Question for people who have built commercial apps

[QuinnMartin]

Back around 20 years ago it was common for most major software running on the PC to be payware.  Nowadays it seems people increasingly expect programs to be free or low cost.  Is there some truth in this?

Like for the GIS market Arcview used to have a near monopoly, but there is now QGIS which is free, so that redefines people's expectations.  With video editing there used to mostly Sony Vegas and Adobe Premiere, but now there is Davinci Resolve which is powerful and is free if you're working at 2160p or less and not using a lot of special effects.  Those are just some examples.

For those who have authored payware over the years I am wondering if you find some benefit in having a free community version instead of a trial version, and a premium paid version on top of that.  Have you gotten much benefit from this, or do you find you lose a lot of potential customers to the free version?  I am figuring increase uptake of the program would offset that.

Curious to hear your thoughts.

[Leledumbo]

The best pricing model for current days seem to be a split between:

• free, limited basic version
• cheap monthly subscription with important features, with a discount for yearly
• more expensive monthly subscription with convenience features, again with a discount for yearly

This would require some logic to be moved to server side, but that's indeed the trade off and most people will be able to afford it.

[BrassGear]

Personally I like to own something if I have to pay for it. I avoid anything with a subscription model for that reason, and another reason is the inflated cost compounded over years.
I think there are a lot of people that feel this way, but the software industry is trying very hard to move to subscriptions, for obvious financial reasons. In my opinion, it is better to support a model that favours reliability and longevity.

[marcov]

Back around 20 years ago it was common for most major software running on the PC to be payware.  Nowadays it seems people increasingly expect programs to be free or low cost.  Is there some truth in this?

I don't think it is fundamentally just an audience thing. Of course, if there are free alternatives that are equivalent, why wouldn't they go for it? But if you can get something better suited for a reasonable price, why wouldn't you just pay it also?

So, yes, the free alternatives moved, but at the same time paid software got proportionality more expensive. In the last decade even more so due to subscription fees.

The reasons for that can only be guessed, but I think that 1995-2005 was an expansion time for software. Heaps of users entered the PC market for the first time, and market share among new users mostly determined your next year's revenue.

After that, software directly marketed to end users became more a replacement market, and growing market share exponentially was less of an option and direct revenue (and thus company profitability) became more important. 

All this lead to price hikes and targeting the products at more advanced users that would pay those prices. That leads to a vicious circle where your audience becomes smaller and more price hikes are required.

As we are on a Lazarus/FPC forum, one of the ultimate examples of this kind of behaviour are the products of our direct competitor, Turbo Pascal and Delphi.  Their current commercial offerings start at Eur 1500/year. This was sub Eur 100  for an eternal license (or equivalent pre euro currency) for the cheapest, commercially usable edition a good 20 years ago.

Now there has been some inflation in that period, but not 1500%, and than I'm not even taking into account perpetual vs annual fee.


Even back then many software had free versions bundled with e.g. hardware. Scanner OCR etc, entry levels of photoshop with digital cameras etc.  route planning software with GPS equiped PDA's etc.

For those who have authored payware over the years I am wondering if you find some benefit in having a free community version instead of a trial version, and a premium paid version on top of that.  Have you gotten much benefit from this, or do you find you lose a lot of potential customers to the free version?  I am figuring increase uptake of the program would offset that.

I write software professionally for over 20 years now, but never sold boxed products to end users. Always B2B "solutions".

So we have established above that if you sell perpetual licenses, the number of users buying it will naturally decrease by year per definition in a not exponentially growing market like 1995-2005. And you still have to spend marketing to get even those.

That is where the free versions come in, these are architected so that the community version only covers one common, but occasional and basic use . People requiring the full product will have other uses/requirements that only the full product satisfied.

This essentially make the free users kind of a marketing instrument. People starting/testing the free version in companies and later upgrading, people using it are members of some club or forum related to what they are doing and tell what they are using etc.

Never make the mistake that a free user is a customer lost. Most would never have been a customer anyway. You will need to carefully craft your SKUs so that this relation between free and paid remains to not cannibalise your market.

It is a fine line that requires careful balancing. One tip that I think is smart is to make some way to end the free version. (e.g. some form of activation) Not so much to be able to take them off the market, but more to force your users always using the newest version with the conditions and limitations attached to that version. Makes the balancing easier, and allows you to correct a slip up int he balancing.

And also subscriptions. I share your dislike for them, and it is often not easy for non widely established products, but if there is something in your business model that requires annual updating of software (or its data), it might be at least an additional revenue source. Even if just at modest prices (so not pay for use, but pay for data updates), and at the same time that can be a vehicle to keep the upgrade train moving a bit, also improving revenue.

[VisualLab]

Typically, the software that the average Smith might need and be able to use (at least on a basic level) comes in commercial and free versions. For example:

  N1. content browsers: WWW, PDF, photos,
  N2. players: audio, video,
  N3. editors: text, presentation, raster and vector graphics, audio and video editing,
  N4. computational: spreadsheet, etc.

In this category (N), there are actually a lot of free programs. This is an obvious issue, as previous speakers have already described.

The second category (S) are programs that the average Smith does not need (e.g. at home, for his own needs)¹, because they are usually of no use to him. These are programs like:

  S1. databases for servicing companies/institutions (i.e. for "bureaucracy" of various types): customers, patients, accounting, etc.
  S2. engineering - various specialized CADs, CAMs, etc. (mechanics, chemistry, construction, electronics, etc.),
  S3. laboratories, hospitals (quality control, forensics, etc.): operation of laboratory and medical equipment and specific data processing (numerical, statistical),
  S4. scientific – highly specialized programs with a narrow subject, designed to simulate phenomena, processes, etc. (physics, chemistry, biology, etc.).

In the S1 category it should still be profitable to create this type of software, but there is huge competition (these programs are relatively easy to create compared to the next 3 groups in this category).

In the S2 and S3 categories, software development should be most profitable. But there are much fewer recipients of such programs than in the S1 category. Additionally, developing software in S2 and S3 categories is much more difficult and time-consuming.

Category S4 is basically unprofitable. The number of recipients is relatively small, very specific, and the production costs are very high. Moreover, in this group there is an increasing expectation that the program will be free (especially those written for biologists dealing with the processing of genetic or protein sequence data). These people have heard somewhere that there are modules or libraries developed in Python. Many of these biologists, who have quickly learned a bit of scripting "programming", have created "applications" and make them available for free, without any guarantees. Basically, it is a plague of "IT crap". I criticize this, not because they are free, but because they are most often "monsters", full of omissions and errors.

To sum up: large engineering, laboratory and medical programs can only be created by large companies, because it requires many experienced programmers and large funds. But small groups of programmers (companies) can also create useful software, for example for smaller companies (hospitals are usually excluded due to the need to provide various certificates, etc. documents). It remains a matter of deciding how to choose a sales model. For a small software company, subscription sales can be the final nail in the coffin. And here I share the opinion of marcov.

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¹⁾ I am leaving out the rather small percentage of people in society, such as technology enthusiasts and hobbyists, who need (want) to use engineering programs (e.g. electronics, microcontrollers, etc.) and are able to use them.

[PascalDragon]

At the company I work at - we're producing backup software as well as software to delete disks for example - we have both free versions of our products that are restricted in their functionality (and speed) as well as in various levels more feature rich variants till the “Enterprise” variants that allow cloning/deleting of multiple disks at once.

For us that works rather well as more or less every user can find their needed edition without really cannibalizing higher editions.

[Rizzz]

Rizwan from XtraSaaS here. Yes, there's truth to this shift. Free alternatives like QGIS and DaVinci Resolve have raised expectations for free or low-cost software.

Offering a free community version can be beneficial. It increases the user base, builds community support, and can lead to more sales of the premium version. While some may stick with the free version, the overall exposure and adoption can offset this by providing more upselling opportunities.

[af0815]

Rent a software is for me and the company a NoGo. We have sometimes isolated networks, so if you need to be online is a a nogo for industrial enviroment. So paid software is ok and if you can test this with a community or time limited version is ok.

In private i never use software with subscription nor on my gaming console. I pay for software, this is ok, but rent - no. The same with home automation, no cloud based version. If you can use a cloud, but not nessesary, it is ok. Here you can say, subscription is ok, but not for the functionallity. BTW: The a lot of devices around, not working anymore, why the company have shut down the the servers for some reason. This is a example for me to make the rigth decision in hard and software.

[Thaddy]

Well, that depends on the difference between payed support and actual subscription for new features. A lot of premium open source projects make their business model and revenue around payed support and that seems to work.

A second point is how to define commercial software.
E.g. I wrote commercial software for 2/3ths of my life, where the client is free and the server 100% proprietary. (on-line banking software)

[Rizzz]

Back around 20 years ago it was common for most major software running on the PC to be payware.  Nowadays it seems people increasingly expect programs to be free or low cost.  Is there some truth in this?

Like for the GIS market Arcview used to have a near monopoly, but there is now QGIS which is free, so that redefines people's expectations.  With video editing there used to mostly Sony Vegas and Adobe Premiere, but now there is Davinci Resolve which is powerful and is free if you're working at 2160p or less and not using a lot of special effects.  Those are just some examples.

For those who have authored payware over the years I am wondering if you find some benefit in having a free community version instead of a trial version, and a premium paid version on top of that.  Have you gotten much benefit from this, or do you find you lose a lot of potential customers to the free version?  I am figuring increase uptake of the program would offset that.

Curious to hear your thoughts.

Totally agree! The software landscape has shifted towards free or low-cost options. Examples like QGIS and Davinci Resolve show how free versions can disrupt industries. Offering both free and paid versions can be a great strategy, building a loyal user base and driving adoption. Some users may stick with the free version, but many will upgrade to paid for extra features or support.