A thought on the software subscription model

I remember one time years ago, when a friend of mine needed Microsoft Office for his business. I said he should just get it and pay for it. Lots of people were pirating this at the time. I said he should just buy it and it would be legal and he’d have his own proper business copy. His brother disagreed. His brother genuinely thought it would be foolish to pay for the software when you could just borrow a copy from someone else. Also, he felt paying for software was a scam.

His brother wasn’t alone in that. I noticed a lot of people having similar attitudes to software down through the years but especially in the early days. I never liked that attitude. It made me feel uncomfortable. A lot of people also felt that the software companies were continually bringing out updates and charging you for the update just to scam you. To me it just made sense. Software changes all the time and companies need to keep it updated. But also if they didn’t improve and bring out new versions of their software then how could they make money. They’d sell their software once and then never hear from the customer again, or at least not for a long time. It was never a viable business model.

I really like the subscription model – if it’s for business, or for an individual using a piece of software that’s well supported and that they get good use out of.

I think that if you’re looking for a piece of software that you rarely use and only dip in and out of, and don’t depend on (i.e. you could easily use an alternative) then I think you should use a free version (I like the freemium model).

For my part, if it’s a piece of software I use now and again or am just trying out, I’ll go for the free or ad-supported version. But if I find myself coming back to it a lot and getting good use out of it then I’ll pay for it. To me, that’s just good practice and especially good business practice. Software is a tool, but it’s not a tool akin to a real-life physical tool, it’s an expense and if you’re in business you should treat it as such. Treat it like your phone or electricity bill. It’s something you’ll pay for while you’re in business and then when you stop doing business you can stop paying for it.

Here’s (in my opinion) some pros and cons for the subscription model

  • It keeps the software company in business. I know you look at that sentence and maybe say “so, what has that got to do with me?”. Well, these days there are a lot of small cool software businesses out there with some really good apps available. Sometimes it’s an app that just does one small thing but does it really well and in an innovative fashion. That company is too small to survive on sales. It will either disappear or be bought out by someone bigger and that cool app will be subsumed into something bigger (Wunderlist disappearing into Microsoft Outlook…). If you really like an app, then by subscribing you’re ensuring that the company that made it will stick around and be there to continue developing it and supporting it. To me that’s invaluable.
  • You are more important to the software company when you subscribe. If you pay for an app outright then the company doesn’t have to care about you any more. They have your money, it’s too time-consuming for them to look after you. They need to chase new customers. It’s a harsh but unfortunate truth of the business. On the other hand if you subscribe then you’re continually giving them money and as a result, they need to look after you or you’ll go elsewhere. By subscribing you’re enabling them to look after you. You’re giving them the freedom to be comfortable in looking after you and they’re less under pressure to get new customers and are able to focus on the ones they have and survive with a smaller customer base.
  • You get continual support and updates to the software. As I said above, software is, and should be, always changing, always in development. If you buy something outright then you’re immediately using an old piece of software. By subscribing you’re always working from the latest version and also always able to avail of support.
  • You never have to make a big outlay for software. If you’re buying some software packages outright then there’s a hefty cost to them, a cost most of us would find painful to meet. On the other hand with the subscription model, I believe that the cost should be low enough that you almost don’t notice it. I often ask my clients “Can you afford X per month” where X is usually some small figure. In most cases, they agree that it’s a small cost and then I always suggest the subscription model. I don’t like the idea of paying a high initial cost of something that’s going to be immediately out of date and with no or soon to be expiring support.

I said pros and cons above but I’m not sure what the cons are. Sure you can add up the cost of the software over its lifetime and argue that it’s costing you more. That’s not true though and it’s an accounting illusion in my opinion. It’s not true because you’re getting continual value out of the software (you’re producing something with it for your business, you’re getting continual updates, and you’re getting continual support). Also, If you pay €5 per month then I argue that it’s not costing you €60 per year because you never have to pay €60 for it. You only ever have to pay €5. If you’re in business then you’re balancing that €5 per month against your income in that month. You can’t do that with a once off payment because it doesn’t balance that way.

To me, fairly priced subscription models are the way to go in software development. Especially with the appearance of more and more powerful web apps, companies have an easily accessible global market and don’t need to charge so much to survive. If a company is providing a great product and good support to go along with it then I say definitely subscribe (especially if it’s a small company). That’s only true of course if they are providing both of those.

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