Why You Should Charge More for Your App Subscriptions
The reality is most people won’t sign up for your subscription even at a low price. Most people dislike subscriptions, and many won’t subscribe at any cost. The recurring nature of subscriptions provides a major mental hurdle and makes them hard to commit to.
However, you likely have a smaller set of users who get the most value out of your app and are willing to subscribe. These are your most devoted and die-hard users. When designing your subscription plan you want to focus on these users, they are the ones who will pay and stick around (see my post on churn for why this is critical). By going subscription, you are choosing to focus on fewer customers but your most dedicated customers. Given that this is a much smaller customer base, you need to charge a higher price.
Corollaries:
- Switching to a subscription at too low of a price can be disastrous because you scare away customers without making it up from the ones who stay.
- If you only offer a subscription, you will lose some customers who liked the product and were willing to pay for it via another model. Now they are doing without or using a competing product.
Previously:
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The article makes it seem very simple: Go for the 15% conversion rate at $100/y, because that seemingly maximizes subscription revenue. What it totally ignores, however, is that those 85% of previously happy customers don't just vanish into thin air.
A lot of them will feel betrayed and angry by the huge price hike, because to them it looks like the previous price was just a bait-and-switch and the developer got excessively greedy all of a sudden. Many of those disgruntled users will go out of their way to trash the app's ratings on the App Store and on any review site they can get their hands on, while also bad-mouthing the app on social media and with friends and family.
In the end, it's just a poor outcome for all involved parties: Most users stop using an app that they previously enjoyed using, a few users keep using the app but are now paying through the nose for it, and the developer now has to live with being seen and treated as "that greedy jerk that increased prices by 500%" by most of their previously satisfied users, while likely not making much more money than if they had stayed with regular non-subscription pricing.
Of course an ex-Tim Apple employee would pen this bad advice. What it really boils down to is that if you expect me to pay 3x the price of said App I have AT LEAST 3x the expectation that your App will be bug free.
But instead, developers who pursue this trap end up doing the same things every time: Adding out of scope “features” to justify the subscription, deferring long-standing bugs that “never seem to get fixed” version to version, and then there’s the occasional security leak.
If I were a developer, I wouldn’t emulate nor endorse these Tim Apple practices.
Instead I would offer loyal end users the ability to either subscribe or pay for a 1-off lifetime fee per version. Apple should be able to handle different versions of the same app, right? /sarc
After Panic Transmit iOS, I’ve been informed by the Dev of REDACTED that he’s discontinuing development. From what I gather dealing with AppStore even for minute updates is too much of an ordeal for him. And REDACTED is one of the devs that really knows how to make Apps that “survive” system upgrades without maintenance. REDACTED has survived at least 3 OS iterations without major changes and Apple insists on “getting in the way” of the dev. And like Panic Transmit I use this app EVERY DAY.
Maybe Tim Apple should GTFO of the way of developers and end users, and stop adding “features” (like Notarization, which was easily bypassed) while demanding more money. It’s a bad example to set for developers, and bad advice from ex-Tim Apple employees.
Personally I’m tired of Apple
...getting in the way of Apps I rely on. This is the main issue, not “human rights” or “how to milk users even more just short of rag-quitting.”(Sorry, got clipped).
I do not like app subscriptions. But I have no choice, so I subscribe to a few (5ish). Only one offers the updates in features that were promised. Surprisingly it is one of the cheaper ones. Most provide some bug updates and a random feature or two that is mostly useless.
I’m not trying to argue with the economics of app development; if the developers say they can’t make money without subscriptions, I will accept that. However, the whole “subscriptions allow us to focus on the userbase and provide needed feature updates” doesn’t seem to bear out in reality.
Yes, Leo, you should definitely have a higher expectation of quality of you’re paying more. And luckily subscriptions put the developer into the position to deliver exactly that.
Their goal changes from justifying new purchases to keeping their existing customers happy, so (at least in theory) bugfixes should increase in priority. It also increases competition, because switching from one subscription to a competitor‘s subscription can be cost neutral. So for hardcore/pro users, the developer‘s interests suddenly align much more to their own.
For "prosumers", however, subscriptions are almost always bad news. They can’t justify the permanent expense for something they only use occasionally. Everyone is worse off in that case, as users lose their software and developers leave money on the table. And that’s were the angry users come from. They were the same people that once were the "ambassadors" that eventually convinced e.g. their employees to purchase.
@Peter I think you’ve got it there, that was me. Up until the Tim Apple era I used to recommend Apple kit, before iOS and to a greater extent macOS became “windows with more grief”. Apple introduced windows like permissions, users click thru them. Apple introduces notarization, that’s more developer grief that malware authors EASILY bypassed. Apple did that goofy killswitch that almost killed Charlie Monroe, and his entire business, whose tools I use every day, FOR NO REASON WHATSOEVER.
And all the while Apple keeps reducing our options and wasting something more precious than money, our TIME. I think developers are the most powerful group that Apple really can’t afford to lose. It’s obvious that they’ve lost significant technical and security depth. I’ve NEVER heard of a “security team” not only sitting on security bugs for 6 months to a year, but also BOTCHING A BUG BOUNTY by releasing the bug itself in beta software, and then NOT PAYING THE SECURITY BOUNTY FOR THEIR OWN MISTAKE. Of course the security team in question had to inform their enterprise customers after Apple blew it. I hope Apple paid the bounty in the end. ¯\_(ツ)_/¯
What Apple wants (with that advice) is for all of us “former ambassadors” to “go away” because they only want “true believers” but the point is that if hardcore power users / prosumers go then they won’’t engage with Tim Apple Inc. as before. They just become “windows with more grief” users that won’t endorse anymore if ever again.
And they want developers to emulate that? Yeah no, please don’t waste my time.
Maybe a better idea is for every developer to do this:
- Post on their websites exactly how much time is wasted with Apple security theater and “review.” I’m betting most devs are making minimum wage after everything said and done.
- Set enduser expectation on their websites, not in AppStore release notes that Apple is costing them too much time. Time is VERY expensive.
- Put in “notes to AppStore review” that they’re going to reduce updates because “it costs too much in time” to deal with AppStore review, notarization, and other dance of seven veils security theater. (Notarization is not about “security” and bad guys got their malware “signed.”)
Apple’s 30% really *is* too expensive for developers who can’t explain that the TIME that they waste with Apple simply isn’t worth it and can’t be “passed on” to the enduser.. So the only options are to “wait for Epic to win” or in Silly Valley style, push back on Apple.
Don’t wanna push back? Then prepare for the same time next year “licensing” a Big Sur machine for thousands of dollars, never “owning” it, and Apple having the ability to “cancel” any software you have bought inside or outside the AppStore, because they can.
Yeah I was an “ambassador”— now I feel like a simp. MacOS still is better than the alternative, Windows still has laughable “filename too long, cannot move or copy” bugs that have gone on for 10 years that are still not fixed. And I see Apple heading that way, and then what?
I am tired of renting my software. I don’t like the feeling that I don’t own something, and that it will simply stop working if I do not continue paying.
There are some companies that have a hybrid approach (such as Jetbrains) where you get to keep a version fo the software permanently when you subscribe for longer than a year. And others like 1Password where you can still purchase the software outright.
I am very dissatisfied with Adobe, and have cancelled my personal Creative cloud subscription. In my experience, their software is becoming less and less dependable (I have to regularly reinstall their CC app as it hangs on startup once a month or so) and they don't seem to care [1]
I am fine with yearly upgrades. I can keep my old version. My software doesn’t stop working if the companies close down or become acquired. I can’t say I have the same sense of security with subscription only software.
[1] A few years ago, while having to reinstall their buggy CC software, Adobe had a webcast where the host had everyone singing happy songs extolling their software subscription. It left a very bad taste
https://m.youtube.com/watch?v=ex3Nru6efIE
