Dear startups: I hate subscription services (2021)

Nope. The one-off ceiling is basically non-existent for practical purposes. Do I pay you a theoretical infinite amount of money to use your product for a small percentage of my income, or do I pay you a small part of my wealth for your product?

With a subscription model, there’s a point where the consumer has paid you “too much” and they will either cancel or find another solution. This is also known as churn. If your avg customer pays you for 8 months, this is a pretty good indicator of how much customers are willing to pay, but you can likely charge more for a one-off cost, sometimes 2-5x more.

Since you are likely combatting churn by finding new customers, switching to a one-off model means you can just find new customers and not worry about churn since it doesn’t exist.

Don’t get me wrong, sometimes subscription models make a lot of sense. Most of the time they don’t unless you’re selling something that has an infinite cost anyway (like immediate access to “all” movies ever made like Netflix) and would be an infinite cost for the consumer to do it in some other way. But if I can pay a contractor to build your app for less than infinite money, then it shouldn’t cost an infinite amount to use your product.

> The subscription model benefits the consumer because it incentivizes use of the software.

Is that really a benefit? I buy a hammer to meet my needs, not to incentivize myself to hammer things. Even in leisure I don't want to subscribe to my snowboard.

> I suggest that we, as consumers, may need to reconcile with the cost of labor.

Fair if there truly must be on going labor. But some things don't need to keep changing constantly. And if backward compatibility were taken more seriously then we wouldn't be wasting so much effort just keeping shit working.

Assuming a developer gets paid (before any taxes) $5000/month you would need 6000 customers, it's definitely possible but it's a lot harder than a monthly subscription. I have read many times that higher prices also filter out a lot of high maintenance customers.

You live in a fancy apartment building that has a lobby with a concierge. The building isn't going to give the concierge $100,000 and tell them, okay keep coming back for the rest of your life.

If the lobby of your building has a fancy chair in it, the furniture company isn't going to expect $10 a month forever to keep using it, and on the flip side, if the furniture turns out to be accidentally made of asbestos, it's the furniture company's responsibility to do something about that, regardless of the fact that you're not paying them every month.

Is there a version of the concierge that's a one time purchase? Probably not a good one? The fee your paying is for 1. continued incentive to continue doing a good job and 2. Training and improvements to the staff.

Is there a version of the chair that should be a recurring fee? Maybe if the chair company comes and swaps out the chair every month, but then you're not paying for the chair, you're paying for the chair service. Should the apartment building have the expectation that under a flat fee the fabric in the chair is going to get upgraded to fit new styles and tastes? No, that's never a expectation when you buy furniture. The only case where the manufacturer would be beholden to you would be if there is some gross defect in the product or if there was some negligence on their part that could lead to injury.

Realistically there's not going to be an issue where a chair lets robbers in, but if you bought a door lock for example, and the lock failed when someone tapped it, you're not SOL because your not paying a subscription to the lock maker, they're liable for their defective product.

There's absolutely cases where software should be a subscription model and there's absolutely cases where it shouldn't be.

I don't need any features that have been added to Adobe Premiere since 2013. I don't want or need updates--my copy of CS6 still works. I'm not getting a CC subscription.

If I needed software to help with accessibility compliance, I would absolutely be willing to pay a monthly fee because the standards change and information becomes out of date quickly. It would be an unreasonable expectation that a lump sum I paid in 2013 would still have my websites up to code today.

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Forgive typos, on my phone.

The author hates subscription services, but the author doesn’t fit the ideal customer profile.

Someone who only pays for something once isn’t a customer that any company should want to attract in the first place, especially when you consider marketing costs.

The author would pay the LTV or even more, but the author is in the minority. Most people would pay some small amount of money once and then happily never pay another dime. They don’t drop hundreds of dollars on their LTV.

The author used Adobe as an example, and that’s where I should point out that it was one of the most pirated pieces of software on the market. SaaS basically eliminates that issue entirely.

Also, most consumers budget on a monthly basis. Ten bucks a month is easier to swallow than $150 all at once for a permanent copy of something like Microsoft Office.

For businesses, they were buying support contracts anyway, SaaS makes even more sense for them.

So, yes, that’s why everyone is SaaS. These businesses that operate on the model know it’s successful and more lucrative than one-time sales.

You might hate it, but the balance sheet doesn’t.