Thoughts on paying for software and pricing models

Every now and then, I stumble upon some really great software. Often, some of the best software will be a paid option. (If said software is free instead, you should consider why the developer has made this software available for free.¹)

I personally don’t have any issue paying for software, but it’s also worth mentioning that I’m not a big fan of subscription models for software licensing. For services, I think it makes sense. For regular apps with no online functionality, not so much. I’m not surprised that we’re seeing some applications move to a subscription model, though: it means getting a steady stream of revenue, assuming your customers keep paying for their subscriptions.

What really surprises me, however, is how little other people seem to be willing to pay for software. I’ve seen both friends as well as professionals in my industry dismiss paid software because the pricing was too high to their liking, even software that has no associated subscription cost. I’ll come back to this later, but for now, I’d like to talk about one of my personal favourite software purchases of the last year or so: REAPER.

REAPER, an excellent case study in affordable pricing

Since the beginning of this year, I’ve been doing some audio editing — mostly on voice recordings — and one of the things I really needed for this was a (cross-platform) DAW². So in February of this year, I purchased a copy of REAPER. I want to specifically mention this particular piece of software here, because on the official website, it mentions that the cost of the software is “not so much” , which is quite amusing.

It’s a powerful piece of software, and it’s actually affordable if you’re just an individual looking for an affordable DAW. In this particular space, there’s many options available, including very expensive options such as Pro Tools and Logic Pro X. Some of these are paid upfront, some require an active subscription. Some ship with a media library, and others don’t. But they are generally priced at 200+ euros, or even higher prices.³

For my needs, I didn’t need anything too crazy, just a basic, cross-platform DAW, one I could tailor towards editing of voice recordings. So, this was a no-brainer.

It also helps that they offer different licenses for different target audiences. If you are using REAPER for personal use, a license only costs 60 dollars. That’s much cheaper than the alternatives. (That’s the one I got.) REAPER also seems to receive very frequent updates, so I am very pleased with my purchase. There are also no machine limits, so I have the program installed on my laptop and my desktop.

Pricing is not easy

Pricing is hard for the developers of a software product. I understand that. As a consumer, I still believe that the ideal piece of software is the one you buy only once, and receives minor updates; ideally, as long as possible. I don’t mind “upgrading” (at a fee) to a newer version if it’s a major feature update.⁴

Creating such a product is hard to do, and may prove to be unsustainable for smaller businesses. (In order for this model to be sustainable, you need to be able to charge very high prices, and have substantial software updates that people want to buy/upgrade, even if they already own the software. I assume this model is less reliable in generating recurring revenue than the subscription model.)

If your software is a tied to a service, like Dropbox, it makes sense that you require your users to pay a subscription fee — you can explain that to the consumer: their monthly or yearly payment is required to keep the service up (in this case, cloud hosting of files).

If it’s “just” software without online components, it’s more difficult to convince your customers to pay a subscription fee, unless you have frequent updates with added functionality; hence making it an interesting value proposition.

For me personally, I strongly dislike software that requires an active subscription for you to even be able to use the software. I think paying a subscription fee to keep receiving updates is okay, as long as the software you bought doesn’t stop working.

Why people don’t want to pay for software

Software used to be fairly expensive. As we’ve seen applications turn into mobile apps, we’ve also seen a serious decrease in the general pricing of software. It all began with the App Store: remember when most apps were 99 cent, paid upfront apps, anyone?

This has had a serious influence on people’s perception of how expensive software should be, with many apps being available free upfront and experimenting with other monetisation options. We’ve seen this bleed into other platforms as well, where developers on traditional platforms (desktop, laptop) have decreased the pricing of their apps.

Brief thoughts on open source

Also, I believe that the availability of open source software has decreased the need for paid software as we prefer to use software without a cost to use it. Note that this software is not free to build, of course.

I see fellow developers and devs on Twitter praise the likes of Visual Studio Code and such, but of course we should not forget that some complex tools have no good open source replacements. It’s also worth pointing out that some open source software is absolutely unmissable in the modern day, so it’s not like I’m discounting open source — it’s just that it’s hard to do well if you’re not a big company.

Making your software available via open source has other issues, of course: maintainability is an issue — can you keep maintaining a piece of software for years? This can cause trouble if you hand your project over to an untrustworthy maintainer. I’ve also seen many cases of open source developers being treated quite unfairly, simply because they had the guts to open source their code: now they’re being harassed by people who want to see fixes and new features for code they may have written in their spare time. It’s quite crazy.

So yes, big companies seem to be benefitting the most by open sourcing their stuff, because they actually have the workforce to keep maintaining their projects.

(Anyway, all of this is just some food for thought. I’ve been brewing on these points for some time now, so I figured I’d just publish this. I don’t really have a smart conclusion to make here, sorry about that. I might post a list of some great software here at some later time.)