Should I Sell Software Using Licenses Or A One-Off Fee?

Many software developers have moved to a subscription based model. There are a few who haven’t though, and they have their reasons. For a new developer, it’s a tough decision deciding which way to go. We know, we’ve been there!

So for any new developers out there, or any seasoned developers who feel the need to revisit their pricing model, we’ve decided to take a look at the advantages and disadvantages of a subscriptions based versus one-off payment model for software products.

Licensed Subscriptions

Advantages for developers:

Funding future development: As developers, we put a lot of hard work into maintaining our plugins. One-off fees are really not sustainable if we’re going to be answering support as well as constantly updating our plugins to make sure they work in the ever-changing online environment.

Subscriptions provide us with a stable income and a means to survive and keep our plugins alive.

This is such an important point that I want to provide an example. We have a friend who charged a one-off fee for their awesome plugin. They sold their plugin for a cheap price, less than $25. Five years later, they are still getting support tickets from customers who bought the plugin years ago. Not only are they having to deal with support tickets from sales five years ago, they’re still having to maintain and develop the plugin. It’s a lot of time spent for really no extra money, which is just not sustainable long-term.

Predictable income: Subscription models give you a more stable income over time, which allows you to continue working.

Motivation: Although the money is what keeps food on the table, the other side of using a subsctiption model is the motivation it provides us developers. Subscription renewals is a sign that customers are happy with our work and that our software is worth continued the investment of our time and resources to maintain it over time.

Disadvantages for developers:

Management: With customers on a subscription model, you’ve got to manage a few things, such as payment options, reminder emails, invoices, and so on. These obviously require a little more effort than one-off payments, but are relatively easy.

You just have to make sure you’re keeping on top of things. If a customer reaches out to you about a renewal payment that they weren’t expecting, make the effort to find out why. Sometimes customers just don’t read their emails until the money leaves their account. But other times, there could be a glitch that is affecting your email service, which needs to be sorted out straight away.

Advantages for customers:

Cheaper over the short-term: Subscriptions have a lower barrier to entry because the developer is assuming you’ll keep using and paying for the service over time. One-off payments tend to be more expensive because they ideally take into account a few years of development and support.

No-contract, no committment: Not only is it cheaper to buy the software, but it’s not a waste of money if you only decide to use it for one year. You aren’t locked into any contracts, so you can simply choose not to renew your subscription the following year if you aren’t satisfied.

Up-to-date software: With plugins, it isn’t just a matter of creating it once and letting it pull in the dollars. WordPress has updates, WooCommerce has updates, and other plugins also have updates that may clash with your plugin and cause your site to break or not function correctly. Paying a subscription means that the developer is funded to keep working on the plugin and keep updating it.

Ongoing support: Same as with the last point, a subscription model gives the developer the funding they need to be able to spend their time answering your support questions.

Disadvantages for customers:

Renewals: We all know how annoying it is to keep on top of renewals for any kinds of bills or subscriptions, and your software license is just another one to add to the pile.

Here at Puri, we try to minimize this by sending out reminder emails one week, and one day before the renewal is due. If the license auto-renews, customers will get a confirmation email notifying them of this. We also send out emails one day after to notify the customer in the event that their license has expired.

It’s a fine line between spammy and not enough emails. No matter what you do, you’ll probably still have the have the odd customer who will ask for a refund the moment their license has been auto-renewed and you’ll wonder if they received any of your other emails.

One-Off Fee

Advantages for customers:

Know your total cost: Paying a one-off fee allows you to know exactly what your full cost will be for the plugin. If you buy a plugin on a subscription model, you may not have a full idea of the total cost because you don’t know how many years you’re going to use it for.

Disadvantages for customers:

Higher price: Since software developers do need to invest continued time into maintaining and updating their software, this does mean that a one-off fee is generally significantly higher than a yearly subscription. This can create a higher and perhaps significant barrier to entry for some customers.

Committment: Paying a more expensive one-off fee for software is great if you’re going to use it for a long time, but could also end up being a poor investment if you only end up using it for one or even two years.

Outdated software: Paying a one-off fee means that your plugin will likely become outdated fast when the developer realizes they can no longer afford to maintain and update the plugin. Subscription models give developers a steady flow of funding that is necessary if they’re going to keep dedicating their time to working on updating and improving the software.

Advantages for developers:

Easy to implement: Selling plugins with a one-off fee is easier to set up. It’s easier to get up and running straight away because you don’t have to mess around setting up renewal payments and renewal notification emails.

Disadvantages for developers:

Time spent on ongoing maintenance for no money: If you decide to go with a one off fee for your plugins and services, then eventually you’ll be faced with a few unsavory choice: Do you let your plugin die because you can’t afford to spend time on it anymore? Or, do you keep working on it and not be able to put food on the table? Or do you find another paying job and try to keep managing the plugin on the side?

Lack of motivation: It’s hard to keep motivated when you’re answering support tickets from sales made five years ago that aren’t continuing to fund your time and ongoing development.

Finally…

As you can see, in our perspective the subscription model makes a lot more sense for both us and our customers. We are continually working on our plugins and improving them, and hope our customers can see the value in continuing to fund our work and keep the plugins up to date.

We have seen developers in our space sell plugins with a one-off fee and lose motivation a few years later. Some have had to find alternative forms of income, taking on other full-time work which means the plugin gets neglected. Those are the plugins that sit around not having been updated for a few years. They chug along slowly, but eventually they have compatability issues and die out.

The only way to avoid plugin die-off in our perspective is using a subscription based model, which incentivises the developers to keep working on their plugins and providing support to their customers.