Do you know anyone that charges a one-time fee for a SaaS app like pinboard.in does? When do you think/know it makes sense to let someone use your hosted app indefinitely for a one-time fee?
Yeah -- I've always sold Bingo Card Creator on this model. It is modestly less crazy than you think it is: if you're getting customers on an ongoing basis, attrition plus the natural near-zero marginal costs of servicing customers means the new customer keep the lights on and older customers get to freeload indefinitely.
Suggestion: make something that will let you charge on a recurring basis. (I once thought BCC could never sustain that. It probably could, if I had a mind to implement it, but the pain involved isn't worth it to me.)
Starting from $0 revenue on the 1st day of every month sucks. Starting from "I'll always have at least 90% of the revenue I did last month" is, on the other hand, a wonderful thing for the business in every possible way.
I've been thinking about this from the perspective of Customer Lifetime Value (CLV). Charging a one-time fee based on historic CLV data, IMO, has three advantages: 1. Customers perceive the indefinite nature of recurring payments more expensive than a one-time fixed fee, 2. I'll have more cash upfront, and 3. I'll make more from customers that might have unsigned up long before the average CLV point.
Do you mind if I ask why not? It seems like something that should make a whole load more money, and if it puts people off, changing the code to say is_subscription_valid() {return TRUE;} and switching back should be trivial.
Implementing in the first place shouldn't be too painful if you can steal some code from Appointment Reminder.
I know I'm underestimating the total amount of work here, but is it really going to take more than a couple of days? Unless there's crazy invoice integration work required, in which case I understand - that's a painful world!
Edit: although I appreciate that consulting rates way outstrip revenues from SaaS a lot of the time. Still, it's nice to have some income whilst you're on holiday ;)
This is a bad idea. Any customer who really likes & uses your app as-is will eventually become unprofitable for you. Your "best" customers will use resources you have to pay for every month, but you only collected N months of revenue up front. You'll eventually have to decide to pull the plug and screw your users (like Joyent/Textdrive's forever hosting). Even before that, your financial incentives will be at opposites to the people who like your app the most, which is a bad place to be.
Ideally, you want your customers' usage to align with more money to you over time, not less.
If you need money now, offer your customers a discount for quarterly/annual prepayments. You're more able to predict your costs out 12 months, so you're less likely to make a fatal mistake here.
Charge yearly a X%(go figure it out what works best) of what you would charge one-time.
Charging a one-time fee is evil for the customer with common sense. If your service stops growing, what about the customers that already paid for it?
You don't pay for updates in a SaaS app as it's in the cloud, so... I can only truly see a recurring model working. UNLESS you know very well your userbase and you know very deeply it's the only model that would work.
I've thought of doing a slight variation on this for SaaS apps that are project based - charge once for each project for something like six months or one year access. I think it would work in situations where the customer only needs use of the product for each project for a defined amount of time.
If you've got ongoing expenses (e.g., bandwidth) you'll need to make sure to charge enough that income from the one-time fee is enough to cover the monthly bills + profit, in perpetuity.
Annuity tables (or the annuity formula) may be helpful here.
[+] [-] patio11|13 years ago|reply
Suggestion: make something that will let you charge on a recurring basis. (I once thought BCC could never sustain that. It probably could, if I had a mind to implement it, but the pain involved isn't worth it to me.)
Starting from $0 revenue on the 1st day of every month sucks. Starting from "I'll always have at least 90% of the revenue I did last month" is, on the other hand, a wonderful thing for the business in every possible way.
[+] [-] sandeepshetty|13 years ago|reply
[+] [-] mootothemax|13 years ago|reply
Do you mind if I ask why not? It seems like something that should make a whole load more money, and if it puts people off, changing the code to say is_subscription_valid() {return TRUE;} and switching back should be trivial.
Implementing in the first place shouldn't be too painful if you can steal some code from Appointment Reminder.
I know I'm underestimating the total amount of work here, but is it really going to take more than a couple of days? Unless there's crazy invoice integration work required, in which case I understand - that's a painful world!
Edit: although I appreciate that consulting rates way outstrip revenues from SaaS a lot of the time. Still, it's nice to have some income whilst you're on holiday ;)
[+] [-] 147|13 years ago|reply
[+] [-] runako|13 years ago|reply
Ideally, you want your customers' usage to align with more money to you over time, not less.
If you need money now, offer your customers a discount for quarterly/annual prepayments. You're more able to predict your costs out 12 months, so you're less likely to make a fatal mistake here.
[+] [-] thiagodotfm|13 years ago|reply
Charging a one-time fee is evil for the customer with common sense. If your service stops growing, what about the customers that already paid for it?
You don't pay for updates in a SaaS app as it's in the cloud, so... I can only truly see a recurring model working. UNLESS you know very well your userbase and you know very deeply it's the only model that would work.
[+] [-] dugmartin|13 years ago|reply
[+] [-] Turing_Machine|13 years ago|reply
Annuity tables (or the annuity formula) may be helpful here.
[+] [-] onetwothreefour|13 years ago|reply