Last week I shared with you an interesting trend that I’ve noticed in the productivity industry: more and more productivity apps are using the color purple as their icon. I know, it’s a game changer.
Just kidding.
It’s this: productivity apps are moving towards a subscription model.
That means instead of paying a one-time fee, you will end up paying every month or year to use your favorite productivity app.
Just look at DayOne (our favorite journal app), 1Password (password manager), TextExpander (faster typing). They all started as one-time purchase apps but have since moved on to a subscription model. This is a trend that’s happening right in front of us and I expect more apps to follow.
The day after I emailed you, Ulysses, a popular writing app, announced that they moved to a subscription model too.
The developer and co-founder of Ulysses shared on a Medium.com post why they’re moving to a subscription model. He says:
“Our users expect a continuously evolving high quality product — and subscription is the only way we can truly deliver on that expectation. We want to make sure the app will be around for years and years to come. We want to heavily invest in its development, and this requires the right setting for our team, our families and our users. Writers want to rely on a professional tool that is constantly evolving, and we want to keep delivering just that.”
It’s a worthwhile read to understand how app companies make money and how most struggle to stick around.
The short version is this: as of now app companies really only make money when they release new versions of the app. It generates a huge spike in sales that will give them enough to eat and then work on the next launch.
This feast-and-famine approach is very common among new businesses. Heck, Asian Efficiency was like that in its initial stages.
The problem for app companies is that they’re being forced to focus on launching something new every couple months. Every launch must have new features or something radical to make it worthwhile for existing users, like you and me, to upgrade. This oftentimes leads to rushing things, lots of bugs, bloated software and over time an inferior product.
This is obviously not sustainable.
Founders of app companies are starting to realize that this model doesn’t work and are slowly moving to subscription models.
But here’s a bigger trend that will force app companies to adapt to the subscription model.
It’s a trend we’ve noticed around early 2015 but we didn’t really talk about it with you until our podcast episode “8 Productivity Prediction for 2017”. Mike and I pretended to be nerdy fortune tellers and we made bold predictions about the future of the productivity industry. So far we’re 5/8 and we still have a couple months left.
One of the predictions came true and it’s this: more people are moving towards a cross-platform solution.
Now that Microsoft is stepping up their game again and Android has become more popular, we’ve noticed among our customers that a lot of them use a combination of Apple, Microsoft and Google products.
One might have an iMac at home, Windows at work and an Android phone.
We started to notice this in early 2015 when we kept getting questions from OmniFocus users “what do I do when I use Windows at work and I have an Android phone?”. I answered a lot of these questions on the blog and they also happen to be one of the most popular posts of 2015 and 2016.
When I look at our private forum in the Dojo and its associated Slack channel (where our members can interact with each other and our team), I see the same thing. The majority of people use a combination of Apple, Microsoft and Google products.
How does this tie back to productivity apps moving towards subscription models?
As an app company, in order to develop a useful app, it has to be cross-platform. Otherwise, you’ll miss out on a large portion of users and users at some point will likely leave you.
The people at 1Password realized this. The people behind TextExpander realized this too now that there’s a windows version of TextExpander. For the longest time Smile Software, the company behind TextExpander and PDFPen, was Mac-only but now they’re slowly moving towards making all of their apps available on Windows too in order to save customers.
(Side note: I’m seriously concerned with what will happen with OmniFocus. I’ve seen a lot of people move away from OmniFocus because there’s no option on Android and Windows (something I’ve told you before in the past). This will continue to happen and all the Mac-only apps right now should be concerned about losing users.)
To create a cross-platform app, you have to invest a lot of time and money into the app. Just imagine all the testing you have to do to make sure it works on an Android phone (there are hundreds of models) and on Windows.
On top of that, you usually need to build a sync service to house the data so all the different platforms can stay in sync (nobody wants to be on the “same wifi” network to sync up – that’s so 2012.)
As you can imagine, it’s expensive to develop a cross-platform app. Where does that money come from?
You guessed it: subscriptions.
It gives app companies predictable cash flow that allows them to create better apps and that are cross-platform.
You, the 2017 consumer, want a cross-platform app. You want to have the option to be able to use your favorite app on whichever product and platform you use.
We’re in this transition period right now where app companies are starting to realize that and that’s why I’m telling you right now – be prepared to pay for subscriptions for your (productivity) apps.
2018 Prediction
I know we’re not in 2018 yet, but this will be one of my top predictions: you will pay more than $250/year in subscriptions to use your favorite productivity tools.
As I mentioned in last week’s email, that’s not expensive and shouldn’t be a problem. You’ll recoup that cost in the increase in productivity.
If this scares you and you’re thinking of switching apps that still use a one-time purchase model, be prepared to:
- Spend a lot of time doing research for the right app to replace it with
- Spend a lot of time experimenting, trying new workflows and setting up your new apps and integrations
Is that really worth it for an app that will cost $60/year? I don’t think so.
As the co-founder of Ulysses wrote:
“App subscriptions are a bit unpopular at the time of writing, but we think they clearly are the way forward, at least for our kind of app: a complex, multi-platform productivity app.”
I agree.
You, the consumer, benefit from this trend because you’ll be able to use your favorite apps on all the different products and platforms you use. It’ll just cost a little more.
-Thanh & the Asian Efficiency team
P.S. In a strange way, this subscription trend will force you to be more productive. How? When you know you’re paying $60/year for a tool, you want to maximize the value and actually use it. Nobody wants to waste money paying for something they don’t use. By paying for something (expensive), you value it more and will force yourself to use it. It’s a weird psychological effect but it will benefit you albeit in a weird way.
P.P.S. Anytime you see a free app take off and become really popular, expect it to either die or turn into a subscription. If a free app turns into paid upgrades, I would even then be worried because it’s not sustainable for the business as I outlined earlier. Something to ponder about as you evaluate your current usage of apps.
I understand that app companies need to make money and they need to sustain. But this is purely from the company point of view. What about the user? I’ve tried several subscriptions in the past. As someone discussed elsewhere in the comments, users are going to be financially overwhelmed with 10 or 15 subscriptions to be paid every month. Companies charge same amount in every country, but here in India I can’t afford each and every subscription in parity with the States, because my income is not the same.
Secondly it’s not always that we will stick on to a subscription or use it more just because we bought it. I bought annual subscription for an app because I liked it initially, but within a month, I had a repulsion and stopped using it.
I enjoyed reading this article. I don’t mind the subscription model, but I think I’d rather see companies move to a more extreme freemium model. For example, I depend on Evernote now – if it’s not in my Evernote account, it didn’t happen. The price of a premium subscription to Evernote is well worth it for me. But how did I get there? I was a free user for a few months. That time allowed me to begin using it, ensure it was going to fit my needs, etc. I don’t think I would mind if companies stripped down free versions even more – just enough to give me a taste and understand if this is a tool I can use. I prefer the freemium approach over a time-limited trial. I can’t really use a product in 14 days to know if it’s something that will be useful to me. Plus, having such a limited amount of time doesn’t really encourage full use. With Evernote, for instance, I knew that if I ended up not using it that I could bail pretty easy… I would have as much time as I needed to get my content into a different system, I could use it until I was fully implemented in that new system, etc. If I know I only have 14 days to try the software, I’m most likely just going to play around with it and see what it can do. I’m not going to *actually* use it, so I’m never going to see how it could have an impact on my productivity.
As an aside, I agree with the remarks about OmniFocus. I’m a Mac/iOS user at home, but a Windows user at work. My work life is really where I’m focusing my productivity efforts. I was seriously interested in OmniFocus when I was first exploring tools to improve my workflow, but obviously moved on because of the no-Windows limitation. I guess it’s up to them if the Omni folks want to be Apple-fangirls and stick up their nose to non-Apple products, but they’re about to become dinosaurs in the tech industry. The days of operating system wars are over – everything’s in the cloud these days, and nearly all major apps are available on a variety of platforms. Users expect their favorite tools and software to be available wherever they want it, not where the software company thinks it “ought” to be.
Interesting analysis. I’m curious about the business justification for those companies NOT moving to the subscription model.
I was also hoping you were going to say something about how AE is changing to reflect the trend towards the multi-platform user experience. ;-)
Good article.
Before following AE, I was all too glad to use free apps, but since learned the importance of having a reliable service to use. As more companies will move to the subscription model, we will depend even more on AE to guide us through the different options available to make better use of our budgets.
I love Omnifocus and hope they won’t let us down in not providing a cross-platform service sometime soon.
100% agree with this; paying a subscription is fine, but I must value the product to do so. Not paying doesn’t mean the product isn’t valuable, it just isn’t to me at that time.
I am worried about omnifocus as well. It’s almost the sole reason I’ve stayed with an iPhone for a few years now. I really hope the omni group have a cross platform project going on behind the scenes, or at the very least, a web version, and they’re considering moving to a subs model as well. This would smooth out (in monetary terms) the jump to the next version over the course of a year and still provide a steady revenue stream to feed the business.
I’ve been watching the trend toward subscription models for the past several years. Microsoft, Adobe, and others began the trend that is now being followed by others.
While I understand that companies need to make money, the average user cannot afford to buy subscriptions to everything. They are struggling to make their house payments, their car payments, and put groceries on the table. Subscriptions hold their data hostage when they lose a job and can’t afford to pay the fees, and this data can prevent them from being able to secure another job in worst case scenarios.
I’ve already seen a backlash on the subscription model. I see Microsoft and Adobe users purchasing older versions of the software that they use, complaining when the companies stop activating them during reinstalls because they are “no longer supported.”
As for me personally, I won’t buy a product that requires a subscription. I learned a long time ago that the lower you can keep your recurring expenses, the easier it is to survive when financial tough times arrive. I’ve switched to plain text for most of my productivity needs, and open source or non-subscription based apps for others. Very little of what I do can’t be accomplished with plain text and Markdown in a free editor, so this change has actually simplified my computing experience.
I’m curious to see what will happen if this trend continues. I suspect that Microsoft will start charging subscriptions after a time for users of Windows 10, and that is when it will start to get interesting. It may not be this year or the next, but I honestly believe it will happen. That is when the average user will either buckle down and pay, or begin a massive migration to other platforms.
Productivity tools help us deal with time. So why do we measure them by a lump sum of money? If the $250 figure scares you, it’s because you’re looking at it as a single occurrence. How do you feel about that when you realize it’s only about 68 cents a day?
Yes, I still have to budget for them. None of the subscription-based apps or software I use charge daily. Even so, it’s easy to assess the return on investment. At the end of the day, all I have to do is ask myself if I made more than 68 cents.
The biggest challenge to entrepreneurs often is their own point of view.
Hi
Good blog article there …
Just having trouble understanding this sentence… is it missing the “to” in front of the word “apps”?
If this scares you and you’re thinking of switching apps that still use a one-time purchase model, be prepared to:
First of all yall’s (as I say as a Southerner) website, tools and podcasts are amazing. Asian Efficiency (love the name) is the thinking man/woman’s productivity site. I am sure you are right about the subscription model but it makes me sad bc I am an app junkie. Perhaps complementary apps will band together and offer bundles of their apps at a discount to buying the same apps separately.
Would love to see you guys do an app but it probably wouldn’t be profitable. I’d like to plug a favorite productivity app of mine, Kanbanflow.
Sorry, I misspelled your name, Thanh. I was typing what I was thinking. Dangerous!
Hi Tan, I am concerned that the blowback to subscription will be people turning to open-source. That has its own benefits and there are really great OS tools but the overall effect will be, IMO, a decrease in productivity/quality. Subscriptions are ok, for me, but every app out there expecting me to pay $60 or more per year adds up to an unsustainable level in my household. A teacher in school says “It’s only one X” but when you multiply that by 6 subjects it turns into a kid that never gets to sleep because of homework. Same with subscriptions. Thanks for AE and for being there!