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Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

License models for downloadable software

In the never ending quest to generate more revenue from my niche B2C downloadable software, I'm considering changing the license model. I see the following options:

1. (my current model) Buy once, perpetual license. Upgrades to minor versions are free. Major upgrades (ex v3.x -> v4.0) are paid.  Big name examples using this model: Inuit, Microsoft, VMWare.

2. Buy once, perpetual license. All upgrades (minor/major) are free for 1 year. Upgrades after 1 year require paid license renewal. Big name examples using this model: Intellij, DBVisualizer.

3. Monthly subscription. All upgrades while subscription is active are free. Software stops working if subscription lapses. Big name examples using this model: Adobe, Microsoft.

I currently use #1 above, but based on my development schedule and user usage, I think #2 could be a better fit. #2 ends up essentially being a 1-year subscription model, but the only examples of this I know of are tech/developer focused software.

I've surveyed my users about #3 and got 80% negative responses, some very negative. This makes me think it is not yet viable. Adobe and Microsoft have not softened up the end-user enough yet.

Are there any other models?  What else should I consider when choosing? Are any of you using #2 and if so is your product a "developer" or "mainstream" product?
M.B. Dude Send private email
Friday, August 15, 2014
We do use #2, but we make a B2B developer product, so not very relevant. Our scheme is a bit more complicated. though.
Dmitry Leskov Send private email
Friday, August 15, 2014
#3 only makes sense if the price to buy the software once per version is of high enough that you can get additional people who would like to pay in installments.

I don't think the market has to be softened any more for the monthly subscription model to work. Just have to make sure you're not paying way to much for a monthly cost.

With Microsoft and Adobe you get a fairly expensive suite of software for a nominal monthly payment.
TrippinOnIT Send private email
Friday, August 15, 2014
As a customer, when I see #1 I am used to it as normal so seeing that doesn't affect my intention to buy. However, it can be tempered by awareness that big number upgrades are coming out too quickly, like it's on version 22. Which means no updates after 6 months. I prefer greatly to see a situation where version 4.15 is upgraded to 4.2 just as version 5.2 is upgraded to 6.0.

When I see #2 this causes me always to try to figure out how often they have updates and try to guess when the next big number is coming out. Then wait until less than Period N before buying. And then usually forget about it and never return.

When I see #3 I just pass.
Scott Send private email
Friday, August 15, 2014
As a developer, I do #1 and #2, always favoring the customer. You get  everything up to the next big number update. And, if the big number update is within so many months of purchase, you get that. This second part prevents people from walking away because they heard there is a big upgrade coming.
Scott Send private email
Friday, August 15, 2014
#2 is almost a yearly subscription, except that the software doesn't stop working at the end of the subscription period.  People are happy about this.  VisualAssist uses this model, and I happily renew each year (though often not right on the year mark, and if I'm too late, I pay full price again).
Doug Send private email
Saturday, August 16, 2014
I think cheaper major version upgrades for those whose subscription has expired is also a good thing, from a user's point of view. ReSharper used to do this, so did AutoCAD. Both changed reasonably recently. The users I have spoken to were less than impressed. I know I delayed my latest version of ReSharper upgrade until I actually felt a strong need for it.

Don't punish loyalty, IMHO.
Ewen Wallace Send private email
Saturday, August 16, 2014
In our scheme, a renewed annual support contract (which includes upgrades) begins where the previous one left off. On the one hand, this gives you a 365-day grace period - you can renew your contract almost one year after its expiration and receive all upgrades we may have released in the meantime. On the other hand, a lapsed renewal buys you a shorter support period.

And if more than one year have passed since the expiration, you can buy an upgrade at 3/4 of the respective new license price.
Dmitry Leskov Send private email
Sunday, August 17, 2014
"When I see #3 I just pass." Scott

I'm the same.

Some, very select, software makes sense as a subscription, as it's acting as the front-end for an ongoing service (such as marketing software that shows stats for keywords and also if domain names are available for those keywords etc).

If you're not giving me something new, fresh and updated every month then why should I pay you every month?

If your software is so expensive that I need to rent it (!!) then you can be sure I'll be looking for cheaper options or Open Source.

Reluctantlyregistered Send private email
Monday, August 18, 2014
> or Open Source

Said no customer ever.
Jeremy Morassi Send private email
Monday, August 18, 2014

I've dumped commercial software that I really liked, and which was better in some ways, for open source software when the commercial software became too much of a pain in the ass due to MBAs involved in software design choices.
Scott Send private email
Monday, August 18, 2014
And to  be clear had nothing to do with finances. Money is not a problem, nor is it the issue. I'd much rather pay for quality. But I won't be dicked around with.
Scott Send private email
Monday, August 18, 2014
Money is an issue for me, if they want it every month...

I don't care if it's 99 cents, I just don't like "subscriptions" for something I can just buy outright.

Reluctantlyregistered Send private email
Tuesday, August 19, 2014

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