Charge more for app subscriptions
mronge.com
mronge.com
Bumping the price from US$20 to US$100 might indeed allow you to focus more on your most dedicated customers.
It also bumps the price way above anything that billions of people around the world can pay for such a thing.
At Ardour, we have 3 subscription price levels:
Regular: US$10/month
Low Cost: US$4/month
Developing World: US$1/month
It may also be important that on a technical level, our subscriptions are not like e.g. Adobe's. Stop subscribing to this GPL'ed software and nothing changes except for your ability to get updates for free.
The obvious answer is that it's defeatable, but if the alternative is then to make it a radio button (trivially 'defeatable'), that's clearly not it.
The user/buyer who elects to use a one-time payment gets to pick their own price, too: the default is pre-seeded based on OECD data on the cost of a mid-prize restaurant meal for two without alcohol, combined with IP address.
Our motto has been (thus far): it doesn't matter if everybody pays for it, it only matters if enough people pay for it.
What I'm not clear on is why you don't work out the correct region & pricing on the customer's behalf; why you leave it to honesty?
And now I quote that, is that the real wording? 'Regular' vs. 'developing world'? Idk, I won't speak for others, but I wouldn't phrase it like that myself.
Do people really do this? I use Paddle for subscription payments and they offer regional pricing plus they charge country specific tax and VAT processing at checkout. If a business tried to get around this, wouldn't they be at risk of accountancy issues?
The cost of mobile data in the USA is 1-2 orders of magnitude higher than in India, for example. You can't charge the same for some mobile app subscription in both markets and not lose out vs. discriminating.
Is there some automated way you could come up with reasonable pricing based on IP detected country?
I use Paddle for payments and they offer localised pricing - you either enter the country specific prices manually or you enter e.g. the USD price and it sets a price for each country based on converting this by the exchange rate. Is there a better way than using the exchange rate?
So IP address is not particularly useful in determining the "right price".
That said, and as mentioned below, we do use IP address and OECD data on the cost of dining out to pre-seed the one-time payment option (the user is free to edit it as they wish).
To whatever extent Netflix or Adobe are attached to the former goal, then certainly they are not going to offer pay-what-you-say-you-can.
Whether that's the best goal for them to have, either for themselves or for society at large, is an entirely different question.
The pay-what-you-say-you-can approach is problematic when you want to "raise enough" when you can't rely on people to be truthful about what a fair price is though. I can easily imagine this killing a niche app that's not making thousands of sales.
I am not affiliated with Ardur, just a happy user
But in the end you have to decide what is right for you and if your app is super niche then maybe it’s not the way you wish to go.
I'd like to point out that https://sloppy.io (not sponsored) recently helped me out with regional pricing. On top of being a great service, I can tell the people running it actually care.
Have you found a way around this or just accepted the essentially 38% tax on those $1 monthly transactions?
[0] https://community.ardour.org/about_subscriptions [1] https://www.paypal.com/gf/smarthelp/article/How-can-I-update...
You also can't link to your website via any means if you can subscribe via the website. Even support articles can't link to the main website.
I mean, I sure hope so :-D
So the key for us is, actually make it free for most, and not a crappy free, good enough that they may never feel the need to upgrade. The premium level gives some bonus features, nice-to-haves.
This brings to mind a more interesting question: nevermind you, but can Senegalese, Bangladeshi and Phillipino developers make money at $1/mo?
If the answer is yes, where are all the local apps taking over the world with their low prices?
If the answer is no, are you depriving those locales of local producers?
In the Indian market most of these apps are just free and ad supported, by which I mean they are filled to the brim with banner ads and every action requires going through an interstitial ad.
As for this, though:
> where are all the local apps taking over the world with their low prices?
There's a ton of shovelware made in developing countries on the Play store, it's just not good. Most of them have bad UI, bad UX and/or the ad problem I mentioned earlier, making them unappealing to anybody who can afford an alternative.
There's also the fact that apps made locally target local customers for region-specific use cases, so you're not likely to find them useful if you're not from the region (and that is, if you can find them at all in the Play store without any marketing targeted at you!) I know of a few decent to good apps that have to do with Indian accounting etc, and they're making good money at low prices but nobody in the US is going to use them because they're made with the Indian GST and accounting principles in mind. An implication is that these apps don't follow US/EU regulations. There was an Indian-made fertility app that was collecting data that was flagrantly in violation of GDPR (https://privacyinternational.org/long-read/3196/no-bodys-bus..., search for "Maya by Plackal Tech".) To them, the additional work required to be GDPR compliant is not worth it, given that the domestic market is big enough for them at the early stage.
They're out there, but you've never heard of them because to market them to Western public you have to pay Western prices for ads, and it's out of reach for the most of 3rd world indy devs. And at the local markets it's hard to sell even at very low prices, as customers tend to be more careful with their expenses even at $1/mo prices. In poor(er) countries it's not just that people earn less proportionally while still keeping the same relative buying power. A lot of stuff that you need is not proportionally cheaper, and often it's even more expensive if it's from import or market is small, so people have less money to spend both in the total and relative terms... and because of that free/bootleg versions are the number one choice for any software. And all of that results in lowering the bar, poor overall quality of software products, as it just doesn't make much sense to invest time in polishing products too much, it will not pay out.
McD is thought of as a premium product in some very poor areas, but on the whole they aim for mass market affordability, which makes it a fair comparison.
Like: I want to charge €10 a month for my product in the EU. Use the Big Mac pricing model to tell me what that is in Brazil.
According to your site, a Big Mac in the EU is €4.21 (is it really the same across all EU countries?) which means €1 buys you 0.237 burgers. €10 is therefore 2.37 burgers. At the current Brazilian price of 20.9 BRL per burger, you should charge 2.37 * 20.9 = 49.53 BRL (at the time of writing Google says €10 is worth 62 BRL)
The Euro zone is reported as a single economic zone in the index (it's published by the Economist). I'm not sure if the prices are actually exactly the same, but from an economic reference point of view, they ought to be. I'm sure there are differences in the prices within each city that McD operates in as well... the currency prices are probably an average.
Just googled prices for Germany: Apparently it’s €5.29 here.
Nope, not at all. Even prices within the country are not the same, e.g. in Croatia the price on the seaside is a bit higher than the prices in Zagreb (the capitol). For comparison, in Zagreb BigMac is under 3 euros, while in say Barcelona it's around 4e. In Denmark it's close to 5, if I remember correctly. It's following fairly closely the local salaries and taxes.
In fact the majority of times BigMac index is mentioned in media is in the reverse calculation - assuming that BigMac price is more or less "fair" per country journalists calculate how actual salaries or prices in the country stray away from this indicator, to show severity of economic problems.
For products and services that have near zero marginal costs. Saying something is worth 2 cups of coffee, for instance, is useful but our coffee prices might differ by an order of magnitude. But McD is always a middle class lunch wherever they run.
The other alternative I can think of is Coca Cola. That would also be an interesting index.
Minecraft in the US sells for $26.99 USD [0]
Minecraft in the UK sells for £22.49 GBP [1] or about $29.60 USD (+9.22%)
Minecraft in Mexico sells for $479.00 MXN [2] or about $22.18 USD (-19.56%)
Surely, if it's good enough for Microsoft, it's good enough for a company of one.
The Big Mac index, while provides similar results, is a bit too disconnected from the cultural attitudes towards paying for software.
[0] https://www.microsoft.com/en-us/p/minecraft-for-windows-10/9...
[1] https://www.microsoft.com/en-gb/p/minecraft-for-windows-10/9...
[2] https://www.microsoft.com/es-mx/p/minecraft-for-windows-10/9...
Perhaps Microsoft choose their pricing based on other measures.
You can't make a direct comparison of "wealth" by looking at salaries. You have to take into account purchasing power parity, for a start. But then you also have to find a way to include the somewhat non-linear results of tax rates and services provided by those taxes.
For example, the typical US family of 4 spends $23k a year more on healthcare than the equivalent family in France.
The Mac is expensive in my country, for instance, just because of crazy tax rules. It's fancy to eat on Mac Donalds here. It does not tell us about purchasing power in any way. I wish it would be that simple.
Exchange rates aside, I'm coming from register once, pay to upgrade world. When deciding not pay means losing access to the app, not to the latest version only; It's very hard for me to fork the cash.
Also customs are incredibly high - try to get a 5k display from the US, you may pay like 1600 dollars in import fees.
Someone may assume they don’t want us to “develop”, but for sure, the attitude is not helping.
Upgrades are a much simpler purchase decision. Am I using the app? Is it offering a good value? Does the upgrade provide new features I want or need at a reasonable price?
Some customers will say no to one of those questions at first, but eventually change their minds. Like subscriptions this model matches revenues to usage, so engaged customers support future development. iOS would be a much better platform with easy upgrades vs. easy subscriptions.
With applications, I don't choose between more or less expensive subscription, but I'll chose your competitor who sells upfront.
One caveat with upgrades is it's difficult to maintain many version of the same app. Now with frequent hardware and OS upgrades (yearly!) it's even more expensive than ever to maintain many versions.
More importantly, how do you charge upgrade pricing? Any user who encounters 2.0 on the store is charged the same price, whether they own 1.0 or not. There is no easy way to give 1.0 owners a discounted price.
There are elaborate kludges to work around these limitations with a great deal of work. Apple could make producing upgrade versions easy, like they’ve done with subscriptions, so devs can focus on improving their product value instead of purchasing mechanisms.
There are plenty of games and apps that are dead because the developers no longer make new sales and the previous money is all spent and the business become unviable and they shutdown the servers.
Recurring charges gives the incentive for the developer to fix bugs and maintain the codebase and not abandon it completely once they loose interest, if original developer looses internest recurring revenue makes the code/service valuable so that a new developer can buy who makes enough in maintaining it.
If the app/service you bought does not have enough paying users to even pay for hosting servers or a part time developer time to maintain it, then no revenue model will save it anyway.
While I can understand that desire, there's no law of nature that says we have to act in a profit-maximizing manner. A SaaS service could have a different goal: running a sustainable business that benefits as many people as possible.
So they could choose to charge a deliberately low amount such that more people can afford to or are willing to pay for it, while also charging a high enough amount that the business is financially sustainable.
Subscribing doesn’t necessarily imply benefitting, but the higher the price, the more correlated these are likely to be.
A time limited one, but still there.
I've worked with enough people who used adobe because "I've already payed for this month, so I have to use this" that I'm not sure it's that exotic.
And while sunk cost may not be a huge issue, it's definitely still there.
I'm not going to make any sort of comment on anything else in this thread, because I don't really know what I'm talking about.
However, I don't see how it's possible for someone to derive more benefit from an app overall by paying a higher subscription.
Your subscribers might correlate better with people who are benefiting, but for an individual, either they [Pay less and have the same amount of possible benefit] or [Pay more and have the same amount of possible benefit]. How does it work out that they get better value from the second option?
I believe you focused on the wrong half of the sentence. This is the part that they mean:
>that benefits as many people as possible.
The benefit is the utility people get.
So say you run a matchmaking app. You can charge $500 to create a happy couple and create 1,000 happy couples (you have just 1,000 customers worldwide) or charge $1 to make a happy couple and have 75,000 happy couples.
If you look at your profit, $500k is way higher than $75k. Plus you only have to deal with 1,000 users which you might do by hand whereas 75,000 overwhelms you personally so you have to hire dedicated customer service reps. The 75k users require bigger hosting and service fees.
At the end of all this you net just $20,000 from your 75,000 users whereas you would have gotten $450,000 if you had charged $500.
So why would you pick a $1 price point?
Because you enjoy hearing from the 75,000 happy couples you created, getting sent their wedding pictures, heartfelt thanks, etc.
You think you are giving a service, and you'd rather give it to 75,000 people than 1,000 people.
That's what OP means by "help as many people as possible." The higher the price, the fewer people can afford it. If you want your app to help more people, you have to lower the price.
Sometimes, a product is as good as it is going to get, and you are chasing diminishing returns by continuing to add new features. You often see this with mature commercial software, where teams need to justify their expense by redesigning and upgrading things that don’t need to be upgraded.
Maybe we should stop developing that piece of software, and instead put the resources to something new.
The big issue with app "subscriptions" is that they don't actually work like subscriptions.
Before the digital age, "subscription" used to mean (and for physical products it still means) that you get regular delivery of something as long as you pay. If you stop paying, you no longer get more stuff, but you get to keep whatever you already received. You don't have to return your back issues of the newspaper when you cancel your subscription. Arguably TV subscriptions have always been an exception, but functionally they're not because you can record TV.
App "subscriptions" are different. Developers like to emphasize how they fund sustained future development of an app, but the reality is that when you cancel you usually lose access even to current features (you arguably already helped pay for).
The way app subscriptions should work is that you can perpetually keep using whatever version of the app was current when you stopped paying (Jetbrains actually does this, and I salute them for it: https://sales.jetbrains.com/hc/en-gb/articles/207240845-What...).
The current model is really "app rental", and it's inherently customer-hostile. Playing with the pricing does not fundamentally change that.
(Presumably this is so you can't upgrade for a month, then cancel, and end up with a perpetual license for the current version.)
Your current version: 18.4 build X
You can update to version: 19.5 build X (Note: your update plan expired on 2019-XX-XX)
If you renew your update plan, you will be able to update to version: 20.6 build X
We have an optional software maintenance, which gets you software updates and support for the duration of your subscription. If you don't renew your subscription, you get to keep using the last version that was available at that time.
Sometimes if a lapsed customer later buys a lot of new licenses relative to the number they already have, I just reinstate their maintenance for free, because it feels like the right thing to do
I make a browser plugin that functions as a productivity/accessibility tool. When I first started charging, I actually did grandfather in all our existing free users and give them perpetual access to the then-existing feature set. But it's not clear what it would mean to freeze people who had a paid subscription and then terminated it.
If someone pays for one month, do they forever get access to the version that they briefly paid for? How do I deal with customers who are upset that certain websites have changed and no longer work with old versions of our plugins? I would expect lots of questions from folks who want to know if this bug or that bug had been fixed by later releases (and then they would briefly subscribe to get perpetual access to the newer version).
Another commenter mentioned giving folks access to the version that existed a year before they stopped paying, but if I release version 1, then 2, then 3, someone might try out 3, stop paying, and then end up on 2. That seems confusing and suboptimal for everyone.
I also have a "smart" thermostat in the house, it was a one-time purchase, but they offer a subscription for bonus features like detecting when you're outside and turning down the thermostat then.
That said, I'm not actually very comfortable using it anymore, all of my home temperature and humidity data is being sent to their servers and sold on (I'm sure) as statistical data. I get remote control (from my phone) and (actually interesting) temperature / historical charts. Only per day though, I would like to see weekly/monthly/annual data.
Additionally, it doesn't generally speaking fit the actual usage and that is something that irks the customers.
Take car rental as an example their pricing (right or wrong) more or less used to be on a per day basis with a certain (logical ) amount of km included per day and excess km paid extra at a given rate.
Now they are mostly on a per day basis with "unlimited" kms included.
The amount of the "unlimited" is clearly calculated on historical data/averages, etc. and the result is most of the times an affordable rate, often considered fair by everyone that actually runs it for a near to the average distance.
You still have a few that rent the car for several days and drive it for only a fraction of the distance and a few people that take great advantage by driving the car for a much greater distance in a short period, but they are a limited amount of "extremes".
With an app, as you say in an "app rental" agreement, you probably have a much larger amount of people that will use it very rarely and (if it is a good tool) a much larger amount of people that will use it every day, all day.
The first category won't be happy.
This X 100
I would rather pay you $50 with a major update every year that costs $50 than $50/yr subscription. Because if the resubscription comes up and things are a little tight I lose access to the app. Or if I don’t use the app I don’t have to worry about accidentally autoresubscribing
For everything with a backend though, I just don't see how it's a sustainable business model to allow customers to keep using the backend in perpetuity. Of course, a lot of consumers know knowing about the tech that's involved, so as a software engineer I have a different perspective here.
In the real world, it's not that "people don't want to pay anything", it's that people have a small amount of money to throw at things for a marginally better experience. I sure like keyboard-driven apps, but I'm never going to pay as much as I pay for my entire Internet package for any online service. Hell, all of them I pay for barely add up to $30/month.
Superhuman and similar are tools for rich people, equivalent to a Rolex or the latest iPhone. Those with less income are assumed not to be its target audience. I'd argue that they could double the price without losing more than a single digit percentage of current users.
One may say that the takeaway is basically, target prosumers and rich customers who see the value of the product in order to make the most money. That they are price insensitive is also great as a dev, because, yes, you can increase the price multifold and not lose customers, which increases your revenue overall.
Or, in other words: if I look at an app and decide that it's perfect and I'd really like to have it, but it costs $30/month and I need that money for gas to get to work or to put into my kid's college fund, I'm not going to get it.
The kind of people who post on HN usually have enough money that just $30/month isn't a problem, but what if there's 10 apps that do the same thing? At $300/mo that's now a substantial budget item, and if I have anything serious to save up money for, individual apps are going to be the first thing to go.
Not everyone is aiming to pay $0 for everything. Some of us like to support things we like our values even if we never actually use them ourselves.
Services like Patreon are also different in that the product is not the rewards, those are just the bonus, the product itself is giving support to the creator. Imagine if you'd buy a service like Patreon that just takes your money and gives nothing to the creator, I'd assume not, so you can see how the product is creator support.
Consumer: Pay $ZZZ/mo for internet, used to $1/yr apps, etc
Business: No idea what the internet bill is, doesn't see corp credit card bill, and for purchases for some level of value, used to do initial procurement flows for $100+/mo, a bit more or $1K/mo, pretty real for $10K+/mo (ex: ROI calc), ... but approval flow for < $100/mo is a "hey-o mgr, this site look alright to you?"
This has led to a huge change in my attitude to buying things like app, books, games, movies. If it's a small company/author who cares about their product/book etc. and charges a reasonable amount, I want to pay for what I'm using. Before, I pirated, searched for zero cost stuff, because it was either that or reduce the quality of the food I ate. Now, I can support the people that make the amazing things I use, and I want to support them. I don't think I'm especially unusual in this regard.
I guess the difference is that now, a $5 app purchase is close to zero in its affects on my bank account, a $20 app purchase needs only a few seconds consideration. However, if I see a $1-$10 a month subscription for simple app with very little cloud functionality, that's still a hard no from me because it seems like blatant greed.
If it's a journaling app, a calendar app, a habit tracker or a drawing app and it wants me to pay monthly, it's a hard 'no' for me as well unless it has a cloud component that I feel justifies the price. There is mostly nothing in it that justifies paying monthly, it's just an offline app.
"But developers need a salary too" - yes, then price your app accordingly and charge for upgrades. Subscriptions make me feel if I stop paying I lose the app and can't access my data any longer. That, and subscriptions pile up.
If I subscribe to one app it's not a big deal, but if I subscribe to 10-20 apps and they all cost monthly, it adds financial stress on me and stuff I 'have to keep in my head'.
[1] https://techcrunch.com/2018/10/15/sneaky-subscriptions-are-p...
Also, I just plain want to make things that lots of people can enjoy. Subscriptions certainly limit your audience so why is that better (and why should that be the only option or even the preferred one?).
I know developers who asked for this in 2007 but can we please have “free trial, pay at end of trial” and “paid major upgrades” as standard, store-supported options, at long last? There was never anything wrong with these models and they are also great ways to make a living.
Around a month or so ago, one of my feeds had weird description text that caused the download button to be bumped off the visible area, meaning I couldn't download that episode. I took a screenshot and reported it to the developers.
When filing the bug, I wondered about that £5 all those years ago and I imagined we'd both be happier if I had taken out a yearly subscription instead. The developers would be motivated to keep me happy because I'd stop paying if I didn't get my bug fixes done.
In the end, they promptly fixed the bug and pushed out an update by the end of the day without taking any extra payment, so I'm not sure what point I'm trying to make.
Maybe I missed it, but it's worth pointing out that while in the table the one-time cost makes less than the yearly pricing plans, that's only for the first year - presumably the yearly plans come out ahead the next year and even more the year after as long as the user retention is decent.
For my paid Chrome extension (https://www.checkbot.io/), I've experimented with yearly only, then quarterly + yearly, then monthly + yearly plans. I think quarterly plans are worth exploring (I don't see them often) as it means users get longer to evaluate the service before they decide if they're going to renew. They can be a pain to be clear about in pricing tables though.
Also I have a piece of hardware I bought from the Astropad folks and if the app suddenly stops working because they demand a subscription I'm gonna be pretty damn unhappy.
Part of the problem, of course, is that app stores have completely killed "upgrade pricing". There's no good way for your existing users to give you money for "hey we added some new features and fixed some bugs" without bullshit workarounds like "okay the new version is a totally new app, go buy it".
In the future when? Isn't that now? Adobe changed to subscription model in 2013. Everyone that is paying subscription now grew up with the buy-once model, right? In the future, people will have grown up with adobe's current subscription model.
Is preventing me from using it in a professional capacity.
I purchased Affinity Designer without checking for the feature, and people have been asking for the feature for at least 5 years.
Edit to add the forum link I forgot to paste in:
https://forum.affinity.serif.com/index.php?/topic/6756-dxf-o...
Not that Illustrator lacks its share of long-running requests, "rotate the view" has been near the top of their publicly-voted bug/feature request site ever since they opened it, and would be "picked up shortly" back in 2017. https://illustrator.uservoice.com/forums/333657-illustrator-...
(And I know I was asking for it years before they abandoned the old "here's a hole to put your bugs and feature requests into" setup.)
We've never taken features away and put them behind a subscription paywall, and we never intend to! So don't worry about that!
Also hardware allows us to have the upgrade pricing model you described. If we make a hardware device that's even better than the Luna you have now, you can choose to upgrade! Escaping the App Store model has been a really refreshing part of making hardware.
I'd like to believe it but I don't think its true. Adobe has done quite well out of subscriptions and I expect that to continue.
For me, if there is a free website app paired with a pay-to-play mobile app, I will never buy (or subscribe to) the mobile app because I consider that a bait-and-switch. If the whole stack was pay-to-play and I want the service offered I will pay.
* you get users who care more about your app * you get users who will not place irrational demands ("I paid $0.99 for your app, now implement this feature or I want my money back!") * you get to focus on features that matter and long-term development, without having to implement shiny cruft just so that a "major version number upgrade" is justified * you have a sustainable business
I've reached a point where I am worried if an app I use regularly does not have a subscription model with reasonable pricing. Experience shows that this means that sooner or later the authors will lose interest and abandon the app, or go overly broad with features. I've seen this happen so many times that I'm actually wary of even starting to use new apps at this point.
As for the "but it's too expensive" problem, well, perhaps you don't need all those apps after all? There aren't that many apps that I use regularly and I'd much rather limit the selection and then pay for those that I use and need.
So how do I price? For a year I had my price at $47.99 one-time and did OK. A month ago I segmented my licenses/users into Personal (same price of $47.99) and Business ($147.99) licenses. Business license has the ability to print barcodes. Revenue increased w a slight decrease of units sold.
Then last week I launched a Business subscription at $14.99/month. Everyone is still buying the one-time licenses. I don’t blame them... I generally avoid subscriptions.
Soon I’ll be releasing a Shopify app/integration and I’m really curious how that user group will respond. As far as I know, merchants are already used to monthly costs so it just becomes the cost of operating their store.
I need a pricing consultant. Check out my pricing page at https://label.live/download
I'm not surprised, everybody can multiply $15 by 12 and see that doesn't add up.
It immediately pushed me to start a 7.99 GBP a week subscription.
About 550 USD a year.
https://musically.com/2020/02/12/startup-files-jambl-music-m...
"The rationale for aggressively pushing a £7.99-a-week subscription (the same pricing as sister app Beat Maker Go) whilst showing freemium users unskippable ads is that, by pushing away all but truly determined users, Jambl can get feedback, iterate and make its app super-sticky – then shift to full-on growth."
$550/y is a lot for consumer software. Windows OS, O365, nope, I can't even think of any other consumer software priced that high!
- apple/google cut. OK for a $2 purchase. Not OK for recurrent payments. If it is indeed a valuable service, it should have a web site. More often than not online subscriptions will be priced more competitively. See Babbel subscriptions in app and online.
Headspace is ~$55/year and they have a ton of subscribers.
Plenty of language learning apps are over $100/year.
If the value is there, and especially if there is a direct comparable to a non-app based service, people will pay.
That further incentivizes developers to concentrate on the subscription model.