Once
jasonleow • 19 Feb 2024 •
The Basecamp boys DHH and Jason Fried are launching something new again, and as usual, going viral.
Something happened to business software. You used to pay for it once, install it, and run it. Whether on someone’s computer, or a server for everyone, it felt like you owned it. And you did… Today, most software is a service. Not owned, but rented. Buying it enters you into a perpetual landlord–tenant agreement. Every month you pay for essentially the same thing you had last month… Add up your SaaS subscriptions last year. You should own that shit by now. – Once.com
I’m so glad they’re putting the spotlight on the one-time payment model. Because that’s where I’m doubling down on. But it’s not all a bed of roses. There’s upsides and downsides:
Upsides
- As a customer you get to own it, not borrow it every month for a fee.
- It stays the same for the version you bought. No annoying updates, unless I choose to.
- You get to customize it to what you need, and not subject to constraints.
- As a founder you get all the lifetime value of a customer upfront.
- One-time payments are more susceptible to impulse buys. I always hesitate on a $20/m subscription, but have no problem buying something for $100-200 one time. It’s amazing how we compartmentalise money in our heads.
- Subscription fatigue means people are now more open to a larger upfront but one-time payment.
- No confusing and annoying upgrades and upsells, or worrying about bandwidth limits.
Downsides
- Unlike MRR, your one-time revenue start from ZERO on the 1st of every month. Not for the faint hearted.
- You have to acquire new customers every month. So you got marketing cut out for you. (But arguable if this is harder or same as recurring customers)
- Not great for exit because industry standard for valuation is MRR. Though for me, I’m building lifestyle businesses, not building for exit. So that’s fine for me.
- If your one-time payments are lifetime deals, it can be a support burden.
- One-time model or LTDs are a bad idea if your business has recurring costs to keep running. For example, no way you can do the once model if you’re an AI app paying for GPT API access.
What other pros and cons are there to the once model?
Comments
Yeah, same here. I’m preferring one time buys more often these days.
The thing with subscriptions is that they add up. $5 here, $10 there and suddenly, you pay multiple $100 a month. I try to regularly check where why money flows and cancel things I don’t need.
Also, when it comes to SaaS stuff, I think many things couldn’t be backed into a traditional Software/App any more that only runs locally on a customer’s machine. With all the interconnectivity and “Cloud stuff”, there is no reasonable way to sell something for a one-off price, I think. When it has servers that need to be paid, it will be subscription-based.
I don’t mind some subscriptions if I know it will keep the apps I like working and alive. I treat them more like donations. But I refuse to support subscriptions tied to physical products, or software that would demonstrably work better as a native program on my PC.
The entrepreneur Dave Chesson makes an interesting study for this question. He founded Publisher Rocket (collects Amazon book data) and Atticus (book formatting software). Both are sold under the pay-once model, AND that includes free use and updates forever. Both apps are actively being developed with new features. So, his business model is to keep adding new users rather than feed off the existing user base. It seems so counterintuitive not to be a subscription model. But, I think it works because there are always new people entering the indie author space, and a strong community where recommendations are key.
@phaidenbauer Yeah agree. Where there’s recurring value to customers and recurring costs to upkeep, then subscription makes sense. But I think we’ve went too far to the subscription end of the spectrum and even software that can be one-time is now subscription. That, I hate.
@Winkletter Yeah I think that’s how one-time models work. Constantly acquiring new users is the challenge, but like what you said, in some niches it’s possible to keep acquiring them, cos new people joining, or the market share of that platform is constantly expanding. I find my Carrd plugins to be in that latter situation.
I like the concept from a consumer standpoint. You make an interesting point about how we value a monthly subscription vs a one-time payment.