When Should Software Be a Subscription Service?

The excellent Mac utility app TextExpander is moving to a subscription pricing model, and this is creating a dialogue about the justification for such a model. From a one-off purchase of $35 – plus upgrades every couple of years, usually at about half that price – Smile Software has moved to a monthly subscription service that would cost $47.52 per year. The company defends this pricing by explaining that they’ve moved the management of the software’s data to a web server, but for most individuals, this service is unnecessary. While there are interesting features for teams – shared text snippets, which can make it easier for employees in a company to stay on message – even this version of the software costs about $100 per year, per employee.

Is there anything in this upgrade to TextExpander that is compelling to individual users? My guess is that Smile has a lot of large business customers who will welcome the shared snippets and team management of their higher-priced offer, but how many individuals actually want to share snippets, or need their snippets to be stored on the web? Dropbox syncing is fine; it allows me to share the same snippets on my iMac and my MacBook.

This has raised the question of when software should be sold as a subscription. Developers may say that they don’t have to hold back features for a major upgrade, and can add new features at any time, since the subscription includes every upgrade to the apps. Consumers, however, see this recurring payment as often stifling innovation; once a company has guaranteed income, and users are locked into an app, they are unlikely to switch, and the developer has little incentive to improve their products.

I don’t contest the fact that developers need income. I have gladly upgraded TextExpander every time there was a new version, even if the changes weren’t important to me. It’s important to support independent developers, to ensure that the Mac and iOS ecosystems have excellent apps. In addition, the race-to-the-bottom pricing that we’re seeing with the App Store model is preventing developers from making enough profits.

The real issue here is not so much that of whether a subscription is good or bad, but of its cost, and its value to users. I have long used TextExpander, and would be willing to pay, say, $20 a year for the app. This is roughly how much I have spent on the app and upgrades, averaged over time. But $47 is just too much to pay for what this app does, especially when there are excellent alternatives, such as TypeIt4Me.

A number of apps and services are sold as subscriptions. Some examples of this are:

  • Microsoft Office, $100 per year for home users, for up to five computers, 5 tablets, and 5 smartphones.
  • Google Apps for Work, $50 a year for email, Google Drive, and a suite of productivity apps.
  • Adobe Creative Cloud, and, in particular, its photography package, which includes Photoshop and Lightroom, $120 per year.
  • Evernote, with clients for just about every platform, offering one free tier and two paid tiers, $25 and $50 per year.
  • Todoist, a task manager, with Mac, Windows, iOS, Android, and web clients, $29 per year.
  • Apple Music or Spotify, $120 per year.

When you look at what these apps offer, and then compare TextExpander’s pricing, you see the problem. TextExpander – which does an important but limited task, that of expanding snippets to longer bits of text – costs nearly as much as Google Apps, or Evernote, services with wide-ranging feature sets.

As I said in my article yesterday, “I really do feel bad to have to say this; I think the people at Smile are great, and they make excellent software. But I think they’ve made a big mistake, essentially increasing the price of this app by more than double.” The move to a subscription model just doesn’t make sense for this type of app, and the increased cost simply isn’t justified.