Subscription pricing for Apps. Its fair. For both sides.
I get it. We all hate to pay subscriptions for apps. I’d rather just pay once and be done with it. But it isn’t that easy.
You need to look at contract law and accounting principles to see why subscription pricing is the only way many companies can stay in business.
#What if Cars were sold with FOREVER free maintenance?
Let me illustrate it this way. What if a car company sold cars but they had to do free maintenance on those cars FOREVER. So you buy a car for $30k. But for all maintenance work the car company would have to foot the bill. For years. For decades. For a lifetime. Do you think this would be a sustainable pricing model? Hell no. All the car companies would go bankrupt if they had to do free maintenance forever.
From an accounting and a legal standpoint the company could not even record $30k the day they sell the car. Why? Because they have massive obligations to provide all that maintenance over decades. They probably would have to split that $30k over 30 years. You can see how that would ruin a car companies financial statements and profitability. Which would ruin their chance to get good financing and loans.
One solution would be for the car company to raise prices to cover 30+ years of future maintenance. They probably would have to charge $50k for a car that others would be selling for $30k. Its pretty obvious that a car company selling a $30k car for $50k would get very little sales.
#Apps are sold with FOREVER free maintenance
Now bringing back to apps. App makers are in the same bind as a car maker who had to provide forever free maintenance. You can’t just sell an app and pack up your bags. An app maker has to constantly make updates, bug fixes, and improvements. This happens dozens of times a year and especially with major OS updates. This takes a ton of time and money!
So if an app maker sells an app for $10 how on earth can they run a profitable business if they had to spend hundreds if not thousands of hours of programming the next 30 years? The answer is they can’t. They are in a huge bind. Of course they could increase the one-time fee but it would be massive. Maybe hundreds if not thousands of dollars.
This was the way it was in the ‘ole’ days. When apps were called programs on PC’s. And these programs were expensive. Very expensive. Hundreds if not thousands of dollars. When the app store came about things got dirt cheap. Unsustainabily cheap. Companies simply cannot stay afloat charging a one time fee of $10 for something they have to update/maintain for years.
Also note that accounting standards have changed. In the past companies could show the entire one-time fee as sales. Not anymore. The one-time fee has to be spread over years, even decades. Thus companies show less profits on their books and its harder to get financing.
#The solution: pay as you go pricing
The solution is subscriptions. You pay as you go. This way companies get a steady revenue stream to match the steady amount of work they need to put out to maintain/update the product. The consumer can cancel at anytime without obligation.
To me this is fair. You pay as go.
Of course this cost more then the good ‘ole’ days when apps were a one-time fee of $10. But that business model is simply unsustainable unless the app is being subsidized by other means. Other means such as obnoxious ads or even worse spyware.