Subscription vs buying?

Hi there,
I was just wonering what is a better model that you guys would prefer?
Buying a product that you know that you will need year after year that will cost you $360 or taking that product and serving it for a monthly subscription by dividing it into 12 payments?
Would really help out
Thanks guys

 

oh, okey i understand that no one is interested. Thanks for the help

 

It depends on the price! If it's really high, I won't buy it! If I need it, maybe I would pay monthly! Of course if people have enough money in their cards for example, I assume they would pay once for it!

 

Hello! The monthly option seems like a good one. People are more attracted to paying small sums several times than a big one just once. Even though the total is the same, psychologically speaking the effect is different when paying fewer. Good luck!

 

I think it actually depends on a number of things. The price and the service mainly. Lots of people prefer to one-time payment, like myself.. At the same time, if its something running on your server that could require more server upgrades and things like that later on, a subscription system might be better.

 

I would consider the following variables:

1. One-time cost plus continuing support/upgrades
2. Monthly subscription fees which will include support/upgrades
3. The time period of my planned usage of the tool

I would map out the costs against the expected time period of usage and see which one has the better ROI.

 

The current Internet landscape is so much shaped by the cloud that an one-time bigger payment would definitely give way to smaller recurring subscriptions. Personally I would prefer recurring subscriptions as well. This way:

1. It's easier to test it out before spending an arm and a leg.
2. It would be easier for me to exist.
3. It's easier as I don't have to worry about updates, security patches, etc. because it's all taken care of.

This also forces you the vendor to concentrate on converting as many customers as possible because what matters in the monthly subscription model is the number of customers.

On the contrary if you sell the traditional way for upfront bucks that may seem much bigger, the number of customers you can accumulate along the years will be smaller as you would focus on closing a few deals and the customers are not retained for the long term, which is not the ideal way to grow a large business.

 

We're working on an analytic tool for the SEO market and it will be based on subscription.
In this case, there were no other alternative.

 

The perfect answer: both. Give the posibility of monthly subscription and a 1 year deal that will provide a discount comparing the cost of monthly payments x 12.
if you can't do both go with monthly. People want to pay a smaller amount if they don't trust you. With monthly they can stop if they don't like the service.

And as a side note, focus more on the quality of your service not how you get paid. The best payment method is the quality you deliver.

 

It highly depends on what product and industry we are talking about. But i think the key here is that the consumer is aware of their long-term need. In this case paying yearly seems like a much better idea than paying monthly. Why? Here is an example.

Lets take a look at web hosting. A quick look on the hosting market shows that most hosts do offer both monthly and yearly subscriptions. Digging deeper will show that most of the clients do sign up for yearly services for a number of reasons. First - the price. Going on a month-to-month subscription rarely comes with any discount from the standard price. On the contrary - it often involves a setup fee that hosts don't normally charge because they have to cover the risk of the client using the platform for a very cheap initial price and leaving afterwards.

Then comes the customer fear that the service might not fit their needs so why should they risk it with a longer contract. Companies learned to tackle that fear and most already offer a XX-day moneyback guarantee which is enough for any client to check the service and see if it will do them well.

There is another reason that is overlooked. With recurring problems there is a chance that extreme factors can lead to non-payment and thus, suspension of the service. Running a business and having your business page go down because you miss a payment can only do you harm, especially if you are serious about it. Who can predict if you would be travelling, miss the notifications and don't have an opportunity to do so for a longer period? Or, God forbid, having a medical emergency? Even if the host offers automatic renewal this might fail because the bank declines the transaction or there aren't enough funds in the account. Too many if's which are all covered with an yearly payment.

That is just one simple example for it. But different products and companies carry different Terms for their usage and payment so I don't believe this is a question that can have a straightforward answer.

 

Slow down. You posted at night then checked in the morning.

Residual income will always be MY preferred earning.

If a product is $360 you will make more per sale but will lose business from those who can't afford or justify your cost.

If a product is $29.95/mo you will get more purchases but won't retain subscriptions from customers who can't justify staying longer than a month if your product doesn't serve them.

In my opinion (MY opinion) I would go for the masses because there will ALWAYS be a percentage of people who are too lazy to cancel or don't care much about a nominal monthly fee. I am one of them... I'm still paying for a web host that I haven't used in 3 years BUT one day........