It depends on how long you see the product lifespan, how fast and whether you develop it and release new versions at all, does the technical support you provide apply to all versions of the product? (in my opinion this is a bit crazy, unless you have a larger team). Does the license apply to the version you are currently selling or to all future versions you will produce? There are many variables that can be taken into account to have a bit of an advantage, putting the customer in a situation where: technical support applies only to new versions of the product (and you set the rodmap yourself so you can go far away from the features they liked when buying your product - thus not supporting them), offer custom work on the product, technical support for old versions - to be considered if at all possible. It may turn out that the one-time purchase cost for the customer will be more expensive than the renewed license.
Agreed. As it is a utility and simplistic product, it will not have many more features added later. Hence I sold lifetime deals with promise of all future upgrades and support.
Then ask yourself a question - how big of a support you gonna provide ? I would limit support hours to an annual amount you can accept, and treat larger needs beyond that limit as a separate development work order. Prepare a well-done documentation with examples, so you can say - for your own peace of mind - that support covers things not described in the documentation.
Due to nature of the product, most of the support is only needed during onboarding. Its pretty straightforward afterwards with full documentation available.
I guess I am not being able to generate enough trust in prospects even after 14 days no-question-ask-refund policy.
Assuming your product is for individuals, I would listen to my customers, and move away from services and towards the "purchase once" model of old, guaranteeing maybe 1 or 2 major updates.
If your product is for business and production, I would simply remove the lifetime purchase option.
My product is for businesses but they seem only interested in a cheap lifetime price. I guess adding more features is the solution here to get them to pay more.
Have you asked them if they would pay more for more features? Perhaps some work to be done around perceived value and pricing, and to understand if putting more resources in is actually going to generate the revenue lift you’re looking for.
Yes. If everyone chooses the lifetime deal and nobody is choosing the recurring deal, it probably means the lifetime deal is much better than the recurring deal for all segments of your userbase.
You should ideally keep increasing the lifetime deal price until you hit the point where you see a non-negligible number of people choose the recurring plan first, then decide where to go from there. That's just common sense for the profit-maximizer.
Do the math - say you get 1000 customers who buy lifetime deals. And nobody else. How much does it cost you to keep the product alive for those 1000 customers, and how long is your runway using the money from those 1000 deals at that cost? Is that runway an acceptable "lifetime" in the view of those customers?
If you get good answers from that math, maybe it makes sense. But I'd wager that most business models don't have good numbers in such a scenario.
If I had business concerns, I would talk to users and try to understand why some pick recurring payments and why others pick one time purchases.
Then I would reconsider my offerings based on how each group provides or does not provide business opportunities.
Anyway raising the price of the lifetime product is the simplest way to encourage price sensitive customers into recurring plans. If that doesn’t change their choice, revenue increases.
Just having users talk is probably enough. And think about what kind of customers you want and what kind you dont want because everything is not for everyone.
Is a 'lifetime deal' what we old timers used to call most consumer software license purchases (where you bought a package at Best Buy for $30 and that version worked on your computer for as long as you wanted)?
I remember companies doing the following: you get “lifetime” on your install, then a year of free upgrades. And you can get future versions with a discount.
Yes, mine is a platform SaaS, and everyone automatically gets the latest version. Also it is a simple product targeted to a niche, so not many features in pipeline.
It depends on how long you see the product lifespan, how fast and whether you develop it and release new versions at all, does the technical support you provide apply to all versions of the product? (in my opinion this is a bit crazy, unless you have a larger team). Does the license apply to the version you are currently selling or to all future versions you will produce? There are many variables that can be taken into account to have a bit of an advantage, putting the customer in a situation where: technical support applies only to new versions of the product (and you set the rodmap yourself so you can go far away from the features they liked when buying your product - thus not supporting them), offer custom work on the product, technical support for old versions - to be considered if at all possible. It may turn out that the one-time purchase cost for the customer will be more expensive than the renewed license.
Agreed. As it is a utility and simplistic product, it will not have many more features added later. Hence I sold lifetime deals with promise of all future upgrades and support.
Then ask yourself a question - how big of a support you gonna provide ? I would limit support hours to an annual amount you can accept, and treat larger needs beyond that limit as a separate development work order. Prepare a well-done documentation with examples, so you can say - for your own peace of mind - that support covers things not described in the documentation.
Due to nature of the product, most of the support is only needed during onboarding. Its pretty straightforward afterwards with full documentation available.
I guess I am not being able to generate enough trust in prospects even after 14 days no-question-ask-refund policy.
Assuming your product is for individuals, I would listen to my customers, and move away from services and towards the "purchase once" model of old, guaranteeing maybe 1 or 2 major updates.
If your product is for business and production, I would simply remove the lifetime purchase option.
My product is for businesses but they seem only interested in a cheap lifetime price. I guess adding more features is the solution here to get them to pay more.
Have you asked them if they would pay more for more features? Perhaps some work to be done around perceived value and pricing, and to understand if putting more resources in is actually going to generate the revenue lift you’re looking for.
As lifetime deal was sold with promise of all future upgrades, asking that question might seem confusing to them.
There is some truth there, but regardless, you have to talk to the customer to understand if you intend to optimize pricing around value.
Right. Just that it's not easy to get them to talk. Always other priorities than providing feedback.
But can't blame them. I am also like that :)
Do you have 20+ lifetime sales to show this is true?
I have 10+, then I stopped selling lifetime deals to check adoption of recurring plans.
I suspect this is too little data.
But 10+ deals suggests you have enough inbound interest to test it.
Try AB testing it I would say.
True. I am planning to add lifetime deals again but with higher pricing than before.
Yes. If everyone chooses the lifetime deal and nobody is choosing the recurring deal, it probably means the lifetime deal is much better than the recurring deal for all segments of your userbase.
You should ideally keep increasing the lifetime deal price until you hit the point where you see a non-negligible number of people choose the recurring plan first, then decide where to go from there. That's just common sense for the profit-maximizer.
Good points, thanks. I had taken an extreme stance, and removed lifetime deal altogether to check adoption of recurring plans.
Can you suggest how should lifetime price compare against yearly price?
I use the metric of 2 to 5 years worth.
I see. At my product stage, I am thinking of turning yearly plan into lifetime.
Do the math - say you get 1000 customers who buy lifetime deals. And nobody else. How much does it cost you to keep the product alive for those 1000 customers, and how long is your runway using the money from those 1000 deals at that cost? Is that runway an acceptable "lifetime" in the view of those customers?
If you get good answers from that math, maybe it makes sense. But I'd wager that most business models don't have good numbers in such a scenario.
Good logic. Lifetime deals were sold supercheap to get initial users, so product will only have a runway of few months with that revenue.
If I had business concerns, I would talk to users and try to understand why some pick recurring payments and why others pick one time purchases.
Then I would reconsider my offerings based on how each group provides or does not provide business opportunities.
Anyway raising the price of the lifetime product is the simplest way to encourage price sensitive customers into recurring plans. If that doesn’t change their choice, revenue increases.
True, I guess getting users to talk frankly is something I should focus on.
Just having users talk is probably enough. And think about what kind of customers you want and what kind you dont want because everything is not for everyone.
Right
Is a 'lifetime deal' what we old timers used to call most consumer software license purchases (where you bought a package at Best Buy for $30 and that version worked on your computer for as long as you wanted)?
Exactly. And mine comes with all future upgrades included.
I remember companies doing the following: you get “lifetime” on your install, then a year of free upgrades. And you can get future versions with a discount.
Doesn’t work with saas probably.
Yes, mine is a platform SaaS, and everyone automatically gets the latest version. Also it is a simple product targeted to a niche, so not many features in pipeline.
If unit economics are working, you can focus on lifetime deals with increased price for every new version.
Yes, thinking of experimenting with pricing.