From Adobe products to Microsoft Office, many products are using subscription-based payment methods nowadays to maximise profit. App subscription is so popular because it generates continued cash flow for developers, encouraging them to optimise their apps on a long-term basis.

For consumers, we enjoy subscription-based payment because of a mental trick called “loss aversion.” It means that we hate the idea of “loss” so much that we would do everything to minimise the money we pay so that one-off $200 payment seems way less scary if we can pay just $20 each month. However, subscription has its drawbacks as well.

First, as the method offers you cash flow, it also provides your users with flexibility. Once they are finished with your product, they can just suspend the payment.

Second, for users, the cost of a subscription is far greater than that of a lump sum. Some users may refuse to use your product when they find out that you might need to charge them every month.

Now, as a product manager, you need to decide whether you need to go for a subscription or one-off payment; or you can simply give a choice back to your users. This is why Microsoft is offering Office 365 alongside Office Home, which promises one-off payment only.

I hope this was helpful.


Author Anchal

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