Do you prefer one-time fee or subscription?

Currently working on the pricing for my SaaS startup, I wonder about which pricing model to apply. It seems that almost all SaaS use subscription billing nowadays and I kind of miss the old day when we can buy a software just once.

Would like to hear what do you guys think, do you prefer one-time fee or subscription billing for a SaaS product?

Comments

[Nguyen Kim Son]

Thanks guys for your insights!

To be more specific, does this make sense to go with onetime payment for a email alias service? in short email sent to alias will be redirected to your email inbox and you can also reply as the alias. The main difference with similar services like temp-mail or 10minutemail is the aliases are permanent.

The operation cost is quite low (server, maintenance) and i’m thinking about 10-20$ onetime fee, what do you think?

[Austin S. Hemmelgarn]

As an end user, I'd actually expect this to be some small monthly fee per alias, with the aliases only staying 'alive' as long as I kept paying for it. Probably something like 1-2 USD a month, maybe with a slight discount if you've got lots of aliases or pay for a full year up front.

In your shoes though, I'd not even consider a one-time option for a couple of reasons:

• While operating costs may be low, this is something with high potential for abuse, and it's harder to rationalize banning someone who's abusing it if you're using a subscription model.
• Running a mail server, even if it's just a store-and-forward address rewriting configuration like you're talking about, is actually a lot of work. It's not particularly expensive in terms of finances, but doing it right takes a lot of time because you have to watch it like a hawk to make sure it doesn't get exploited.
• If your system does somehow get exploited (by a user or by some third-party), you may end up having to pay damages, which will not be cheap.
• Because of how people think, you're likely to hook more people the lower your cost is, even if you're a subscription model instead of a one-time fee.

[Nguyen Kim Son]

Thank you for the thoughts! You're totally right on the potential abuse risk and the laborious work to keep the email server running correctly. Could you elaborate more on the following please?

it's harder to rationalize banning someone who's abusing it if you're using a subscription model

At the same time, I think onetime fee can be a convincing option for a new, not well known yet product. I'm thinking about offering a onetime fee for early adopters and subscription for others, what do you think?

[Austin S. Hemmelgarn]

My point is that you'll tend to get more backlash from users if you ban someone who has paid for a 'lifetime' license for the service than if you are dealing with a subscription model. Depending on how quickly they get banned and where exactly the transaction happens, you may even owe them a refund if it's not a subscription model.

I'm thinking about offering a onetime fee for early adopters and subscription for others, what do you think?

I think that's largely reasonable, but I'd be careful to put reasonable limits on the one-time fee (IOW, they could have up to some number of individual aliases active at the same time before they have to start paying just like everybody else). I'd also make sure to spell out clearly in the TOS that you make no guarantee that the service will stay online forever, otherwise you may end up in a situation where you're forced to keep maintaining it to support the people who paid the one-time fee.

[Nguyen Kim Son]

Thanks, I understand the point on the banning now :). And great point on being careful in the TOS, I'll make sure to put it in the TOS!

As a side note, what do you think about the idea itself? Is this a service that might interest people?

[Austin S. Hemmelgarn]

I couldn't really say for certain. Based on what you've described so far, I can see three use cases for this:

• Sorting email by To: header. IOW, use emails through your service for everything, and then have each alias get auto-sorted after forwarding. In this area, you're really just competing with address extensions (the part after the '+' in emails like [e-mail]), and most decent providers properly handle those at no cost with zero setup. On top of that, you'd need to handle things specially on your end for this to work (though you probably should go to the trouble of that kind of handling so things are properly traceable by your users and by law enforcement).
• Disposable emails for one-time contacts. Lots of competition in this area, but it also doesn't seem to be your main focus, so not much to say (I'd suggest supporting this use case though, it should be easy to do if you've got persistent alias handling already).
• Using differing aliases for each individual service you need email for to obfuscate your online footprint. AFAIK, you have little to no competition here. This is the particular angle I'd suggest marketing towards, as many people would love to be harder to track online.

[Nguyen Kim Son]

Support the disposable email is indeed an excellent idea and it's quite easy for us, let me put it into our todo list :).

The product corresponds to the third use case. Its main goal is indeed to protect user online identity. If you are interested, could I contact you to send you more details and have your insights on this product?

[Austin S. Hemmelgarn]

Sure, though I don't know how much more insight I might be able to provide other than the usual reminder for all online services of 'Make sure you're compliant with relevant data handling legislation (GDPR or otherwise).'.

If you want to drop me an email (should be listed in my DEV profile), that's probably going to be easiest for both of us.

[Nguyen Kim Son]

Okay just sent you an email :).

[brandito]

I feel as though this is something that should be considered on a per-project basis, e.g no point charging $200 once off when the product would cost $200/year to run or maintain.

Pricing really needs to have expenses/costs factored in if you plan on being sustainable.

[Mike Healy]

SaaS is ongoing. The software is hosted so the new versions, the maintenance, the hosting are all continuously provided. It therefore only makes sense to charge subscription fees, because otherwise it's essentially a ponzi scheme whereby new members are needed to finance the product for existing users.

The exception might be if you have very low maintenance and hosting requirements.

Traditional software could be 'sold' because that single fee covered the development to that point, and new versions were funded by charging for upgrades.