Ask HN: Single vs recurring payments for web apps
For my previous web apps, I charged the user once when they signed up. There were no recurring payments. I reasoned that for the type of web apps I build -- tools -- that most people would prefer one larger payment vs a recurring small one.
I've been discussing it with a few other folks and they're encouraging me to try a monthly payment, pointing to the success that 37signals has had with it. Less people might sign up, but over time the extra revenue you make from them will make up for it.
I tend to to think of apps like Photoshop, Textmate, and Transmit and think "A recurring payment? No way." And yet somehow when I think of 37Signals, it doesn't seem so bad, but I can't put into words why one makes sense and not the other.
How do you decide? Has anyone tried both and compared the numbers?
It's for that reason that paying for a webapp one time feels odd to me. It's like purchasing a product, except the product can be taken away from me at any time, which is unsettling.
Think about 40 bucks a month for an alarm system, or 60 bucks for the gym. That's roughly 5-7k over a ten year time span, and even if you adjust for time value of money and the user having the cancellation option, at the end of the day it's ridiculously easier to get people to make a monthly payment for those sorts of services than it would be to get a one-time upfront multi-thousand dollar payment.
I think I'd rather pay a one time fee for software. My fear (and I doubt this is only me) is that I'll forget about it and wind up paying for it long after I've used it. Great for the services I pay for, but bad for me.
Is there any software you pay a recurring monthly fee for? If so, what is it? And if not, why do you think that is?
Consider a hypothetical example: You can pay $50 once for Textmate, or $8/mo. Which would you prefer? How about $4/mo?
That said, if I really wanted to spend money on Textmate, yes, I would prefer to pay 50 bucks rather than either $4 or $8 monthly. At a $1 or $2 a month, I would probably be indifferent. To some element there's an issue of how long the purchaser will actually use the tool vs. how long they estimate they'll use it.
I agree with you 100% that we develop countermeasures because we know that these recurring monthly plans are dangerous. My sense is that we develop the countermeasures exactly because the monthly plans are so effective at separating us from our money, and that the countermeasures only partly offset the tendency. Of course, for you may have an outright aversion to the monthly plans, just as I have excessive frugality, but overall my sense is that for most people monthly plans go over better than upfront charges in most situations.
Clearly there are other factors that go into it, but that's one way to look at it.
Simple: 37Signals has server costs on an ongoing basis to maintain a customer - Textmate/Transmit/PS do not. Most consumers understand it's a hosted solution and are ok with paying a recurring payment.
If your solution isn't hosted and it's a onetime download kind of thing then it would only make sense to charge them the one time.
But surely, as the "webapp" you can also revoke a users subscription.
I have been thinking about "recurring payment" with an agreed, "we the webapp" will cancel your paid access if you have been absent of the site "x days" or more likely 2 months.
You could look into using quarterly or half yearly payments potentially, similar to how Pandora does it, charging for the whole in one fell swoop.
Good luck with it
EDIT: misused day instead of month