Productivity Apps and Subscription Pricing
Day One is evolving. We’re transitioning to a more stable subscription business model to ensure this app and these services always stick around.
This week we’re releasing the Day One Premium subscription service. It includes the ability to create more than ten journals and access all future premium features.
If you have already purchased Day One (version 2.0 and later), the features you currently have will always be yours to use without any additional cost.
I think Day One Journal is an awesome app. Maybe the best journaling app around. The developer (Paul Mayne) has always seemed professional and nice when I’ve interacted with him. This is exactly what makes me sad. These are the reviews for Day One since the announcement.
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This is my fear for iOS. Apple showed their customers what the bottom of the barrel looks like. It’s free apps forever. 10 years after the iPhone, I think we are seeing where it’s headed – Apple-made apps with an endless supply of third party coin-grubbing games. There was a time when a new, amazing, and high quality application was released on iOS almost every week. But today, the market grows fallow. What were once top-tier apps are either languishing un-updated or being kept alive by experimenting with new business models.
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My impression is that the subscription model is a move to stay profitable. I don’t think this will be a magic bullet. Customers simply don’t want to pay the price for top-tier self sustaining apps on iOS, especially when the full annual cost of $50 is spelled out in black and white.
I spoke with a developer friend that makes legal-related apps. He explained the transition of his app to a subscription model as a last resort to keep the lights on but also “the worst two months of my life”. This new app economy has been particularly rough on quality productivity apps. Those apps take a lot of time and attention to do right while at the same time consumers are not used to paying subscriptions for them. Nevertheless, that is probably the best model available to them at this point.
My fear, as someone who really likes quality productivity apps is that all this will end up driving productivity apps out of business.
It’s certainly true that people are wary of subscriptions. But I wonder how much of the recent backlash is due to the subscription model itself and how much is due to the fact that, in practice, transitions to subscriptions have effectively been large price increases. Here are some examples:
Day One debuted in 2012, and Day One 2 was $10 for iOS and $40 for Mac; the subscription is $50/year ($35/year for now).
I most recently rebought the Mac version of 1Password for $20 from the Mac App Store in 2011 (see comment), and I bought the iOS version for $8 in 2012. Since then there have been zero paid updates. My license, amazingly, is still valid. Now, the individual subscription is $36/year.
For TextExpander, even the discounted subscription for previous customers was more than double the previous per-year average price.
In May 2015, Adobe offered Lightroom for either a flat or monthly fee. I chose $149 instead of $10/month. Now 26 months later, it seems that the next major release is still a ways off, so people who chose the subscription paid more. Rumors are that Adobe will remove the standalone option in the next major version.
Microsoft Office is perhaps the exception. Office 365 Personal is $70/year, whereas Office 2011 was $200 (no upgrade pricing), and Office 2008 and Office 2004 were each more than $200, though with more complicated pricing so it’s harder to compare. Office is the app whose subscription pricing I hear the fewest complaints about.
My hunch is that, for an app under ongoing development, many people would be fine paying a subscription that averages out to about the same amount they had previously been paying per year (initial purchase plus occasional upgrades). When I hear that an app is switching to a “sustainable model,” this is what I assume people mean is happening. The benefits to the developer are obvious, and provided that development continues at the same pace it seems fair to the customer as well. (Let’s put aside for now the concern that subscriptions change incentives, so that you’d be paying the same price but not getting the type of development that you want.) It may even be beneficial because the costs are more predictable, and you can avoid large up-front payments for big apps.
But that doesn’t seem to be what’s been happening. Instead, we’ve seen subscriptions combined with price increases, customers balking, and insinuations that people just don’t want to pay for anything anymore. With more than one variable changing at once, I don’t think we can conclude that people hate subscriptions. Am I missing any examples of apps that switched to subscriptions without really changing the price?
Update (2017-07-20): See also: Nick Heer.
Update (2017-07-21): See also: Stuart Breckenridge.
Update (2017-07-22): See also: Michael Rockwell.
Update (2017-07-27): Michael Yacavone:
The cloud. Pairs well with subscriptions.
Update (2017-11-01): EconTech:
In other words, the total cost of ownership (TCO) of [Fiery Feeds] probably doubled or tripled for the average user—and will increase even more when the new price will be in place.
Update (2018-04-20): John Gordon:
Subscriptions do not appear to be Family Shareable. An issue as more apps move to subscription models. Favors the old “use parent’s Store Apple ID”.
Update (2018-07-02): Ben Bajarin:
One thing became clear in our recent study on apps. Consumers use what I call the “investment mindset” when confronted with a subscription business model.
This mindset will challenge developers who want to charge subscriptions for their apps.
Update (2019-02-11): Boinx:
Once Mouseposé is ready for prime time, the license will be available at $9.99 per year. For the early birds who like to save some money, during the beta phase (which will not be terribly long, so get it now!) it will be only $7.99 per year.
