Subscription Model

smcculloch posted on December 10, 2006 18:13

For over 18 months, this site has been running on a subscription model. Over this time, I've learnt a great number of things about handling subscriptions and automating the process (Subscription Tools).

The best way to sum up "why" I went to a subscription model is:-

"A subscription model may be beneficial for the software buyer if it forces the supplier to improve its product."

"According to this idea, a psychological phenomenon may occur when a customer renews a subscription, that may not occur during a one-time transaction: if the buyer is not satisfied with the service, he/she can simply leave the subscription to expire and find another seller."

"This is in contrast to many one-time transactions, when customers are forced to make significant commitments through high software prices. Some feel that historically, the "one-time-purchase" model does not give sellers incentive to maintain relationships with their customers (after all, why should they care once they've received their money?). Some who favour a subscription model for software do so because it may change this situation."

(thanks to wikipedia for the above quotes)

With those thoughts in mind, I counted up the number of individual releases on this site over the past 18 months and it was close to 200! It would be interesting to do a functional comparison between modules "then" and "now".

There are also many different types of subscription systems:-

Time Expired - a product expires and is no longer usable once a subscription has ended
Product Support/New Releases - a customer only receives product updates and support while a subscription is active. (We currently use this method)

I'm not a big fan of the time expired subscriptions, although it may be possible to offer a lower unit cost for this type of subscription, it does require a strong license mechanism built into the code.

So what do you think about the subscription model? Do you prefer a one-time fee or subscription based payments?

Posted in: Financial

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Comments

# pspeth

Monday, December 11, 2006 7:48 AM

I think that the (updates) subscription model is by far the best. I would go further and say that the (expiration) subscription model is the worst. I would leave any system like this.
I actually think that with DNN the subscription model is the only fair system for both the programmer and the community since DNN has consistently caused breaking changes that affectively expire the software anyway.

Basically the subscription model is a pact between the programmer and subscriber to continue to work together.

Even the one year updates model is problematic in many situations because some developers simply can't release a solid update and sometimes not even point releases within a year.

I think it is reasonable to offer a discount for customers who are renewing. Since they have helped finance the current offerings.

Another possible model change would be to offer a basic and advanced suite. One important thing to keep in mind is looking at with subscriptions is not just your current offerings, but also your company productivity.

Are you able to deliver on new features that are compelling. Are you stamping out bugs that users mention.

I think overall you have done some great stuff this year, but still there are some competetive improvements waiting to be added.
(shameless plug for some of mine:)
> Ajax lookup for users in Private messages
> PM integration with core forum (other core mod's)
> Streamlined method for users to add templat examples to your site.
> News Articles Templates Doc accessible from the ? help button.

Sorry for the shameless plug, but I definitely think as long as you can continue to deliver on the high demand items for all your current offering, then adding a second tier is possible. This is especially true when you are adding modules like the Real Estate module that have a more limited audience but better commerce possibilities.

# LOliver

Monday, December 11, 2006 9:37 AM

I think that the update subscription model is by far the best method for a web based environment. I currently manage 10 different websites 7 of which are DNN sites. Now if i had to always remember to renew subscriptions and license keys this would become a very big task especially if I missed one or forgot and that module quit working.

I think there are benefits to a time expire model in certain circumstances but not for web based applications.

Some people may argue that you could go with auto renewal to prevent issues but bottom line is I may not need all the features of continual upgrades and don't want the additional cost associated with it. So a one time product/update subscription for certain modules is all that is necessary. This allows the consumer to manage how he wants to spend there money and manage there budget.

Scott, keep up the great work. You provide great products and support for the modest price you charge. I think your work ethic and methodology should be a model for other module developers in the DNN community.

# Mariette

Monday, December 18, 2006 6:27 AM

Thanks Scott! I will use this in my thoughts over the subscription model I use. It is similar to yours though I sell text instead of software but the idea is the same.

# smcculloch

Monday, December 18, 2006 3:47 PM

@pspeth

Good comments, I take your point about customers renewing deserving a discount.

I'll be building a promotional feature set into subscription tools that will allow me to do this (probably only if you renew before it expires though).

I will also take on board your thoughts about a 2nd tier, it's something I may look into the future, especially if I get some help to run this site.

@LOliver

Thanks for the kind comments, the problem I have with auto resubscription is that people forget about the auto-renewal and I have to end up issuing refunds for those people. I really like the "pay as you go" type model, when you only subscribe again when you need something. Sure, I'm probably missing out on some repeat sales, but in the long run, I don't think it matters.

@Mariette

Thanks for your help with the subscription tools so far, originally I had built it just for this site, but a few others are now using this module to manage subscriptions.

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