I make desktop apps, and sell them for a one time fee. It’s a really simple business model, and my customers seem to like it. After you bought one of my apps, you can use it as long as you like. I believe this is a good deal for my customers, it’s a good deal for me, and it’s how it should be.
However, a lot of software publishers have been switching to subscription pricing lately. Usually the argument is that modern apps aren’t static; developers continuously work on bugfixes and new features; and if people keep using a piece of software it’s only fair if they keep paying for it. Allegedly it’s not sustainable to deliver free updates to people who only paid once.
But how come I can make a living with buy-once apps?
The secret is growth. As long as my app gains new users every day, new people will buy my app. And it doesn’t cost me any money to give updates to existing users.
So why are other companies so eager to switch to subscription pricing? I believe the answer is that they are stagnating.
Microsoft and Adobe are a perfect example of this case. Both companies completely dominate their market. They have little perspective to grow, since everyone who needs their software is already using it anyway. Paid upgrades won’t help. Many designers would be happy with a version of Illustrator that is a couple of years old, and the typical office worker is probably even opposed to upgrading their good old copy of Word. Thus, the only way to increase their revenue is to charge their existing users more. Hence, subscription pricing.
As a small independent developer, I’m in the opposite position. I’m far away from market dominance, my user base is growing every day, and I don’t need to charge recurrent fees for users of my software. And it works out just well.
The one thing I don’t understand is why smaller companies are also trying to switch to subscriptions? Are they also suffering from a stagnating user base, and hoping to increase their bottom line? If that is the case, they are doomed — subscription pricing will only diminish their user base even faster, and won’t fix the underlying problems that led to a lack of growth in the first place.