Hosting your own infra is still a recurring cost given that hardware has an end of life. These servers also need employees to maintenance then and electricity to power them.
There's really no such thing as pay once use forever for anything physical.
You're just paying an estimated lump sum for the subscription revenue it would produce over it's life time
What kind of infrastructure do you need to run Adobe Photoshop? Other than your own storage I can’t think of anything else. I used the same version of PS for years before they switched to a subscription model, forcing users to choose between staying on the old version forever or “upgrading” to their subscription model.
This is the real problem, Adobe made kick ass software that was so good it cut off their future revenue stream, so they decided to rent it out instead of letting people own it. Fine, that’s their decision, just like it is mine not to continue paying for something I use once a month as a photography hobbyist.
You're not wrong that owning your own equipment can be viewed in a similar manner as renting with the lump sum payment amortized over time.
But... when you do it yourself you can much more easily tailor costs that make sense for you.
I have essentially stopped paying for almost any online subscription SAAS product that I can replace with a self-hosted version or a desktop install. I have cut more than 200 bucks a month out of my budget (fairly easily, honestly - replacing recurring costs for things like evernote, myfitnesspal, photoshop, google photos, calendly, ifttt, etc).
I threw some old desktops into a microk8s cluster in my basement, and spent about $1000 on a decent NAS + drives.
I broke even in 6 months. Two years in and I've saved more than 3 grand.
The subscription costs are HUGELY inflated for my needs, and there's no way to bring them down in most cases, because SAAS companies lock features to tiers in a way designed to maximize revenue.
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Basically - my strong opinion is that SAAS is so popular right now because it's a terrible deal for most buyers. Companies make more money with less work.
I think it's taking buyers a minute to figure out JUST how shitty the deal they're getting truly is. But trust me - SAAS is a shit deal in most cases.
The only time SAAS isn't a terrible deal is when you can buy a single month, do the task, and cancel. If you need to be using a tool repeatedly over time - you're WAY better off buying up front than you are leaking money every month to a SAAS company.
I don't disagree with you. But thats more a mispricing issue and not subscription issue.
In your case you've traded off your time to save money and it probably makes sense for you because you have the skills to do it.
But for others, the fact that these services are managed is the value for them. They are willing to pay a premium for and it even might make sense. Given that these customers are continuing to grow are they really mispricing?
Honestly confused by what you’re proposing here. I can’t even figure out how this could work. You buy a subscription from a SAAS and then re-sell it (not sure how) for a one time purchase? And how do you make the money? Investments? Since you have money in advance? I’m genuinely confused.
They’re probably thibking of something like: I buy x seats or x installs for $A/month.
I charge a one time fee of $B to people to use in perpetuity, but require that when they’re not actively using it (or build it into my resell layer software) that a seat is released for someone else.
The assumption is that even though people pay the lifetime fee they won’t actually use it for a lifetime. Some might use it for 20 years and some for 5 days.
In that margin you hope to make a profit where SUM($B) > SUM($A).
Most of finance is financial products that look like this in one way or another.
We used to buy software that ran on our machines. We expected a certain amount of support. Eventually you would have to go purchase version x+1 of the software.
The support is priced in, its not like they are giving it away for free. And then you still had purchase the next version which sounds like an informal subscription with a longer period?
I suppose you could treat it like a kind of subscription. But in a real subscription, you have to take upgrades, like it or not. When you're purchasing the software, you don't.
Also, and this is the huge problem with subscriptions, it's rather common that I need to work with old data that can only be dealt with by older versions of software. Subscriptions lead to a kind of rot, because you can't save the old versions of the software for future needs.
Comments
Hosting your own infra is still a recurring cost given that hardware has an end of life. These servers also need employees to maintenance then and electricity to power them.
There's really no such thing as pay once use forever for anything physical.
You're just paying an estimated lump sum for the subscription revenue it would produce over it's life time
What kind of infrastructure do you need to run Adobe Photoshop? Other than your own storage I can’t think of anything else. I used the same version of PS for years before they switched to a subscription model, forcing users to choose between staying on the old version forever or “upgrading” to their subscription model.
This is the real problem, Adobe made kick ass software that was so good it cut off their future revenue stream, so they decided to rent it out instead of letting people own it. Fine, that’s their decision, just like it is mine not to continue paying for something I use once a month as a photography hobbyist.
Adobe sent an update that made your old, paid for version of PS stop working?
No, you’re right. I misspoke on that. I’ll edit my post.
I don't really agree with this take.
You're not wrong that owning your own equipment can be viewed in a similar manner as renting with the lump sum payment amortized over time.
But... when you do it yourself you can much more easily tailor costs that make sense for you.
I have essentially stopped paying for almost any online subscription SAAS product that I can replace with a self-hosted version or a desktop install. I have cut more than 200 bucks a month out of my budget (fairly easily, honestly - replacing recurring costs for things like evernote, myfitnesspal, photoshop, google photos, calendly, ifttt, etc).
I threw some old desktops into a microk8s cluster in my basement, and spent about $1000 on a decent NAS + drives.
I broke even in 6 months. Two years in and I've saved more than 3 grand.
The subscription costs are HUGELY inflated for my needs, and there's no way to bring them down in most cases, because SAAS companies lock features to tiers in a way designed to maximize revenue.
---
Basically - my strong opinion is that SAAS is so popular right now because it's a terrible deal for most buyers. Companies make more money with less work.
I think it's taking buyers a minute to figure out JUST how shitty the deal they're getting truly is. But trust me - SAAS is a shit deal in most cases.
The only time SAAS isn't a terrible deal is when you can buy a single month, do the task, and cancel. If you need to be using a tool repeatedly over time - you're WAY better off buying up front than you are leaking money every month to a SAAS company.
I don't disagree with you. But thats more a mispricing issue and not subscription issue.
In your case you've traded off your time to save money and it probably makes sense for you because you have the skills to do it.
But for others, the fact that these services are managed is the value for them. They are willing to pay a premium for and it even might make sense. Given that these customers are continuing to grow are they really mispricing?
Is it mispricing to price gauge during a shortage?
Probably not, but I certainly wouldn't find it ethical. I see the same problem here, except the shortage is artificial scarcity of a digital product.
Wonder if it's possible to build a business of reselling subscriptions as one time payments. A sort of reverse loan.
I pay your subscription forever but you have to pay me a lump sum right now.
Welcome to the world of finance! All products are either that, or the reverse. Have fun!
Honestly confused by what you’re proposing here. I can’t even figure out how this could work. You buy a subscription from a SAAS and then re-sell it (not sure how) for a one time purchase? And how do you make the money? Investments? Since you have money in advance? I’m genuinely confused.
They’re probably thibking of something like: I buy x seats or x installs for $A/month.
I charge a one time fee of $B to people to use in perpetuity, but require that when they’re not actively using it (or build it into my resell layer software) that a seat is released for someone else.
The assumption is that even though people pay the lifetime fee they won’t actually use it for a lifetime. Some might use it for 20 years and some for 5 days.
In that margin you hope to make a profit where SUM($B) > SUM($A).
Most of finance is financial products that look like this in one way or another.
We used to buy software that ran on our machines. We expected a certain amount of support. Eventually you would have to go purchase version x+1 of the software.
The support is priced in, its not like they are giving it away for free. And then you still had purchase the next version which sounds like an informal subscription with a longer period?
I suppose you could treat it like a kind of subscription. But in a real subscription, you have to take upgrades, like it or not. When you're purchasing the software, you don't.
Also, and this is the huge problem with subscriptions, it's rather common that I need to work with old data that can only be dealt with by older versions of software. Subscriptions lead to a kind of rot, because you can't save the old versions of the software for future needs.