by Joe Marshall on March 23rd, 2021
Earlier this year we were taking a fresh look at our marketing strategy and we started to think about pricing. We didn't know at the time that we would hit on our most succesful pricing strategy to date - lifetime deals.
As we brainstormed new pricing mechanisms, we considered a lot of angles: Should we move to a flat system of buckets ($5 for every 1,000 submissions), introduce new tiers, charge at different time intervals?
MRR is the holy grail - but we also thought about ARR and all the LTV it could give us up front. Following that thinking, we implemented a new annual pricing system and made it the default. It's nice from a business perspective to get the payment, but we also thought, as customers of our own product, it was less friction to get the once-a-year bill, lowering our subscription noise. And of course we built in a discount for the annual plan reflecting the faith it represented in us.
We released the new pricing page but continued to just get a trickle of Developer tier signups, alongside our already-healthy Sandbox cohort. At this point we were also beginning to take the annual pricing strategy to its logical conclusion: If paying us once-a-year was better than once-a-month, wouldn't paying us once ever be the very best?
And then AppSumo came into our lives.
AppSumo approached us about offering a lifetime deal (which they provided evidence was more compelling vs another monthly deal) and we were intrigued.
We, like everyone, suffer from subscription fatigue. Subscriptions are exhausting, and all the dark patterns around make them even harder. No one wants to briefly use a developer tool, miss some obscure-sounding payment invoice on an old credit card, and wake up months or years later with a nasty bill. Some companies (like Netflix) are great about aggressively pruning old accounts, but not everyone.
The AppSumo deal let Sumolings pay us once for a lifetime of use. The way it works, we never have access to their payment information, and couldn't charge them unless they added a card and upgraded: No recurring invoices necessary.
People liked our tool - the reviews were good and they wanted to pay us their money. They just didn't want the headache of another subscription.
Now an obvious question - how can we afford to do this? We're offering permanent (if not necessarily unlimited) service for a one-time fee.
Computing power is getting cheaper: It's a cliche but as long as the tech giants are slinging it out trying to win the cloud infrastructure war, general compute power will continue to get cheaper.
Our architecture rocks: We're structured in a way that allows us to pay commodity prices for a lot of resources. Our cost per customer is very reasonable.
We love champions: If you pay for something for life, you want to use it - to grow the value of the tool and extract more and more from it. We've already been getting wonderful feedback about possible feature sets from our new Sumoling users, and encountered some interesting new use cases.
Backlinks are nice: Our company's presence in the searchable web is a living, growing thing. As more people use our service in more places, our backlink presence expands and (maybe?) the tiny gremlins that power Google take some small notice.
Brand recognition too: If someone decides to use our branded submission page (which they absolutely don't have to!) we get to spread the Formcake word a little.
The reality is that as much as we would like everyone to use our service forever, the sad reality is that people will drop off, or use us at less than maximum capacity. The profile of a MRR and lifetime users will be different but not unrecognizably so - and ensuring we get such a big part of LTV upfront is nice compensation.
Hopefully, if you share some of our circumstances, you should consider offering a lifetime deal and decreasing the subscription burden of your customers and winning some stellar converts at the same time.
For pro-sumer types or developer tool users especially - the easy process is key.