this post was submitted on 15 Dec 2023
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Wow… lots of people in here bashing the subscription model, but let me point out it’s maybe not as bad as you think…
If you sell a product under a perpetual license model (I.e the one-time purchase model). Once you’ve sold the product, the manufacturer has almost no incentive to offering any support or updates to the product. At best it’s a marketing ploy, you offer support only to get word of mouth advertising of your product which is generally a losing proposition.
Since there’s little incentive to improve the experience for existing customers. Your main income comes from if you can increase your market share which generally means making products bloated often leading to a worse experience for everyone.
If the customer wants support, you need to sell them a support contract. If they want updates you have to make a new version and hope the customer sees enough additional value to be worth upgrading. Either way we’re back to a subscription model with more steps, more risk, and less upside than market expansion so it takes a backseat.
If you want to make a great product without some variation on a subscription. You need to invest heavily upfront in development (which most companies don’t have the capital to do, and investors generally won’t invest in unproven software)
From a product perspective, you don’t know if you’ve hit the mark until people start using your product. The first versions of anything but the most trivial of products is usually terrible, because no matter how good you are, half to three quarters of the ideas you build are going to be crap and not going to be what the customers need.
Perpetual licensing works for a small single purpose application with no expectation of support or updates.
It works for applications with broad market needs like office software.
For most niche applications, subscription models offer a better experience for both the customer and the manufacturer.
The customer isn’t facing a large transition cost to switch to a competitor’s product like they would if they had to buy a perpetual license of it, so you have a lot more incentive to support and improve your product. You also don’t see significant revenue if the customer that drops your service a couple months in… even more reason to focus on improving the product for existing customers.
People ought hate the idea of paying small reoccurring fees for software instead of a few big upfront costs. But from a business model perspective, businesses are way more incentivized to focus on making their products better for you under that model.
Lots of words and lots of assumptions. You can improve a product and release another version with a paid upgrade, while the old version remains completely functional. If your works have made the software substantially better, people will be happy to pay for a new version. If you aren't adding real value, having the last version should not be necessary.
Your biggest assumption is that you don't have the drive to better a product if you don't have a subscription model. It's simply not true. You can and in fact must work to better your product if you want to stay relevant in the market and drive your customer to pay for a new version of your software.
Then, you proceed by describing the positives of a subscription model. While you're not wrong about those points, you are leaving out the negatives and forgetting that every business model would have symmetrical points to be made.
There are some context in which subscription model are suited for or in fact even necessary, but the harsh reality is that now every software is turning into a subscription model only for two reason: you can extract 10x 100x more money for your customer, and you can lock-in them in order to keep them paying. This has proven to be detrimental for the quality of the softwares too: software loose interoperability and compatibility, updates are so frequent and gimmicky that they can be a problem, etc etc.