Subscription Model, A Dying Concept

#We used to own what we paid for

Do you remember when you could purchase software and it’d come on little disk or it was a download you installed once and that was it? You didn’t have to worry about it being feature incomplete, or micro-transactions to get the features you REALLY wanted. You didn’t have to convince yourself to pay $15/month and ensure you put it to use and get your $15 worth every month. The concept of “pay once” and it’s essentially yours to use either right then and there, or in a few months when you have the time or actual use for it. Those were the good days of software and app development.

#Everything is now a subscription

For just $10/month, I can have the VERY basic service offers, and in limited fashion. I’m only allowed to have 100 users, use 1GB of space, and generate 50 reports with it. Or, I can upgrade to the $35/month model and get quadruple my limits, and that’s either WAY too much, or still not enough. If it’s not enough, I’ll need to contact the company and really hope they’ll have some sort of hidden plan or customizable model for me to hit that sweet spot. If it’s way too much, I may need to find an alternative that’s cheaper or somehow justify this to higher ups.

Obviously, I have strong opinions on the Subscription model. Having worked on multiple products that utilize this model I can say that it only benefits the company, and at a certain point, the users will find a better alternative and your market WILL dry up.

Are there certain use cases for the Subscription model? Sure, but at the end of the day, customers prefer to pay for something and feel both ownership of the thing they’ve paid for, and like it wont slowly drain their bank account. Subscription models are also prone to price creep; this can cause customers to respond with frustration that “this thing I’ve paid $10 a month for the last 2 years is now suddenly $11?!” Which, yeah, it’s just a $1 more, but those loyal customers have a right to feel entitled to continue paying what they’ve always paid. Worse case scenario, they leave or find a better and cheaper solution.

There are VERY FEW companies that can offer THE BEST version of a product, charge a consistent subscription fee, and do it right. The majority of startups and small companies simply can not do this. So what’s the alternative? Pay Once.

#Pay Once Or Per Item

I believe that it’s possible to be very sustainable and profitable going with the “Pay Once” model. But it requires the product actually being good, providing value, and being feature-complete. Sounds like a fairytale, right? Because companies have become comfortable listing their service just a few bucks a month and you and I, the consumers, have become comfortable spending just a few dollars here and there. Then we forget about the subscription and a product that was only worth two or three hundred dollars has now cost you and I a lot more and the company simply makes free money. Or worse, the service is shut down then we have to migrate or files, or photos or data over to something else. At scale when applied to larger companies and teams, these costs are astronomical and potentially fatal to a product or project.

When I refer to “Pay Once”, I’m not always talking about charging $50 for something like an image hosting service and now you’re allowed to upload 8 billion photos. We can charge you PER image, so you are literally only being charged for what you’re using, the provider ensures the operational/storage/dev time fees are covered, and that works! We’re no longer obligated to continue paying money every single month just to hold that door open and being able to access our photos. We’ve already paid! And what if we have more photos to upload? We pay per image and those get added to our account.

Let’s take a look at another example; online courses. This is a growing and booming concept across many industries such as web development, academics, drawing, and even content creation. There are several prominent services that offer a subscription model for all of their courses. The problem is, I don’t want to pay $150 a year for access to just the 20-30 courses or subjects I want to keep up to date on. I’d much rather pay PER course or lesson, I really don’t need to have access to entirety of a catalogue and it provides NO value to me.

#Can Pay Once or Pay per need be profitable?

I fully believe in this concept and applying it to existing subscription models. I believe that this model can and will work for the SaaS type businesses while still ensuring there are profitable margins and value being provided to the customer.