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When you’re developing Mac apps, success can sometimes seem self-defeating. The better job you do, the less your customers need to buy subsequent versions of your app. Your job then shifts to marketing and an endless quest to acquire new customers in order to keep cash flowing in. Meanwhile, those who use a subscription business model for their software can easily enjoy that sweet, sweet recurring revenue.
As a customer myself, I actually like subscriptions. I don’t need to worry about which version is installed or if my license can be used on multiple computers — I just set it and forget it. Having a flat fee, which is usually less up front than a traditional purpose, makes it easier to cross the conversion threshold.
Software subscription models also help users feel empowered and involved in the feedback and development process. Since they enjoy more of a long-term relationship with you and your product, they’re more likely to fill out surveys and write good reviews.
The Mac App Store recently turned on subscription pricing, so many developers are evaluating if it’s right for their app. Even if you distribute your app outside the App Store, it’s a good time to take a look at subscription model pricing.
So let’s get to it. Here’s a guide to rethinking the value proposition of your Mac app so you can earn predictable income, relax and concentrate on making better products.
Basics of the app subscription model for developers
When you sell a subscription to your Mac app, the idea is to provide continuous value to a user over time, and to be explicit about what that value is at the time of purchase. For software as a service, or SaaS, apps, the value proposition is implicitly obvious to the user. It makes sense that in order to login and access a web-based service, they must pay up.
For desktop apps, the traditional user expectation is to make a one-time purchase. They buy the app outright, so they should always be able to use it. To simply bolt a login screen onto your app and ask a user to pay every month to use it just isn’t going to gain you many customers.
Instead, if you’re making the switch to a subscription model for your app, you need to concentrate on the four main things that users understand as subscription-worthy:
We’ll skip talking about subscription services since this refers to things like Amazon Prime or non-software businesses. It might be that none of the other three subscription-worthy elements apply to your app, but let’s take a look at each one and make sure you’ve thought through them all.
If you are delivering regularly updated content, then you’ve likely already got a subscription model in place (or have at least thought about doing so). If you’ve never considered it, however, it’s worth taking a look.
Is there content you could create on a regular basis that users would pay for? Even if it’s only tangentially related to your app? Subscription-only content is perhaps the easiest value add-for users to understand. It’s also something most of us are already trained to expect that we’ll have to pay for.
Users understand that if they’re using your servers or infrastructure to complete tasks with your app, they’re going to have to pay. Are there web actions that could make some features in your desktop app more powerful? Maybe you could integrate with a popular web service like Trello or Slack, or send helpful email reminders, or make it easy for users to add events to Google Calendar straight from your app.
These types of features could be part of a freemium package or require payment after a trial period. Ask your existing users if they’ve been wishing for any particular web functionality.
Depending on the nature of your app, it might have already attracted a significant community of people who use it to accomplish certain tasks. Giving your most engaged users an official platform, with tools to connect with others who share their interests or professional goals, could be a viable gateway to a subscription business model.
This could be a forum, an asset-sharing network, a private Slack channel, etc. If you’ve ever observed people talking about your app, it might be a good idea to centralize that type of sharing in one place — and give users helpful tools to make the experience even more valuable to them.
Software bundles can pay off
If you’re an indie developer, you likely have several apps you’ve created over the years. Bundling them together and providing access to them, as well as future apps, for a flat monthly fee could be a great value proposition. In this case, you are essentially the product. Users are saying they like what you make so much that they want to subscribe to whatever you do.
A second option would be a third-party bundling or app rental service. The recently launched Setapp is a subscription software bundle that’s always adding more apps and delivering updates. If you submit your app and get accepted, you get a cut of Setapp’s monthly subscription fees. This has a bunch of great benefits.
- Enjoy recurring revenue without paid upgrades
- Stop thinking of how to distribute your app to a user
- Reach a new audience without worrying about advertising
- Don’t compete with thousands of applications
Unless you’ve acquired a large, loyal user base over the years, it’s probably more beneficial to join a third-party service with a big audience.
Case study: Adobe Creative Cloud
Adobe’s move to Creative Cloud is a good example of how all these strategies come together. In 2013, the company moved all its Adobe Creative Suite apps to cloud-based subscriptions. Before the switch, managing versions and license was extremely inconvenient and confusing. Users would often hold onto old versions for years because the upfront cost was so expensive.
With Creative Cloud, users get automatic updates to the latest versions of Adobe’s apps. Plus, they gain access to stock images, typefaces and assets. Adobe also provides cloud storage with file syncing and access to the Behance community.
For many users, a reasonable monthly cost for Adobe Creative Cloud proved more palatable than a huge one-time purchase, and cloud integration added many valuable features. Keep this example in mind when you’re trying to convert your app to a software subscription model.
Risks of the subscription business model
Spreading out revenue does have some business implications. Since you’re not getting all the money up front, it’s going to take you longer to recoup your cost per customer acquisition. This means increased risk, as your customer could always close his or her account.
Similarly, you’re likely going to carry a loss for longer as you recoup your development costs. It’s a more gradual ramp-up of business revenue, but at the end the overall ceiling is much higher.
Selling apps as subscriptions means stable income
One of the reasons being an indie developer has gotten more lucrative since the ’90s is the emergence of these types of practices. Instead of trying to constantly add new features to an app to get people to buy the latest version, offering a subscription means you can do continuous development on the things your users actually care about, while enjoying a stable income.
Do you have your own app subscription strategies? Let us know in the comments!