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!