Selling software as subscription

will you pay for it? Do you see any gotchas?

[sdani]

I have been thinking of doing this for a long time. To build "some" dream product and sell it for a monthly subscription instead of a one time fee. An example would be to sell a small software for 1.99 a month instead of $48.00 one time fee.

Why do I think it is good for me?
-> A predictable cash flow.
-> Will not have to try to sell an upgrade or new version, as long as I can keep my customers happy with constant improvements.

Why do I think it is good for my customers?
-> very low cost to try the product.
-> no fee for upgrades.
-> quick turnaround for new features (as I won't have to push good new features for new version as a selling point for that new version.) I will probably push new features as soon as they are ready.

Hassle:
-> Customer will have to somehow re authenticate every month - this can be done in the background automatically, but not good for someone who does not connect to Internet for a month.
-> I will have to pay credit card charges / pay pal fee every month.
-> If I release a new version every few weeks, then maintaining those versions and which ones to support can become a hassle.

Any thoughts?
as a customer will you buy a product if you have to re authenticate every month (but you have to pay 1/20th of the price each month).
as a seller, do you think it is worth the extra billing / processing.

sdani

[Leosghost]

This would only work if softice, windasm and all the other more recent stuff hadn't been invented ..there are cracks posted all over the net for stuff that retails for no more than $10.oo ..

and most of the sites that run these download crack lists also run adsense or ads for hosting or domain registration or pron or combinations of all of these ..

not to put you off ..but most software writers either work for someone else ..or distribute through major geeks et al ..

software by installments I just can't see ..and certainly not paid monthly ..

[sdani]

Thanks for a response Leosghost, - yes, cracks is a problem, but that needs to be dealt with in both cases - a one time fee or an installment fee plan.

Why do you (a customer) resist "software by installments"? Do you see any negatives as a customer?

Thanks
sdani

[martinibuster]

Cracks are not a problem for hosted solutions, which subscription models generally are. Saleforce.com is riding the wave right now on that, and even Microsoft is getting in on the act.

The idea is to deliver software as a service through a web browser. That way the client doesn't have to deal with configuring software and databases and maintaining a server/processor/data center- they only have to plug in and let the automation do the rest.

Hosted applications are not the next big thing, they are the big thing at this very moment. Whether you think it's hype or not, it's a solution that a lot of people are turning to, especially for Enterprise level applications. The idea is that you save money on IT expenses because all you have to do is log on and work.

Subscription models go hand in hand with hosted applications delivered as a service. I've never heard of a software you download and keep paying for as a subscription (besides mmorpgs).

[jecasc]

I agree that for a hosted solution this will work. For software installed on the computer I have my doubts. What if I do not have an internet connection on the computer I use the software?

I use a hosted payroll accounting service to do the accounting for my employees and I am charged monthly and only if I use the service. No problem with that.

[sdani]

Thanks martinibuster:

I started this thought with "hosted application" on subscription model. I agree that that's the way to go, but trying to address one issues with that:

A pure hosted solution will miss an entire segment of people who care about security / protection / privacy of their data .. so I am saying, "okay - keep your data locally, but pay me as a subscription."

If people start trusting the brand, then I can provide a hosted solution for those who trust the brand and are willing to keep their data on my servers for an additional fee and added comfort.

If the end user is willing to use a browser/Internet everyday to use the product, won't she be willing to press the "get new key" button once a month to download the latest key valid for next one month. (this can be automated too in the background).

Thanks
sdani

[sdani]

jecasc

"only if I use the service" is an interesting thought. That can be implemented and will probably make the end customer more happy.

sdani

[Leosghost]

I've never heard of a software you download and keep paying for as a subscription (besides mmorpgs).

almost every anti virus app there is uses exactly the keep paying for the subscription model :)..

Hadn't actually seen the OP's question in the area of web based apps tho ( thought it as incremental softs like the anti virii apps model or stats packs etc )..agree with you there martinibuster ..web based apps for thin client ..lots of scope and get in now ( before the big boys think to apply for spurious patents for "picking your nose in front of your web cam" ) ..

These apps will get used by less and less of geeky market ..more and more by Mrs and Mrs 6 pack small business owner ..

[Essex_boy]

I bought a piece of software that has to confirm you registration code with teh main site everytime you use it, should you try to move to another PC then it deactivates.

perfect antipiracy me thinks.

[Leosghost]

nope ..
and before you say "why not then" ..look up the "sandman" or "fravia" or the "underhalls"..

and read ..and think ..and try ..and read ..and think .. and try ..and

enough to make you smile in the dark ..

[balam]

> I bought a piece of software that has to confirm you registration code with teh main site everytime you use it

What happens if you want to use the software you paid for, but your 'net connection is down?

[kaled]

I am reminded of carts and horses - first conceive your killer app, then write it and then sell it.

Hosted apps have a future but will never make up a significant percentage of used software (for elementary reasons).

Kaled.