Subscription Pricing Models

Subscription Pricing Models

(Simon) #1

Subscription Pricing Models

Productivity is not just about tools, but also about cost. If this were not so we would all have secretaries doing the job much of our software does. I would therefore argue that price and pricing models have a major role to play in productivity. This thinking has all come about this year (2017) with over 5 applications I used deciding to go subscription. The fact that they all did it within a short space of time caused me to think more than I normally would have about it, but I thank the circumstances, because I realise everyone should think long and hard about subscriptions, because they are here to stay and they are changing the landscape of software use and ownership.

Let me start with the positives of subscriptions.

  • A more secure continued development
  • More sustained income for developers

And the negatives.

  • Increase of expenditure for users
  • Content in subscription software is only available whilst you pay the subscription (even though you own the content).
  • No guarantee of continued development
  • Not sustainable, meaning not all developers can have a piece of the pie.
  • Existing users are often the one’s who feel penalised in the transition.

The greatest positive with subscriptions is of course for the developer who receives a steady income stream. I understand this. No one wants the stress of irregular income. It also means money spent on advertising can be cut down as there is a steady revenue stream and the developer can get on with the business of developing.

The greatest negative is for the consumer. Costs increase. The iOS app store has seen dramatic rises in app prices, especially IAPs. I think there is a hidden aspect that is not sufficiently thought through by developers with the exception possibly of Setapp. This hidden issue is best explained using words that I have seen in nearly every explanation developers use when minimising the cost of their subscription. The phrase goes something like this, “…so for the cost of a cup of coffee a month you can continue to use great software…”. This is fine if we’re talking about one cup of coffee and this is where this all falls down. We’re not talking about one cup of coffee, we’re talking about one cup of coffee per developer. So in reality many of us are talking about 10+ cups of coffee. Here, I believe developers have not given sufficient thought to the overall impact. The effect upon me when 5 apps turned subscription in a short space of time was a much greater scrutiny at the expenditure. Paying £40 every 2-3 years is different to paying £4 per month for one app. Also, my apps were staggered in alternating years in my upgrade strategy. But now with 10 apps asking for a cup of coffee and the monthly costs becoming £40 per month it simply became unsustainable. So I have decided to say “no” on principle with any subscription that comes my way. There are some that I have to have, buy many were nice to have whilst the price was right.

It has made me wonder how other people approach subscriptions. I’m not sure the software and hardware industry is going to benefit from this trend. Many of the apps I no longer use because of the subscription model where apps that synced my data to my iPhone. This has meant that the hardware upgrade I would have made, I’m not making because my data load on my iphone has lessened and it will run for another couple of years, so here Apple loses out. I wonder if others are doing the same thing. I recent report showed that people were upgrading smartphones every 20 months in 2013 and now ever 29 months. Add to this the exponential costs of new smartphones (iPhone X, Samsung Note 8) are all closer to £1000 than £500. My income is not increasing at the same rate as these costs.

Who really is the winner here? Some developers no doubt, but I fear many will end up going under. The big impact on me with subscriptions has meant I’ve actually undergone a purge of all my software use (desktop/laptop/tablet/smartphone) and am still pruning back and deleting apps and working out what I am willing to pay and selecting my apps carefully. Software on all levels has come of age with a realistic price tag. However, that price tag brings with it greater scrutiny as people will now seriously look at the monthly software expenditure. Perhaps you are already all doing this and I’m a bit late on the bandwagon!

(Wilson Ng) #2

Well, we can use the old model where we buy a software package only can use it for “eternity.” But eternity depends on future MacOS updates. A lot of legacy apps got left behind when iOS went to 64-bit only. I’ve seen enough abandon-ware that I can’t use anymore. Microsoft Office 2011 was just recently declared obsolete and will not be supported in MacOS High Sierra. Who knows if it will work on the next MacOS 2018 update? There are a lot of 32-bit apps that cannot be opened in iOS 11. We’ll have to make sure to keep our iOS devices on iOS 10 to ensure that we can keep our software working.

Software as a service is becoming the norm. Love it or hate it. I just recently bought a MacBook Pro 13". Instead of just copying my old hard drive over, I decided to just start fresh. I really think long and hard about buying apps and installing the apps I use. I’m starting to delete apps from my iPad, iPhone, and Macs the I no longer use. It is a refreshing starting point for me to get back to a stripped down setup. I don’t have the need to have 3 different Twitter clients, 4 different image editors, and 6 different task managers installed on my devices.

The subscription model has made me rethink about what I really want on my devices now. But the apps I do subscribe to, I really use them. I’m thankful for the one month subscription just to see if something will work for me. I know it’s a huge mind shift in how we purchase and use software. But I guess if I’m willing to subscribe to my cellular phone service, my home/office internet, water, power, and gas, I think I’m getting used to the idea of software as services now.

(Joe Buhlig) #3

I know a lot of people are upset by the rise in subscription models over one-time payments but that ultimately comes back to our want for high-end, free software. Which is completely unrealistic.

I think @wilsonng has a great point on rethinking your device uses. If it’s a tool that’s good enough to warrant a subscription then it’s a solid tool and deserves a monthly payment. If it’s sub-par, then it stays free for me or gets cut and potentially goes out of business if others follow suit. That’s not a bad thing. It just means that quality and earning trust become the winners.

The odd thing to me is that often times we don’t pay any more for the tool in the long run. It just means that we are putting our money where our loyalty lies. If I commit to Bear as a note-taker then it’s worth me spending money each month to use it. But if the developers were to switch and allow one-time payments, then they need to charge the equivalent of about a years subscription up-front and release annual major upgrades to stay in business. It can work but it’s more of a challenge.

This is partly why I chose to go with a subscription for the Pro side of the Guild as opposed to a one-time fee. I would have to charge a large enough dollar amount that it would deter a lot of people. But at the same time, it needs to have new words and videos on a regular basis. And that requires time. My time isn’t free. Thus I landed on subscriptions.


I’ve thought a lot about this. Because it’s not just software that is going subscription. I now subscribe to a music service, 2-3 video “content” services, a productivity forum, an RSS service, a housekeeping service, some digital newspapers, a paper newspaper, an online drum lesson website, my iPhone, my iPhone service, iCloud storage, Dropbox, satellite radio, Amazon Prime, a couple websites/blogs, blog hosting, Backblaze, etc… etc…

It’s a lot. It feels like being murdered by paper-cuts. If I were more responsible I’d have it all in some kind of spreadsheet where I could keep tabs on how much I’m actually spending. But, alas…

Ultimately, I think there are silver linings of software as a service for consumers.

  1. Developers must continually improve the product to maintain the revenue stream. Having been subjected to Cultured Code’s glacial development cycle in the past, this is important to me. Bear and Ulysses competing with each other for thousands of monthly transactions should make for more innovation, better quality, and ultimately more powerful software. Once money is rolling in monthly, it should incentivize keeping the app/service up and running as infrastructure is built and staff are brought in.

  2. If you’re like me and have trouble picking an app and sticking with it, paying for something monthly is much more of a commitment than sneaking a big one time price up front before swirling between apps for eternity. I’m not going to be renewing Bear. I can’t “bear” the thought of paying again for something that I’m only kind of using. I’m all in on Ulysses (and sometimes Apple Notes). It’s encouraging me to focus.

  3. There should always be three things in a list. I don’t have a third.

(Simon) #5

Some good points here! Thank you.

This is a great ideal, but I’ve found quite a number of developers not developing sufficiently enough to warrant the expenditure (Apple iPhone 8 as an example!). I’ve also found that when some apps become popular the subscription goes supersonic in price. Then there are those great apps that you invest in who then sell out to Apple, Google or Microsoft and have a future like the Titanic.

(Wilson Ng) #6

Going from an iPhone 6 to an iPhone 8 was a major jump for me. On annual basis, the improvements look small. But over time, they add up.

As long as the app has some good export options and scriptability, I’m comfortable



6 to 8+ felt like time travel.

(Simon) #8

Forwards or backwards?




(Simon) #10

I asked because many reviews of the iPhone 8 highlighted it’s dated look and that it is essentially and iPhone 6 without the headphone jack and a better camera.


Going from a 6 to an 8+ was a major upgrade. Partially because of the larger screen and battery. But wireless charging has been huge for me as I don’t have to fish for a lightning cord in the dark without waking up my wife when I head to bed, and after I give my kid his medicine at 2:30am.

I really like force touch. Especially for diving into the “pay” section of mobile apps like the Starbucks app.

The biggest thing with force touch is being able to move the curser by force pressing the keyboard. It sounds small but I use it almost every time I use my phone for writing.

Otherwise, apps that used to take a long time to load are loading much faster.

The camera is really, really good. My wife is mad about how much better my pictures are than the pics from her 6. And she is the last person on earth that wants to grand me a win on upgrading.

I can say that I haven’t missed the headphone jack once. Still early days, and I have Airpods (which are fantastic), but the headphone jack not being there didn’t occur to me until you mentioned it. And the speakers are way better for listening to podcasts or music around the house.

I feel much better about being around water than I ever have. I don’t have to constantly worry about moisture in the air in the bathroom when I take a shower causing some long term issue.

But yes, it still looks like an iPhone.

The reality with phones, even the X, is that they are a mature platform. There aren’t going to be wild new features for devices with this form factor and purpose.

The X is just another iteration that looks different. The Pixels are just further iterations of the same basic idea. So is every Samsung phone.

In fact, any further innovation in the space will be aimed down-market at developing markets like India and China, who make the market in the US look like pocket change.

Someday we’ll have something beyond the phone. But the phone paradigm is what it will be.

(Justin DiRose) #12

I’ve been on the headphone jack-less bandwagon for almost a year now. Only once was I frustrated because I forgot my Airpods, but I also forgot other headphones, too.

I think the geek community is forgetting most great creations are iterative, not revolutionary. Apple didn’t invent the smartphone, they made a better one. To expect Apple to churn out something revolutionary and new every 3-5 years is ridiculous. It took them 20+ years to put out the iPod after the original computer. I’m grateful to get iterative updates every couple of years on my favorite gadgets. And I’m really glad they’re iterating on Apple Music…

… but I wish it was a little cheaper. I use it a ton, but I’d like to get the family subscription. I also wish musicians got paid better from streaming. It seems to be the one area where revenue is not as good.

(Wilson Ng) #13

Here’s a follow up article about subscription pricing models. There is an app called Agenda thats uses the freemium model. Here’s a TL;DR quote from the blog post:

Agenda’s pricing model is worth mentioning too because it is somewhat unique. Agenda’s core features are free. An In-App-Purchase unlocks premium features including the creation of calendar events, saved searches, and copying and exporting of Markdown. The In-App Purchase also comes with any new features introduced for the twelve months following the purchase. If you don’t pay again at the end of twelve months, the app remains functional, you’ll get bug fixes, and any unlocked features will still work, but you won’t get new features that are introduced.

It looks like you can keep using the app and test it to see if it is worth the subscription price. Then you sign up for a one year subscription. It would be hard to capture revenue if the developer only offered a 1 month subscription. Some users might just sign up for 1 month to grab new features and then cancel at the end of the month to get new features.

This looks like a new model that would be acceptable to users who are willing to go the subscription route or the one-time purchase model.

I think 1Password is offering both a one-time purchase and a subscription option.

It’s nice to have options now!

(Justin DiRose) #14

Bear has done this too from the start. Get all app features except themes and syncing for free. Works well for them.

Yes and I love this about 1Password. I wish more apps gave you this option to be honest. 1Password subscription has more features, but the standalone app is still :100:.

(Joe Buhlig) #15

Looks like Seth has some thoughts on this as well.

(Curtis Spendlove) #16

Sorry to resurrect but I’ve been thinking on this topic quite a bit recently.

One thing I do think frequently gets overlooked is the cost of running developer infrastructure. In the modern world everyone expects seamless, immediate data sync and a bunch of other stuff.

These are all reasonable expectations, but they aren’t free. Even Apple’s generous iCloud toolkit has limits that can be exceeded and start costing developers. And you can’t even use CloudKit if you have to sync to anything other than Apple devices.