There has been a lot of heated conversation about subscriptions etc. lately. I just thought I would share a couple viewpoints. The first is what I have seen over my experience in the last 30 plus years and the second describes the economic advantage gained which allows software companies to abuse their user base once created. The second is also a direct quote from Investapedia.
#1 Give it to them for free for a while or make it easy to steal. Once you crate the user base and dependency lower the hammer with high prices and solid piracy protection.
#2 “Switching costs is another facet of an economic moat, which make it very time-consuming and expensive for consumers to switch products or brands. Autodesk Inc. offers various software solutions for engineers and designers that are very difficult to learn. Once an Autodesk’s customer starts using its software, he is unlikely to switch, allowing Autodesk to charge premium prices for its products.”
They know exactly what they are doing. There is not and never will be a free lunch. That said I still think our favorite little piece of software SU is still a great value for the time being. But if your looking for loyalty, guarantees about the future or something for free your kidding yourself.
Yeah, number one was what gave Autocad advantage over other competitors like Microstation. It was very easy to crack.
This kind of behavior is why Itry to avoid as much as possible Autodesk’s software and the like.
From many diseases (ok, not all), you can get healed and stop buying these drugs. From SketchUp addiction, it is hard to ever get healed.
Regarding product costs in the software industry, it is really a big issue:
The costs of a screw company are a stable stream of mostly material costs relative to the amount of sales (plus variable costs for workers salary plus fixed costs for building the factory).
The costs of a software company are mostly a high initial investment into developing the first release (time × employee salary + little fixed costs for office chairs) and then hoping for a steady stream of sold perpetual licenses until the market is saturated. This was the gold-rush mood since the eighties or nineties, and led to the current fatal situation of big monopolies. In that regard they are only beaten by drug companies who have 3.5–11×109$ investment for one successful product, before the income stream starts.
But what if the market is saturated or your marketing cannot predictably generate new customers?
For users the old scheme can be a huge fixed cost (one-time financing a perpetual license for many years in advance), no matter how long or often you use it. Monthly/yearly subscriptions allow to level that out for both sides, so users have a flexible payment stream and software makers a predictable income stream.
One thing you need to also consider is that software companies need to make continued changes and improvements. Drug companies aren’t expected to do the same to their products. Aspirin relieves pain. no one expects drug companies to add features to aspirin to cure other things. If they come up with a new feature, it is put in a new drug which people will buy and not complain.
Some people also seem to think that software companies should make improvements and add features to their product and provide the updated versions for free. Curiously, software developers need to eat and provide for their families. They can’t work for free. It requires infrastructure and utilities to continue software development. Hardware suppliers don’t give away their product to software companies for free, the power utilities don’t say, “Here, software company. We’ll provide you electricity at no charge.”
Another difference is that software companies are not forced by law to open-source the products after a limited period of time. When a drug is approved (before ready for production!), the count-down starts until the patent expires and until sales must have refinanced R&D costs.
In software, there is more continuity, and that is what users want. Since the environment (technology world, operating systems) and user needs change, software needs to be continuously adapted. Therefore a continuous payment model makes sense and is more sustainable.
Maybe it is a cultural thing: Why do humans (at least the parents’ generation) prefer ownership of something (buy cars instead of using car sharing when they need a car)? Why do we buy electronics once (for a dumping price that covers production but not environmental impact and recycling) and throw them away after some years? We should more think in terms of the whole life-cycle of our consumption.
@DaveR I agree with you for the most part. And I think software maintenance cost make sense. But with the prices we are seeing it’s like Buying a car and still having to make lease payments forever. I guess my point is that it is easy for them to abuse a captive audience.
Buying a perpetual (classic) license is like buying a car. Once you’ve bought it you can drive it as long as you want. Do you expect to buy a car and then get new features added to it every year? No. If you want the new features, you buy a new car. You could think of getting the next version of SketchUp, for example, like trading in your car to buy the next model. They give you $580 trade in value and you pay the balance ($120) in the form of the Maintenance and Support fee.
Software is a rather unique entity and hard to find a solid analogy for. The overall sense I see from this last update is that people do no mind subscribing to an “update/maintainence” but less inclined to subscribe for an actual license to use. Either way, the largest complaint seemed to be the lack of additional features vs bug fixes given the hype and the improvements in previous releases, and which had those been better, the subscription issue may of been an “easier pill to swallow”.
If after putting on a new roof for a client a leak is found…I’d feel obligated to go back and fix it… they shouldn’t have to wait for the next upgrade (new roof) paid by them to have it fixed…why software companies can get away with it is beyond me…a new upgrade is one thing a leaky roof (bug) is another…i
That is warranty! And indeed an issue that consumer protection legislation hasn’t solved yet.
I can only get my TV fixed if the hardware has defects (before the warranty ends), but I cannot get these annoying software inconveniencies and bugs fixed (and I cannot move a deeply nested function up in the menu) because the main functionality works.
If you read the EULA, there is only the software ‘As is’
No warrenties at all…
As @Aerilius said, there might be a cultural or generation shift towards usage versus property.
This shift is already in progress: many car manufacturers are developing new ways of income, since youngsters do not want to own a car, they want to drive one when needed.
Eventually , car manufacturers won’t be selling cars, they would ‘give access’ to their machines, so people can get from a to b.
Likewise, light bulbs use to be a lot better when first produced, but then the manufacturer realised that they would not make enough money.
Check this lightbulb:
Now, if all I want is some light? Who wants to own lightbulbs, anyway? I would like to have an agreement that Philips is gonna provide me light in my house. I don’t care how Philips is going to fix that (bulb, led, candlelight etc) and what they need to do to get it in my room, but when you make it the responsibility of the manufacturer, you will have no worries wether the way the bulbs are produced ( they will make sure all components can be recycled, for it is theirs)
They also would make better quality, because they would not have to change the bulbs every 5 months
@MikeWayzovski This is how we perpetuate the endless pursuit of goods and services and create giant landfills full of low quality garbage. A compressor used to last 25 years now the coils are so thin they don’t last 5.
I disagree, If you buy a car that happens to have a problem, it’s call for revision and it needs to be fixed. This is something that happens quite frequently, with many, if not all, cars manufacturers.
From my point of view, If I buy a software that it’s supposed to export to .dwg and every time you try it fails, since day one, that bug should be fixed for free within the period of that release. Bear in mind that you might pay the upgrade for that release just for one new feature…