Yearly vs Lifetime license cost?

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JnLlnd
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Yearly vs Lifetime license cost?

17 Sep 2020, 14:30

Hi,

Is there a common or average ratio between the price of a software lifetime license and the price for a yearly subscription? Doing some research, I found examples where the ratio was around 4x-5x (for example: $399.99 lifetime vs $99.99/year). I understand it must depend on the type of software but Is this a common ratio?

Thanks,

Jean
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SOTE
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Re: Yearly vs Lifetime license cost?

17 Sep 2020, 23:53

I don't think there is any consistent ratio. The only rule of thumb appears to be making the yearly subscription price cheap enough to entice people to take that option as oppose to a "lifetime license".

An important thing to consider is the updates, which would also be a significant decision factor. Some software is constantly providing major or "must have" new features, that a user would want. So that's where having a subscription is seen as "added value". Where other software is pretty stagnant and updates are quite minor. This can also correspond to the maturity of the product, where it's almost as advanced as it can get. Take MS Office for example. Many people with Office 2013 or Office 2016 are probably fine and have little to no compelling reason to upgrade, except out of just wanting the newest and latest of something.

The flip side of this would be if a subscription is offering other goodies. Examples would be additional software, licenses for multiple computers, cloud space, coupons, etc... So we are talking a case by case scenario, where you have to look at each application and be clear about what is being offered.
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Re: Yearly vs Lifetime license cost?

18 Sep 2020, 16:55

Hi Sote,

> I don't think there is any consistent ratio. The only rule of thumb appears to be making the yearly subscription price cheap enough to entice people to take that option as oppose to a "lifetime license".

This is a good starting point :-)

> An important thing to consider is the updates, which would also be a significant decision factor. Some software is constantly providing major or "must have" new features, that a user would want. So that's where having a subscription is seen as "added value". Where other software is pretty stagnant and updates are quite minor. This can also correspond to the maturity of the product, where it's almost as advanced as it can get. Take MS Office for example. Many people with Office 2013 or Office 2016 are probably fine and have little to no compelling reason to upgrade, except out of just wanting the newest and latest of something.

In my situation, I'm thinking to turn a freeware product to paid. The product is already quite mature and new features will always be incremental and "little" compared to the whole set of features. But I have a quite solid user base, some of them already making voluntary donations. My objective is to give more incentives to all users in order to have them support the development and user-support of the app by paying a monthly, yearly or lifetime fee. Those who would not consider the app (or its update) has enough value to them could continue to use the last free release. And this would be OK for me.

My goal is not to become rich with the app. It is to establish a modest, but long term source of income covering my expenses (like security certificates, hosting and various licenses, etc.) and some of the hours spent maintaining the app. It is also to simplify/automate the management of donor codes (individual codes currently sent manually) by using a software license platform.

> The flip side of this would be if a subscription is offering other goodies.

Yes. I have this in mind.

Thanks for your input :-)

Jean
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Re: Yearly vs Lifetime license cost?

19 Sep 2020, 03:25

I think that an argument could be made that for "converted" payware, subscription makes sense, because it's comparable to having sponsors to support freeware. Instead of continually asking for donations, you would be converting loyal and continual sponsors to subscribers.

Though it would be hard to say how the conversion from freeware to payware will go, though for a highly rated product, the odds are better. For instance, the widespread usage of the product might go down drastically, though paying core users go up or stay the same. Then there are those that will have philosophical objections to freeware going to payware, those that would only use a product if its freeware, those that now will have higher support expectations since they are paying, and payware can entice crackers/hackers so that the product will need greater security and/or the author will need to be more diligent in going after copyright violators. On top of that, payware would often require a license management system, and buying prebuilt ones are usually quite expensive by themselves.

Something to keep in mind is that with freeware and donations, there is almost no limit to how much a sponsor can donate. Particularly if a person setups a nonprofit and/or if they have corporate sponsors with deep pockets that are seeking tax deductions. Though how that will all play out depends on the tax rules of the country, type of nonprofit, and various other factors.

The math on donations to freeware vs payware can also be quite tricky. If you are selling a product for $20 dollars, but a corporate sponsor is willing to donate $2,000 dollars to freeware (to say give it freely away to 100 people or continual development) then which would be the better outcome? How long would it take the payware to make 100 sales (at $20 bucks a pop) to match the donation of 1 corporate/rich sponsor to a nonprofit (at say $2,000 dollars for a tax deduction)? Yet another route is advertisements on the website and in the program, though that can be troublesome if not done right or become bothersome to many users. But it is something to be aware of, that the limits of how much can be donated, what all can be done, and the type of sponsors one can get are often not fully explored by various freeware projects.
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Re: Yearly vs Lifetime license cost?

19 Sep 2020, 11:26

> I think that an argument could be made that for "converted" payware, subscription makes sense, because it's comparable to having sponsors to support freeware. Instead of continually asking for donations, you would be converting loyal and continual sponsors to subscribers.

That's the idea.

> Though it would be hard to say how the conversion from freeware to payware will go (...)

I'm ready for a bumpy road, at least during the transition. But from the feedback I receive from supporters (donors and helpers), the general feedback is positive. My goal is not to always have more and more users. My goal is to have a base of loyal users who find value in my app and support its evolution.

> Something to keep in mind is that with freeware and donations, there is almost no limit to how much a sponsor can donate. (...)

I've received numerous donations in the last 5 years, but never from one with pockets that deep... I prefer regular small contributions than dreaming for a "thousands-dollars" donation :-)

> Yet another route is advertisements on the website and in the program, though that can be troublesome (...)

Yes... Not a good idea for me. As user, I prefer paying my due to the developer than being "sold" to advertisers who do not always have the cleanest ethics.

> the type of sponsors one can get are often not fully explored by various freeware projects.

It's true that there are many avenues to explore. Let's see what will happen with simple and flexible licensing approach.

Thanks for your thoughts. Appreciated.
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Re: Yearly vs Lifetime license cost?

21 Sep 2020, 15:53

Really great conversation guys! My thoughts don't have to do with your original question other than I'd prefer a monthly over yearly charge. It's a lower per-month cost which, when I'm trying something new, is much more appealing. Even if I have a free 2-weeks / month I'd prefer to be paying / subscribing monthly but that's just me...
SOTE
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Re: Yearly vs Lifetime license cost?

22 Sep 2020, 18:33

JnLlnd wrote:
19 Sep 2020, 11:26
I've received numerous donations in the last 5 years, but never from one with pockets that deep... I prefer regular small contributions than dreaming for a "thousands-dollars" donation :-)
Partially the point is that corporate sponsors are not going to be chasing a developer down and usually won't know anything about them. Instead, the freeware developer has to be proactive and pursue corporate sponsors (letting them know about their project), in addition to openly soliciting/making it known they want corporate sponsors in their software and website.

It's also not a dream. Companies want tax deductions for donations. They are often looking for nonprofits to donate to (that are worthy or give good reasons). In addition, there are sites like Patreon and Buy Me a Coffee, where people voluntarily become subscribers to support creators.

There are way more options for freeware developers seeking donations than in years past. It's not so cut and dry anymore between payware and freeware. There is a large lane that has opened up with donations. In addition, going payware is not a guarantee of success either. Like with anything, it can come down to the approach and effort to make it work.
Yes... Not a good idea for me. As user, I prefer paying my due to the developer than being "sold" to advertisers who do not always have the cleanest ethics.
I partly understand what you are saying, but the developer would be choosing the advertisers. If a person doesn't like or are suspicious about a particular one, don't have to use them. I do think its possible to do advertising in a low key and smooth way, versus going nuts with popups to betting sites, porn, and malware. Many users of freeware can be understanding and sympathetic, so here again the approach can be key. Though perhaps user feedback could also help guide such decisions.
Guest wrote:
21 Sep 2020, 15:53
...My thoughts don't have to do with your original question other than I'd prefer a monthly over yearly charge...
Personally, I would prefer yearly or "lifetime" before monthly, but depends on the product in question and would definitely look at the benefits of each option. When going monthly with something, its often because of not being sure about it or something that I would like the option of cutting off if I don't like later/change mind and save on costs versus yearly. Since people are obviously different, might be better to offer monthly, yearly, or "lifetime". But too many options to users, can also create headaches and confusion on both sides.
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JnLlnd
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Re: Yearly vs Lifetime license cost?

23 Sep 2020, 10:36

SOTE > Since people are obviously different, might be better to offer monthly, yearly, or "lifetime". But too many options to users, can also create headaches and confusion on both sides.

This is true that too many options can be confusing. You would have to add another option for a free edition (TBD). Thanks for your other comments.

Guest > I'd prefer a monthly over yearly charge. It's a lower per-month cost which, when I'm trying something new, is much more appealing.

I agree but the issue with monthly charge is the fix transaction fees that PayPal or Stripe charge. For example, for a monthly transaction of $1.00, they keep a fix fee between $0.33 and $0.39. My intent was to charge 1/10 of the annual cost for the monthly subscriptions ($1/month vs $10/year). But, to get an equivalent income, I would have to make it more around 1/8 of the yearly price ($1.25).
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