Ask HN: [Pricing] Charging a one-time fee for a SaaS app?
![Ask HN: [Pricing] Charging a one-time fee for a SaaS app? by @sandeepshetty](/og/ask-hn-pricing-charging-a-one-time-fee-for-a-saas-app-4479420.png)
Do you know anyone that charges a one-time fee for a SaaS app like pinboard.in does? When do you think/know it makes sense to let someone use your hosted app indefinitely for a one-time fee?
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TOTAL DISCUSSIONS 28 comments
This is a bad idea. Any customer who really likes & uses your app as-is will eventually become unprofitable for you. Your "best" customers will use resources you have to pay for every month, but you only collected N months of revenue up front. You'll eventually have to decide to pull the plug and screw your users (like Joyent/Textdrive's forever hosting). Even before that, your financial incentives will be at opposites to the people who like your app the most, which is a bad place to be.
Ideally, you want your customers' usage to align with more money to you over time, not less.
If you need money now, offer your customers a discount for quarterly/annual prepayments. You're more able to predict your costs out 12 months, so you're less likely to make a fatal mistake here.
Yeah -- I've always sold Bingo Card Creator on this model. It is modestly less crazy than you think it is: if you're getting customers on an ongoing basis, attrition plus the natural near-zero marginal costs of servicing customers means the new customer keep the lights on and older customers get to freeload indefinitely.
Suggestion: make something that will let you charge on a recurring basis. (I once thought BCC could never sustain that. It probably could, if I had a mind to implement it, but the pain involved isn't worth it to me.)
Starting from $0 revenue on the 1st day of every month sucks. Starting from "I'll always have at least 90% of the revenue I did last month" is, on the other hand, a wonderful thing for the business in every possible way.
Charge yearly a X%(go figure it out what works best) of what you would charge one-time.
Charging a one-time fee is evil for the customer with common sense. If your service stops growing, what about the customers that already paid for it?
You don't pay for updates in a SaaS app as it's in the cloud, so... I can only truly see a recurring model working. UNLESS you know very well your userbase and you know very deeply it's the only model that would work.
I've thought of doing a slight variation on this for SaaS apps that are project based - charge once for each project for something like six months or one year access. I think it would work in situations where the customer only needs use of the product for each project for a defined amount of time.
If you've got ongoing expenses (e.g., bandwidth) you'll need to make sure to charge enough that income from the one-time fee is enough to cover the monthly bills + profit, in perpetuity.
Annuity tables (or the annuity formula) may be helpful here.