Readit NewsThe 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.
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.
Where are you seeing single payments become prominent in software?
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.
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.