On 31/07/2015 05:48 AM, Jim Henderson wrote:
> Recurring revenue helps you grow the business.
>
> Traditional perpetual license models mean that the customer buys the
> product once.  They may have to license it for a number of users or
> servers, but ultimately, the cost is pretty low over the lifetime of the
> product.
>
> That's good for the customer that doesn't want to continually upgrade.
>
> Most customers, though, want the latest and greatest features and
> functionality - and a subscription model (which is common with SaaS
> products), done properly, funds ongoing development.  Anyone who has
> worked retail knows that the cost of acquiring a new customer is pretty
> high; the cost of retaining a customer is relatively low, as long as you
> keep the customer happy.  The SaaS subscription model works off that
> fundamental idea in retail business.

Selling "support" also works. Provided you have the staff to actually 
deliver support.

Or just a licence to download any and all new versions that get put out 
in the next X months. Keep paying if you want new stuff.

Or paying to have a customised version of the product. (But that's sort 
of tantamount to saying "our product is so hard to set up, you need to 
pay us to do it for you". Not a great thing to say!)

Or hell, even paying for the development of specific features that you 
particularly need. The trouble with this one is that

* Usually there's only one or two specific features a given customer 
needs. Once those are done, no revenue stream.

* Usually how this *actually* plays out is the customer says "we won't 
buy it until it does X". And then you implement X. And then they still 
don't buy. (Why no, I'm not bitter. Why do you keep asking that?)

Certainly where I currently work, a lot of customers specifically *like* 
the fact that if they stop paying, the software doesn't self-destruct. 
Nobody is going to lose any data. You can carry on using the software 
forever; you just won't get any bugfixes or new features.

Then again, where I work, it takes most customers up to 3 years to get 
authorisation to buy a new mouse. So convincing people to buy at all is 
very hard.

(If the second-hand stuff I've heard is at all accurate, the people who 
will *use* the software utterly love it and really want to buy it - but 
the people who authorise the money won't let you buy anything without 
having it signed in the blood of a unicorn...)

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