work or to put into my kid's college fund, I'm not going to get it.
The kind of people who post on HN usually have enough money that just $30/month isn't a problem, but what if there's 10 apps that do the same thing? At $300/mo that's now a substantial budget item, and if I have anything serious to save up money for, individual apps are going to be the first thing to go.
Not everyone is aiming to pay $0 for everything. Some of us like to support things we like our values even if we never actually use them ourselves.
Services like Patreon are also different in that the product is not the rewards, those are just the bonus, the product itself is giving support to the creator. Imagine if you'd buy a service like Patreon that just takes your money and gives nothing to the creator, I'd assume not, so you can see how the product is creator support.
Consumer: Pay $ZZZ/mo for internet, used to $1/yr apps, etc
Business: No idea what the internet bill is, doesn't see corp credit card bill, and for purchases for some level of value, used to do initial procurement flows for $100+/mo, a bit more or $1K/mo, pretty real for $10K+/mo (ex: ROI calc), ... but approval flow for < $100/mo is a "hey-o mgr, this site look alright to you?"
This has led to a huge change in my attitude to buying things like app, books, games, movies. If it's a small company/author who cares about their product/book etc. and charges a reasonable amount, I want to pay for what I'm using. Before, I pirated, searched for zero cost stuff, because it was either that or reduce the quality of the food I ate. Now, I can support the people that make the amazing things I use, and I want to support them. I don't think I'm especially unusual in this regard.
I guess the difference is that now, a $5 app purchase is close to zero in its affects on my bank account, a $20 app purchase needs only a few seconds consideration. However, if I see a $1-$10 a month subscription for simple app with very little cloud functionality, that's still a hard no from me because it seems like blatant greed.
If it's a journaling app, a calendar app, a habit tracker or a drawing app and it wants me to pay monthly, it's a hard 'no' for me as well unless it has a cloud component that I feel justifies the price. There is mostly nothing in it that justifies paying monthly, it's just an offline app.
"But developers need a salary too" - yes, then price your app accordingly and charge for upgrades. Subscriptions make me feel if I stop paying I lose the app and can't access my data any longer. That, and subscriptions pile up.
If I subscribe to one app it's not a big deal, but if I subscribe to 10-20 apps and they all cost monthly, it adds financial stress on me and stuff I 'have to keep in my head'.
Also I have a piece of hardware I bought from the Astropad folks and if the app suddenly stops working because they demand a subscription I'm gonna be pretty damn unhappy.
Part of the problem, of course, is that app stores have completely killed "upgrade pricing". There's no good way for your existing users to give you money for "hey we added some new features and fixed some bugs" without bullshit workarounds like "okay the new version is a totally new app, go buy it".
In the future when? Isn't that now? Adobe changed to subscription model in 2013. Everyone that is paying subscription now grew up with the buy-once model, right? In the future, people will have grown up with adobe's current subscription model.
Is preventing me from using it in a professional capacity.
I purchased Affinity Designer without checking for the feature, and people have been asking for the feature for at least 5 years.
Edit to add the forum link I forgot to paste in:
https://forum.affinity.serif.com/index.php?/topic/6756-dxf-o...
Not that Illustrator lacks its share of long-running requests, "rotate the view" has been near the top of their publicly-voted bug/feature request site ever since they opened it, and would be "picked up shortly" back in 2017. https://illustrator.uservoice.com/forums/333657-illustrator-...
(And I know I was asking for it years before they abandoned the old "here's a hole to put your bugs and feature requests into" setup.)
We've never taken features away and put them behind a subscription paywall, and we never intend to! So don't worry about that!
Also hardware allows us to have the upgrade pricing model you described. If we make a hardware device that's even better than the Luna you have now, you can choose to upgrade! Escaping the App Store model has been a really refreshing part of making hardware.
I'd like to believe it but I don't think its true. Adobe has done quite well out of subscriptions and I expect that to continue.
Bumping the price from US$20 to US$100 might indeed allow you to focus more on your most dedicated customers.
It also bumps the price way above anything that billions of people around the world can pay for such a thing.
At Ardour, we have 3 subscription price levels:
We leave it to users to decide which category to select. Maybe you don't care about people in Senegal or Bangladesh or the Phillipines. That's certain an option, but some demonstration that this has crossed your mind is probably a good idea.It may also be important that on a technical level, our subscriptions are not like e.g. Adobe's. Stop subscribing to this GPL'ed software and nothing changes except for your ability to get updates for free.
The obvious answer is that it's defeatable, but if the alternative is then to make it a radio button (trivially 'defeatable'), that's clearly not it.
The user/buyer who elects to use a one-time payment gets to pick their own price, too: the default is pre-seeded based on OECD data on the cost of a mid-prize restaurant meal for two without alcohol, combined with IP address.
Our motto has been (thus far): it doesn't matter if everybody pays for it, it only matters if enough people pay for it.
What I'm not clear on is why you don't work out the correct region & pricing on the customer's behalf; why you leave it to honesty?
And now I quote that, is that the real wording? 'Regular' vs. 'developing world'? Idk, I won't speak for others, but I wouldn't phrase it like that myself.
Do people really do this? I use Paddle for subscription payments and they offer regional pricing plus they charge country specific tax and VAT processing at checkout. If a business tried to get around this, wouldn't they be at risk of accountancy issues?
The cost of mobile data in the USA is 1-2 orders of magnitude higher than in India, for example. You can't charge the same for some mobile app subscription in both markets and not lose out vs. discriminating.
Is there some automated way you could come up with reasonable pricing based on IP detected country?
I use Paddle for payments and they offer localised pricing - you either enter the country specific prices manually or you enter e.g. the USD price and it sets a price for each country based on converting this by the exchange rate. Is there a better way than using the exchange rate?
So IP address is not particularly useful in determining the "right price".
That said, and as mentioned below, we do use IP address and OECD data on the cost of dining out to pre-seed the one-time payment option (the user is free to edit it as they wish).
To whatever extent Netflix or Adobe are attached to the former goal, then certainly they are not going to offer pay-what-you-say-you-can.
Whether that's the best goal for them to have, either for themselves or for society at large, is an entirely different question.
The pay-what-you-say-you-can approach is problematic when you want to "raise enough" when you can't rely on people to be truthful about what a fair price is though. I can easily imagine this killing a niche app that's not making thousands of sales.
http://ardour.org/
I am not affiliated with Ardur, just a happy user
But in the end you have to decide what is right for you and if your app is super niche then maybe it’s not the way you wish to go.
I'd like to point out that https://sloppy.io (not sponsored) recently helped me out with regional pricing. On top of being a great service, I can tell the people running it actually care.
Have you found a way around this or just accepted the essentially 38% tax on those $1 monthly transactions?
[0] https://community.ardour.org/about_subscriptions [1] https://www.paypal.com/gf/smarthelp/article/How-can-I-update...
You also can't link to your website via any means if you can subscribe via the website. Even support articles can't link to the main website.
0: https://youtu.be/WzQw3kEbEio
I mean, I sure hope so :-D
So the key for us is, actually make it free for most, and not a crappy free, good enough that they may never feel the need to upgrade. The premium level gives some bonus features, nice-to-haves.
This brings to mind a more interesting question: nevermind you, but can Senegalese, Bangladeshi and Phillipino developers make money at $1/mo?
If the answer is yes, where are all the local apps taking over the world with their low prices?
If the answer is no, are you depriving those locales of local producers?
In the Indian market most of these apps are just free and ad supported, by which I mean they are filled to the brim with banner ads and every action requires going through an interstitial ad.
As for this, though:
> where are all the local apps taking over the world with their low prices?
There's a ton of shovelware made in developing countries on the Play store, it's just not good. Most of them have bad UI, bad UX and/or the ad problem I mentioned earlier, making them unappealing to anybody who can afford an alternative.
There's also the fact that apps made locally target local customers for region-specific use cases, so you're not likely to find them useful if you're not from the region (and that is, if you can find them at all in the Play store without any marketing targeted at you!) I know of a few decent to good apps that have to do with Indian accounting etc, and they're making good money at low prices but nobody in the US is going to use them because they're made with the Indian GST and accounting principles in mind. An implication is that these apps don't follow US/EU regulations. There was an Indian-made fertility app that was collecting data that was flagrantly in violation of GDPR (https://privacyinternational.org/long-read/3196/no-bodys-bus..., search for "Maya by Plackal Tech".) To them, the additional work required to be GDPR compliant is not worth it, given that the domestic market is big enough for them at the early stage.
They're out there, but you've never heard of them because to market them to Western public you have to pay Western prices for ads, and it's out of reach for the most of 3rd world indy devs. And at the local markets it's hard to sell even at very low prices, as customers tend to be more careful with their expenses even at $1/mo prices. In poor(er) countries it's not just that people earn less proportionally while still keeping the same relative buying power. A lot of stuff that you need is not proportionally cheaper, and often it's even more expensive if it's from import or market is small, so people have less money to spend both in the total and relative terms... and because of that free/bootleg versions are the number one choice for any software. And all of that results in lowering the bar, poor overall quality of software products, as it just doesn't make much sense to invest time in polishing products too much, it will not pay out.
McD is thought of as a premium product in some very poor areas, but on the whole they aim for mass market affordability, which makes it a fair comparison.
https://bigmacpricing.com/
Like: I want to charge €10 a month for my product in the EU. Use the Big Mac pricing model to tell me what that is in Brazil.
According to your site, a Big Mac in the EU is €4.21 (is it really the same across all EU countries?) which means €1 buys you 0.237 burgers. €10 is therefore 2.37 burgers. At the current Brazilian price of 20.9 BRL per burger, you should charge 2.37 * 20.9 = 49.53 BRL (at the time of writing Google says €10 is worth 62 BRL)
The Euro zone is reported as a single economic zone in the index (it's published by the Economist). I'm not sure if the prices are actually exactly the same, but from an economic reference point of view, they ought to be. I'm sure there are differences in the prices within each city that McD operates in as well... the currency prices are probably an average.
Just googled prices for Germany: Apparently it’s €5.29 here.
Nope, not at all. Even prices within the country are not the same, e.g. in Croatia the price on the seaside is a bit higher than the prices in Zagreb (the capitol). For comparison, in Zagreb BigMac is under 3 euros, while in say Barcelona it's around 4e. In Denmark it's close to 5, if I remember correctly. It's following fairly closely the local salaries and taxes.
In fact the majority of times BigMac index is mentioned in media is in the reverse calculation - assuming that BigMac price is more or less "fair" per country journalists calculate how actual salaries or prices in the country stray away from this indicator, to show severity of economic problems.
For products and services that have near zero marginal costs. Saying something is worth 2 cups of coffee, for instance, is useful but our coffee prices might differ by an order of magnitude. But McD is always a middle class lunch wherever they run.
The other alternative I can think of is Coca Cola. That would also be an interesting index.
Minecraft in the US sells for $26.99 USD [0]
Minecraft in the UK sells for £22.49 GBP [1] or about $29.60 USD (+9.22%)
Minecraft in Mexico sells for $479.00 MXN [2] or about $22.18 USD (-19.56%)
Surely, if it's good enough for Microsoft, it's good enough for a company of one.
The Big Mac index, while provides similar results, is a bit too disconnected from the cultural attitudes towards paying for software.
[0] https://www.microsoft.com/en-us/p/minecraft-for-windows-10/9...
[1] https://www.microsoft.com/en-gb/p/minecraft-for-windows-10/9...
[2] https://www.microsoft.com/es-mx/p/minecraft-for-windows-10/9...
Perhaps Microsoft choose their pricing based on other measures.
You can't make a direct comparison of "wealth" by looking at salaries. You have to take into account purchasing power parity, for a start. But then you also have to find a way to include the somewhat non-linear results of tax rates and services provided by those taxes.
For example, the typical US family of 4 spends $23k a year more on healthcare than the equivalent family in France.
The Mac is expensive in my country, for instance, just because of crazy tax rules. It's fancy to eat on Mac Donalds here. It does not tell us about purchasing power in any way. I wish it would be that simple.
Exchange rates aside, I'm coming from register once, pay to upgrade world. When deciding not pay means losing access to the app, not to the latest version only; It's very hard for me to fork the cash.
Also customs are incredibly high - try to get a 5k display from the US, you may pay like 1600 dollars in import fees.
Someone may assume they don’t want us to “develop”, but for sure, the attitude is not helping.
While I can understand that desire, there's no law of nature that says we have to act in a profit-maximizing manner. A SaaS service could have a different goal: running a sustainable business that benefits as many people as possible.
So they could choose to charge a deliberately low amount such that more people can afford to or are willing to pay for it, while also charging a high enough amount that the business is financially sustainable.
Subscribing doesn’t necessarily imply benefitting, but the higher the price, the more correlated these are likely to be.
A time limited one, but still there.
I've worked with enough people who used adobe because "I've already payed for this month, so I have to use this" that I'm not sure it's that exotic.
And while sunk cost may not be a huge issue, it's definitely still there.
I'm not going to make any sort of comment on anything else in this thread, because I don't really know what I'm talking about.
However, I don't see how it's possible for someone to derive more benefit from an app overall by paying a higher subscription.
Your subscribers might correlate better with people who are benefiting, but for an individual, either they [Pay less and have the same amount of possible benefit] or [Pay more and have the same amount of possible benefit]. How does it work out that they get better value from the second option?
I believe you focused on the wrong half of the sentence. This is the part that they mean:
>that benefits as many people as possible.
The benefit is the utility people get.
So say you run a matchmaking app. You can charge $500 to create a happy couple and create 1,000 happy couples (you have just 1,000 customers worldwide) or charge $1 to make a happy couple and have 75,000 happy couples.
If you look at your profit, $500k is way higher than $75k. Plus you only have to deal with 1,000 users which you might do by hand whereas 75,000 overwhelms you personally so you have to hire dedicated customer service reps. The 75k users require bigger hosting and service fees.
At the end of all this you net just $20,000 from your 75,000 users whereas you would have gotten $450,000 if you had charged $500.
So why would you pick a $1 price point?
Because you enjoy hearing from the 75,000 happy couples you created, getting sent their wedding pictures, heartfelt thanks, etc.
You think you are giving a service, and you'd rather give it to 75,000 people than 1,000 people.
That's what OP means by "help as many people as possible." The higher the price, the fewer people can afford it. If you want your app to help more people, you have to lower the price.
Sometimes, a product is as good as it is going to get, and you are chasing diminishing returns by continuing to add new features. You often see this with mature commercial software, where teams need to justify their expense by redesigning and upgrading things that don’t need to be upgraded.
Maybe we should stop developing that piece of software, and instead put the resources to something new.
For me, if there is a free website app paired with a pay-to-play mobile app, I will never buy (or subscribe to) the mobile app because I consider that a bait-and-switch. If the whole stack was pay-to-play and I want the service offered I will pay.
Maybe I missed it, but it's worth pointing out that while in the table the one-time cost makes less than the yearly pricing plans, that's only for the first year - presumably the yearly plans come out ahead the next year and even more the year after as long as the user retention is decent.
For my paid Chrome extension (https://www.checkbot.io/), I've experimented with yearly only, then quarterly + yearly, then monthly + yearly plans. I think quarterly plans are worth exploring (I don't see them often) as it means users get longer to evaluate the service before they decide if they're going to renew. They can be a pain to be clear about in pricing tables though.
Upgrades are a much simpler purchase decision. Am I using the app? Is it offering a good value? Does the upgrade provide new features I want or need at a reasonable price?
Some customers will say no to one of those questions at first, but eventually change their minds. Like subscriptions this model matches revenues to usage, so engaged customers support future development. iOS would be a much better platform with easy upgrades vs. easy subscriptions.
With applications, I don't choose between more or less expensive subscription, but I'll chose your competitor who sells upfront.
One caveat with upgrades is it's difficult to maintain many version of the same app. Now with frequent hardware and OS upgrades (yearly!) it's even more expensive than ever to maintain many versions.
More importantly, how do you charge upgrade pricing? Any user who encounters 2.0 on the store is charged the same price, whether they own 1.0 or not. There is no easy way to give 1.0 owners a discounted price.
There are elaborate kludges to work around these limitations with a great deal of work. Apple could make producing upgrade versions easy, like they’ve done with subscriptions, so devs can focus on improving their product value instead of purchasing mechanisms.
There are plenty of games and apps that are dead because the developers no longer make new sales and the previous money is all spent and the business become unviable and they shutdown the servers.
Recurring charges gives the incentive for the developer to fix bugs and maintain the codebase and not abandon it completely once they loose interest, if original developer looses internest recurring revenue makes the code/service valuable so that a new developer can buy who makes enough in maintaining it.
If the app/service you bought does not have enough paying users to even pay for hosting servers or a part time developer time to maintain it, then no revenue model will save it anyway.
This X 100
I would rather pay you $50 with a major update every year that costs $50 than $50/yr subscription. Because if the resubscription comes up and things are a little tight I lose access to the app. Or if I don’t use the app I don’t have to worry about accidentally autoresubscribing
For everything with a backend though, I just don't see how it's a sustainable business model to allow customers to keep using the backend in perpetuity. Of course, a lot of consumers know knowing about the tech that's involved, so as a software engineer I have a different perspective here.
[1] https://techcrunch.com/2018/10/15/sneaky-subscriptions-are-p...
Also, I just plain want to make things that lots of people can enjoy. Subscriptions certainly limit your audience so why is that better (and why should that be the only option or even the preferred one?).
I know developers who asked for this in 2007 but can we please have “free trial, pay at end of trial” and “paid major upgrades” as standard, store-supported options, at long last? There was never anything wrong with these models and they are also great ways to make a living.
The big issue with app "subscriptions" is that they don't actually work like subscriptions.
Before the digital age, "subscription" used to mean (and for physical products it still means) that you get regular delivery of something as long as you pay. If you stop paying, you no longer get more stuff, but you get to keep whatever you already received. You don't have to return your back issues of the newspaper when you cancel your subscription. Arguably TV subscriptions have always been an exception, but functionally they're not because you can record TV.
App "subscriptions" are different. Developers like to emphasize how they fund sustained future development of an app, but the reality is that when you cancel you usually lose access even to current features (you arguably already helped pay for).
The way app subscriptions should work is that you can perpetually keep using whatever version of the app was current when you stopped paying (Jetbrains actually does this, and I salute them for it: https://sales.jetbrains.com/hc/en-gb/articles/207240845-What...).
The current model is really "app rental", and it's inherently customer-hostile. Playing with the pricing does not fundamentally change that.
(Presumably this is so you can't upgrade for a month, then cancel, and end up with a perpetual license for the current version.)
Your current version: 18.4 build X
You can update to version: 19.5 build X (Note: your update plan expired on 2019-XX-XX)
If you renew your update plan, you will be able to update to version: 20.6 build X
We have an optional software maintenance, which gets you software updates and support for the duration of your subscription. If you don't renew your subscription, you get to keep using the last version that was available at that time.
Sometimes if a lapsed customer later buys a lot of new licenses relative to the number they already have, I just reinstate their maintenance for free, because it feels like the right thing to do
I make a browser plugin that functions as a productivity/accessibility tool. When I first started charging, I actually did grandfather in all our existing free users and give them perpetual access to the then-existing feature set. But it's not clear what it would mean to freeze people who had a paid subscription and then terminated it.
If someone pays for one month, do they forever get access to the version that they briefly paid for? How do I deal with customers who are upset that certain websites have changed and no longer work with old versions of our plugins? I would expect lots of questions from folks who want to know if this bug or that bug had been fixed by later releases (and then they would briefly subscribe to get perpetual access to the newer version).
Another commenter mentioned giving folks access to the version that existed a year before they stopped paying, but if I release version 1, then 2, then 3, someone might try out 3, stop paying, and then end up on 2. That seems confusing and suboptimal for everyone.
I also have a "smart" thermostat in the house, it was a one-time purchase, but they offer a subscription for bonus features like detecting when you're outside and turning down the thermostat then.
That said, I'm not actually very comfortable using it anymore, all of my home temperature and humidity data is being sent to their servers and sold on (I'm sure) as statistical data. I get remote control (from my phone) and (actually interesting) temperature / historical charts. Only per day though, I would like to see weekly/monthly/annual data.
Additionally, it doesn't generally speaking fit the actual usage and that is something that irks the customers.
Take car rental as an example their pricing (right or wrong) more or less used to be on a per day basis with a certain (logical ) amount of km included per day and excess km paid extra at a given rate.
Now they are mostly on a per day basis with "unlimited" kms included.
The amount of the "unlimited" is clearly calculated on historical data/averages, etc. and the result is most of the times an affordable rate, often considered fair by everyone that actually runs it for a near to the average distance.
You still have a few that rent the car for several days and drive it for only a fraction of the distance and a few people that take great advantage by driving the car for a much greater distance in a short period, but they are a limited amount of "extremes".
With an app, as you say in an "app rental" agreement, you probably have a much larger amount of people that will use it very rarely and (if it is a good tool) a much larger amount of people that will use it every day, all day.
The first category won't be happy.
So how do I price? For a year I had my price at $47.99 one-time and did OK. A month ago I segmented my licenses/users into Personal (same price of $47.99) and Business ($147.99) licenses. Business license has the ability to print barcodes. Revenue increased w a slight decrease of units sold.
Then last week I launched a Business subscription at $14.99/month. Everyone is still buying the one-time licenses. I don’t blame them... I generally avoid subscriptions.
Soon I’ll be releasing a Shopify app/integration and I’m really curious how that user group will respond. As far as I know, merchants are already used to monthly costs so it just becomes the cost of operating their store.
I need a pricing consultant. Check out my pricing page at https://label.live/download
I'm not surprised, everybody can multiply $15 by 12 and see that doesn't add up.
It immediately pushed me to start a 7.99 GBP a week subscription.
About 550 USD a year.
https://musically.com/2020/02/12/startup-files-jambl-music-m...
"The rationale for aggressively pushing a £7.99-a-week subscription (the same pricing as sister app Beat Maker Go) whilst showing freemium users unskippable ads is that, by pushing away all but truly determined users, Jambl can get feedback, iterate and make its app super-sticky – then shift to full-on growth."
$550/y is a lot for consumer software. Windows OS, O365, nope, I can't even think of any other consumer software priced that high!
That further incentivizes developers to concentrate on the subscription model.
* you get users who care more about your app * you get users who will not place irrational demands ("I paid $0.99 for your app, now implement this feature or I want my money back!") * you get to focus on features that matter and long-term development, without having to implement shiny cruft just so that a "major version number upgrade" is justified * you have a sustainable business
I've reached a point where I am worried if an app I use regularly does not have a subscription model with reasonable pricing. Experience shows that this means that sooner or later the authors will lose interest and abandon the app, or go overly broad with features. I've seen this happen so many times that I'm actually wary of even starting to use new apps at this point.
As for the "but it's too expensive" problem, well, perhaps you don't need all those apps after all? There aren't that many apps that I use regularly and I'd much rather limit the selection and then pay for those that I use and need.
Around a month or so ago, one of my feeds had weird description text that caused the download button to be bumped off the visible area, meaning I couldn't download that episode. I took a screenshot and reported it to the developers.
When filing the bug, I wondered about that £5 all those years ago and I imagined we'd both be happier if I had taken out a yearly subscription instead. The developers would be motivated to keep me happy because I'd stop paying if I didn't get my bug fixes done.
In the end, they promptly fixed the bug and pushed out an update by the end of the day without taking any extra payment, so I'm not sure what point I'm trying to make.
- apple/google cut. OK for a $2 purchase. Not OK for recurrent payments. If it is indeed a valuable service, it should have a web site. More often than not online subscriptions will be priced more competitively. See Babbel subscriptions in app and online.