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Ask HN: Is anybody running a successful non-subscription business?

14 points by fandorin ↗ HN
Is there anybody here who is successfully running a business that is not based on a subscription revenue model?

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?

23 comments

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raw_anon_1111
What are you going to do when you reach all of your addressable market?

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.

JohnFen
> What are you going to do when you reach all of your addressable market?

Sell upgrades, develop new products, etc.

gethly
On the contrary. Subscription-based pricing model is dying, and fast. People are tired of it. Just look up articles about how SaaS are slowly disappearing and how entrepreneurs should avoid creating SaaS if possible. People usually prefer one-time payments over monthly payments. There are exceptions, usually when the program/service is very valuable and expensive, it makes more sense to just pay for what you use, but in general single payment will always win. Also it depends whether we're talking local or remote service as remote service has inherent cost and having a single payment is not compatible with it.

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.

raw_anon_1111
What you’re saying doesn’t jibe with reality that subscriptions are dying. I wouldn’t spend time creating anything that was a one time use application if my interest was monetization and not just to scratch an itch.
keiferski
The primary alternative to monthly subscription plans is a usage-based pricing plan. In other words, your customers are still paying more than once, but when is based on how much they use it, rather than per month/year.

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.

herbst
This model is how you get me as a customer. Monthly is unattractive, usage based feels fair even if more expensive
csomar
> Is there no point in having a one-time fee product?

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.

fandorin
Well I guess this is the way forward for me.
bruce511
In the beginning we sold a product for a one-time fee. Every couple of years we'd release a (paid for) upgrade. The market was young, new features were obvious.

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.

fandorin
Thanks for your detailed response. I agree with what you wrote. But the key part is: "We sell to business not consumers." --> My product is not business-oriented. Probably there is a small % of businesses that use it but it's definitely not a majority (at least not right now). If I had a B2B product I would just do a subscription without thinking too much.
bruce511
Building a business based on sales to consumers is hard. Consumers are fickle, their life-time value is low and acquisition costs are high. Products also tend to have very short life cycles. Any hint of success is quickly cloned and iterated on by others. It becomes primarily an exercise in marketing, not coding.

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.

ohman876
I have never built a smartphone app myself but I know one thing, if the app is useful I'll buy it again and again to get it on my new device.

Another thought, maybe your app has the potential to be extended, you can make extensions available as addons for a fee.

mattbrewsbytes
Use it as a way to differentiate yourself. One methodology I've seen used with installed apps is major upgrades require a financial renewal but those can be spaced out every couple years. I love it when I find an iOS app that is paid, without ads, without in-app purchases.

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.

skwee357
Define successful.

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.

rubenvanwyk
Is it really a SaaS if it doesn't rely on recurring subscriptions? I thought the definition of a SaaS is the recurring subscription model.
Someone
SaaS = “Software as a Service”, not “Software as a Subscription”.

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
Only the last, for me, is “as a service”. An app that runs 100% on your system that doesn’t require the app developer to do something specially for you, for me falls under one of the other three (freeware, buying, subscription)

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)

JohnFen
Yes, lots. I personally refuse to use subscription-based software, but have no trouble finding software that doesn't use that model.
herbst
I dislike monthly subscriptions myself, and always look for alternatives which I then happily spend my money on.

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.

quantdev1
Welp. Now I’m regretting shutting down a similar business - because I felt like single product businesses were a dead end.

Sheesh.

nicbou
I earn affiliate income on https://allaboutberlin.com. It allows me to help far more people by keeping everything free. It's been my main source of income for a few years now.

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.

keiferski
Just some unsolicited advice: the company I work for has benefited from AI traffic, I think because people are looking for a certain software solution to a particular problem, which we provide. In other words, they still need to visit our site to solve the problem. This is unlike many other AI queries, where the solution is a piece of information. I imagine your site is full of such information, which is why your traffic is being halved by AI.

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?

muzani
The subscription model is VC friendly. ARR makes it easy to calculate whether this little pony can grow to become a unicorn.

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.