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An examination of the software market… (high level)

The interesting reality of the software world today is the Freemium, subscription and one-time payment. Freemium is where you get an application on your device that is free. If you need advanced features, you have to pay. Subscription is where you pay a monthly or yearly fee and receive an application. If you stop the lubrication in theory, you have to remove the applications. Finally the last is the more traditional pay once use forever. The three models have evolved considerably. If you look at the actual business model leveraged from roughly 1980 (with the IBM PC Jr release) to roughly 2007, the pay once and use as long as you wanted to model was predominant.

The rise of the Apple and Android stores pushed the freemium model to the top. A friend of mine who teaches economics says that the freemium model has produced the same results as the original pricing model. We hear about the many software packages that make a lot of money using Freemium. Angry Birds is the poster child of the overall model.  He argues that Freemium and pays one-time, have the same issues. The one-time pay software cost normally made it prohibitive for many people to buy the software. The rise of pirated software was the result. The Freemium model has a problem as well; the quality of the free solution has to be good enough that you will pay more.

Subscription models are actually where the vendors will consistently make more money. You end up using the software, paying the subscription once a month, once a year or so on. Either way, it is a consistent and guaranteed revenue stream for the vendor. The products allow you then to get the upgrades for free and yet not have to cough up the original price. The vendor will also sweeten the subscription deal. Take MS Office for example 5 device is 99 bucks a year. If you considered that buying office was 199, five copies would be a thousand dollars. The one time cost is of value! But the vendor, in that case, would still make money. The market is littered with one time and Freemium companies that are no more. Subscription is the best long term for consumers and the software vendors.

Interesting change in the market over the last ten years.

  • Have you ever purchased the adds on for free software (Freeium)?

    • Yes
    • No
  • Do you have a go-to software package?

    • Yes
    • No
  • Do you have any one-time pay software on your phone or computer?

    • Yes
    • No

What do you think?

14 points
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Written by DocAndersen

I am a long time blogger and technology poster.I focus on what is possible, but I also try to see what is coming. In recent years I have been focused on sharing the memories of my family, as part of my Family History Project.

20 Comments

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  1. I refuse to use the subscription model- once I pay for software, it’s mine. Also, most subscription model software requires a connection to the net and my production machine is sandboxed, so I couldn’t use it anyway…

  2. Unfortunately, I do not know this software. I am more amateur. If I choose correctly from your posts, you are a computer expert. I do not currently need any special software. If I had to decide, I would opt for a 1x payment.

  3. When I was a programmer we used to talk about the 80/20 Rule. 80% of the users use 20% of the features.

    There is also crippleware. It differs from Freemium in that it gives you all of the features but puts some limitation on them. Take a photo app for example:

    The Freemium version might give you 10 different filters while the paid version may give you 100.

    The Crippleware version would give you all 100 but only allow you to save the image in low-rez.

    • You are 100% right Gary I did forget crippleware! I suspect I did so because when I something like that I just uninstall.

      Photo editing apps really seem to flood that market.

      I remember the 80/20 rule. We used to tell CIO’s that all the time back in the day!

  4. I have no idea about this I just know that what I have in my computer is what I have and I don’t have to pay anything additional. My friend who services my PC does keep telling me that I need to have more RAM added and I don’t even know what that means. Apparently, when I got to different sites many times they annoyingly snap the pages and I have to reload.

    • RAM is Random Access Memory when your computer turns on it loads the operating system and the programs you use into RAM. if you don’t have enough it has to load the OS and the applications into a swap file on your hard drive. Doing that slows down the computer. The more RAM you have, the less you use a swap file.

      Thanks!!!

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