Questions

Moving from a traditional one-time software license & maintenance price model to a subscription fee model

I'm looking to move from a 10 year one-time license + yearly maintenance pricing model to a monthly subscription fee model (3 or 5 years minimum contract duration). Ideally I'm looking for a simple formula that would convert from one model to another.

3answers

Perhaps I am not understanding your phrase or what you're looking for. A simple formula would be 10 years divided by 120 (to get the fee per month). To keep all things equal, this number is now your monthly subscription fee.

Feel free to drop me a note if there is something we can clarify.

All the best,
-Shaun


Answered 3 years ago

You could go many different ways with this remembering that your fee should be high enough to make you money, but low enough to not bother your subscribers (and also not way off the market).

You could take your yearly maintenance fee, and divide it by 12. Then you have a monthly subscription fee. Then you have them on the monthly subscription model, and can sell up from there on added services.

If that doesn't create you enough revenue to actually make money, you need to formulate a relaunch model altogether. You create a new packaging of your service, a new pricing scheme, that will work for new business. And then you try to get as many subscribers as possible to the new model telling them about all the new good services, they didn't have before motivating the higher price. If they don't move with you, they don't value the new services high enough. Again - the new model should be competitive also.

Again there are multiple ways to go with this. If you want further dialogue on it, feel free to give me a call.

Best regards
Kenneth Wolstrup


Answered 3 years ago

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