New licensing/revenue model for Bohemian Coding's Sketch. Thoughts?

Discussions
#1

Bohemian Coding announced a new licensing model for Sketch:

https://blog.sketchapp.com/versioning-licensing-and-sketch-4-0-8ad98783e9ba#.fm7tjycu4

TLDR: They are no longer releasing major versions every 2 years, instead they will continuously release major features. Users pay $99 and get 1 year of updates. They can use the last version they have indefinitely.

For desktop software this seems like a good compromise between the pure subscription (Adobe) model and the legacy model of charging for major updates. In this model, developers can get a baseline of yearly recurring revenue from their more dedicated users while still giving users indefinite use for the product they paid for.

Does anybody have first-hand experience with this kind of revenue model for desktop software? I am thinking of using it for my next product.

#2

I’m the founder & CEO of a licensing company (LimeLM), and based on informal surveys of our customers around a quarter of our customers sell subscriptions of their software in one form or another. (I don’t have the exact numbers yet – we’re working on doing a proper survey of our customers early next year on a range of topics).

The way these customers sell their software as a subscription varies from customer to customer. But here are most common use-cases:

  1. The company sells the software as a subscription, and when the subscription expires the end-user can no longer use the software unless they renew.

  2. The company sells the software as a subscription, and when the subscription expires the end-user can continue to use the last update that fell in that subscription period. (Sort of what like Sketch is doing)

  3. The company sells the main app as “perpetual” (or “pay for major versions” type model that’s common in the industry), but they also sell plugins that add specific functionality, and these plugins are subscription based.

Based on our informal surveys of customers, #2 (what Sketch is doing) is the most common subscription model. While most of our customers still stick to the more traditional “buy major versions” type model.

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#3

I buy software on the pay-yearly-with-perpetual-fallback model and I’m surprised how difficult and time-consuming it can be to renew. (I guess I have to earn the right to give these companies money?)

As a customer, it’s a good model. But if you do this, PLEASE make it easy for your customers to renew. At the very least, have your payment provider store their details so they can renew with a single click.

And why not give them the option of renewing automatically?

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#4

I agree @danielstudds, whatever the model, it has to be as frictionless as possible to be successful.

@wyattoday please share the results of your new survey when you get them, if you can. Thanks!

#5

Sorry to up this but thanks for posting this. I was doing a search for [“desktop software” recurring revenue] and this came up.

I’m currently trying out some new models and something like this came to mind. The main downside to me is it’s a little more complicated to explain than simply “one year”. But it does have the benefit of allowing perpetual use if you don’t update, which I think makes more sense with self hosted software.