Subscription for software - to be or not to be?
A year and a half ago, Nanosoft company was formed, which declared its goal to develop the first free domestic CAD platform nanoCAD. In November of this year, the platform finally came out in an independent form - immediately in version 2.0. About this event even appeared an article on Habré , where we told about it. Our platform is free, but vertical applications based on nanoCAD are distributed in a somewhat unusual (especially for the conservative world of CAD) sales schemes - by subscription.
What it is? Why do we do this? Why it was impossible to do "like everyone else"? This publication would like to answer questions and, if interested, suggest further communication.
Next under the cut
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Stage 1. How was it?
As is usually the case, your position is easier to explain if you follow the story. In this case, let's see how the concept of the price of software in the field of CAD has been transformed.
Historically, CAD is quite expensive: it is a production tool, and tools are expensive. Despite the wide variation in prices (from $ 200 to $ 20,000 and above), the bulk of CAD is in the range from $ 3,000 to $ 6,000. This is the price of one workplace - if the project organization employs 50 people, then boldly multiply by 50. Of course, even for organizations that are professionally engaged in design, this is a high price. And for other industries (and even more so for ordinary users), this price of the licensed program does not pay off. Is it possible to close or draw on the drawing board with a pencil and eraser, rolling back into the past and completely losing competitiveness? No wonder piracy is flourishing ...
Figure 1. Classic sales scheme: “bought a license and then buy upgrades”
The classic method (Fig. 1) of software distribution is based on the principle “I bought an endless license, and the next version is at the price of an update”. This is similar to the distribution of a book (that is, an intellectual product ): a developer writes a version (book), draws it up into a certain product (box, documentation, disk, protection key), releases the product to the market and sells it for a period. If in the current edition of the book (oh, the program) users find errors, then fixes are released. If sales were successful, enough comments were added to the first version - a new version is released and the circle repeats. On the new circle, the exception is for current licensed users only - they can make a preferential update from the old version, which usually amounts to 20-30% of the price previously paid. It's simple, right?
According to sales experience, it can be traced that even in our country with a high level of piracy, licensed users do an update about once every 1-3 years. But some of the users who bought the license, then goes to competitive solutions (rarely) or to pirated versions (more often) - the latter especially seriously complicates the life of developers and annoys them ...
There is one thing: when the number of potential users increases, and the competition increases, the developer must release new versions of programs more and more often - you need to quickly correct errors, introduce new functionality according to the wishes of users, implement interesting ideas that have appeared among competitors. And here we are gradually moving to stage 2 ...
Stage 2. How now?
Figure 2. Updated sales scheme: “bought a license and then buy support”
With the development of the market, a new sales scheme is gradually taking shape, which can be stated as follows: “I bought an endless license, and then buy support and regular updates.” The idea is that one-time updates are moved into the mainstream of regular payments (Fig. 2) . I will explain.
For a new user, nothing changes - he buys a license for the same price as before. But the current user can (or should - depending on the developer's policy) “spread out” the payment for the upgrade over time and “put” his software on support, regularly paying the developer some fixed fee (usually 10% of the price for new licenses). In fact, this is a kind of credit for future updates and a question of developer confidence, right?
The advantages of this approach for the developer are completely clear:
You may notice that the new approach moves the software into the category of services : first, the user buys the goods (packaged latest version of the program), and then prepares services for technical support. But here, too, there are subtleties ...
Firstly, software is not originally a commodity in the classical sense. Having bought the program as a commodity, the user has only the right to use it (the developer still remains the owner). This means that the program cannot be resold or transferred to another user (only the developer can give permission for use), the program cannot be returned to the developer (the user can refuse to use the program, but no one will return the money to him), replication of the goods does not lead to replication of the right to use therefore, a copy of the goods is unlicensed by definition.
Secondly, buying a product with a perpetual license, the user is deceived - the program will not work indefinitely. Doubt? Well, then try running a program that was released 10 years ago under the new OS. Another option: request technical support for CAD, working under DOS or purchased 5 years ago. At best, tech support will have a nice chat with you. And what can they do? Raise the old code and start correcting it? Most likely, you will be given a friendly advice: update the software. For extra money. That is, you have a license, but you can not use it. Go to the pirates for new versions?
Stage 3. Subscriptions
Figure 3. The main sales scheme of Nanosoft: “buy a subscription”
And here we come to the next thought - why not finally finalize the software as a service: “Buy a subscription, which consists of a commercial license, support and updates”. After all, we use the services of gyms, we rent premises, machines, cars, pay for calls on a mobile phone, go to cinemas - why not write in this scheme and software?
So, is it really a rental software ? Look - quite attractive:
I do not think that I have listed all the advantages of subscriptions ...
So, subscriptions are a kind of compromise, and users have the opportunity to purchase software at a price that suits the developers. Theoretically, the idea of ​​piracy is becoming obsolete, no?
But in practice, when implementing subscriptions, subtlety arises - subscriptions must be limited in time, otherwise their meaning is lost. That is, the software should stop working after some time. "How? Do you take a program license from us? Does it stop working? And if we need to correct the drawings in a year? Are you pushing us on the needle? ”, Users say. There are several solutions: either to retain the ability to work with drawings after the expiration of subscriptions (for example, using the free nanoCAD platform), or still leave an alternative sales scheme (in the end, after watching a movie in the cinema, the viewer can buy a DVD for re-viewing at home).
Conclusion
The question arises: which scheme is better ? We think that subscriptions are a more reasonable and convenient scheme. In IT, it is realized when selling Internet services and system software (antiviruses, firewalls, etc.). We implemented it in the first place, despite the fact that this is a novelty for the Russian CAD market, and many users still do not perceive it and require boxed delivery. What do you think?
PS By the way, the classic boxed delivery for vertical solutions is implemented by us: nanoCAD SPDS 2.0 , nanoCAD Mechanics 2.0 can already be bought as boxes for 25 thousand rubles. (against 7 thousand rubles for the annual subscription). All subsequent paid software products will be sold both by subscription and by boxed scheme.
PPS Interesting? Continue? If so, what topics are interesting in the future?
What it is? Why do we do this? Why it was impossible to do "like everyone else"? This publication would like to answer questions and, if interested, suggest further communication.
Next under the cut
')
Stage 1. How was it?
As is usually the case, your position is easier to explain if you follow the story. In this case, let's see how the concept of the price of software in the field of CAD has been transformed.
Historically, CAD is quite expensive: it is a production tool, and tools are expensive. Despite the wide variation in prices (from $ 200 to $ 20,000 and above), the bulk of CAD is in the range from $ 3,000 to $ 6,000. This is the price of one workplace - if the project organization employs 50 people, then boldly multiply by 50. Of course, even for organizations that are professionally engaged in design, this is a high price. And for other industries (and even more so for ordinary users), this price of the licensed program does not pay off. Is it possible to close or draw on the drawing board with a pencil and eraser, rolling back into the past and completely losing competitiveness? No wonder piracy is flourishing ...
Figure 1. Classic sales scheme: “bought a license and then buy upgrades”
The classic method (Fig. 1) of software distribution is based on the principle “I bought an endless license, and the next version is at the price of an update”. This is similar to the distribution of a book (that is, an intellectual product ): a developer writes a version (book), draws it up into a certain product (box, documentation, disk, protection key), releases the product to the market and sells it for a period. If in the current edition of the book (oh, the program) users find errors, then fixes are released. If sales were successful, enough comments were added to the first version - a new version is released and the circle repeats. On the new circle, the exception is for current licensed users only - they can make a preferential update from the old version, which usually amounts to 20-30% of the price previously paid. It's simple, right?
According to sales experience, it can be traced that even in our country with a high level of piracy, licensed users do an update about once every 1-3 years. But some of the users who bought the license, then goes to competitive solutions (rarely) or to pirated versions (more often) - the latter especially seriously complicates the life of developers and annoys them ...
There is one thing: when the number of potential users increases, and the competition increases, the developer must release new versions of programs more and more often - you need to quickly correct errors, introduce new functionality according to the wishes of users, implement interesting ideas that have appeared among competitors. And here we are gradually moving to stage 2 ...
Stage 2. How now?
Figure 2. Updated sales scheme: “bought a license and then buy support”
With the development of the market, a new sales scheme is gradually taking shape, which can be stated as follows: “I bought an endless license, and then buy support and regular updates.” The idea is that one-time updates are moved into the mainstream of regular payments (Fig. 2) . I will explain.
For a new user, nothing changes - he buys a license for the same price as before. But the current user can (or should - depending on the developer's policy) “spread out” the payment for the upgrade over time and “put” his software on support, regularly paying the developer some fixed fee (usually 10% of the price for new licenses). In fact, this is a kind of credit for future updates and a question of developer confidence, right?
The advantages of this approach for the developer are completely clear:
- More rapid software development: the developer is not bound by the product version, he can switch to the regular release of updates, which will include both new functionality and bug fixes.
- Protection from competition: if a customer pays fees regularly, then the transition to competing solutions is theoretically more difficult (although competitors do not sleep either - think up ways to entice customers). In addition, by promptly satisfying user requests, the developer increases loyalty to himself and his program.
You may notice that the new approach moves the software into the category of services : first, the user buys the goods (packaged latest version of the program), and then prepares services for technical support. But here, too, there are subtleties ...
Firstly, software is not originally a commodity in the classical sense. Having bought the program as a commodity, the user has only the right to use it (the developer still remains the owner). This means that the program cannot be resold or transferred to another user (only the developer can give permission for use), the program cannot be returned to the developer (the user can refuse to use the program, but no one will return the money to him), replication of the goods does not lead to replication of the right to use therefore, a copy of the goods is unlicensed by definition.
Secondly, buying a product with a perpetual license, the user is deceived - the program will not work indefinitely. Doubt? Well, then try running a program that was released 10 years ago under the new OS. Another option: request technical support for CAD, working under DOS or purchased 5 years ago. At best, tech support will have a nice chat with you. And what can they do? Raise the old code and start correcting it? Most likely, you will be given a friendly advice: update the software. For extra money. That is, you have a license, but you can not use it. Go to the pirates for new versions?
Stage 3. Subscriptions
Figure 3. The main sales scheme of Nanosoft: “buy a subscription”
And here we come to the next thought - why not finally finalize the software as a service: “Buy a subscription, which consists of a commercial license, support and updates”. After all, we use the services of gyms, we rent premises, machines, cars, pay for calls on a mobile phone, go to cinemas - why not write in this scheme and software?
So, is it really a rental software ? Look - quite attractive:
- Subscriptions make licensed software more accessible. If at stage 2 we “smeared” the price of renewal, then with subscriptions, the software price itself is “smeared” (reducing, for example, by 3-4 times - the average time spent working with one version of the program) - see fig. 3: The initial barrier is lowered and CAD becomes available even to a private designer. We believe that, other things being equal, the user will select the licensed software, and not pirated. Subscriptions are a good way to check if this is so.
- Subscriptions allow you to move the costs of software from the category of variables in the category of constant. This is good both for developers (regular receipt of finance) and for users - fixed costs are easier to control and plan, and carry out accounting reports.
The software is transformed into classic fixed assets, which are depreciated on the products created. - Subscriptions are easier to manage. Has the number of designers been reduced? Reducing the number of purchased subscriptions. Reconfigured jobs? We refuse a part of subscriptions, we buy others. Flexibly.
- Subscriptions allow you to respond to customer requirements. Is it convenient for a client to pay once a year? Please, annual subscription. Once in two years? Two-year subscription. Does the client have special requests for software and its maintenance? You can develop specialized subscriptions that will include advanced technical support, employee training, software customization, the development of new modules, etc.
- Subscriptions protect customers from reckless costs. If the software does not suit, does not develop, or its development has gone in a direction that does not meet customer expectations, then next year customers simply do not extend the subscription, signaling to the developer: “there is something wrong in the Danish kingdom”.
- Subscriptions allow the program to grow faster. Developers are interested in regularly updating programs and developing their functionality. This, by the way, is a big responsibility for developers - if there is nothing to develop, then you have to update the interface.
- Subscriptions are the only way with the intensive development of the program. The “classic” sales scheme is good if the program is released once every 2-3 years. But if the new versions come out every six months, then for the user this scheme will be too expensive, it is better to slow down a bit with the purchase and wait for the program to gain functionality. Subscriptions allow you not to postpone for later what can be purchased today.
I do not think that I have listed all the advantages of subscriptions ...
So, subscriptions are a kind of compromise, and users have the opportunity to purchase software at a price that suits the developers. Theoretically, the idea of ​​piracy is becoming obsolete, no?
But in practice, when implementing subscriptions, subtlety arises - subscriptions must be limited in time, otherwise their meaning is lost. That is, the software should stop working after some time. "How? Do you take a program license from us? Does it stop working? And if we need to correct the drawings in a year? Are you pushing us on the needle? ”, Users say. There are several solutions: either to retain the ability to work with drawings after the expiration of subscriptions (for example, using the free nanoCAD platform), or still leave an alternative sales scheme (in the end, after watching a movie in the cinema, the viewer can buy a DVD for re-viewing at home).
Conclusion
The question arises: which scheme is better ? We think that subscriptions are a more reasonable and convenient scheme. In IT, it is realized when selling Internet services and system software (antiviruses, firewalls, etc.). We implemented it in the first place, despite the fact that this is a novelty for the Russian CAD market, and many users still do not perceive it and require boxed delivery. What do you think?
PS By the way, the classic boxed delivery for vertical solutions is implemented by us: nanoCAD SPDS 2.0 , nanoCAD Mechanics 2.0 can already be bought as boxes for 25 thousand rubles. (against 7 thousand rubles for the annual subscription). All subsequent paid software products will be sold both by subscription and by boxed scheme.
PPS Interesting? Continue? If so, what topics are interesting in the future?
Source: https://habr.com/ru/post/79047/
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