Choosing between different pricing models can be hard, but it is a crucial decision to get right. Should your software product be sold at a one-time price? Should you charge a continuous subscription fee? Or should you maybe even charge customers differently depending on how they use the product?
These questions will be answered in today’s blog, as I will briefly introduce three of the most common pricing models, Try-and-Buy (Perpetual), Subscriptions, and Pay-per-Use.
You can also find the video that we have made for this blog here:
The Try-and-Buy (Perpetual) Pricing Model
To illustrate some different ways a software product can be priced, consider the case of a music streaming app. They could let you try the application for one month before you have to pay the price of $50 to continue to use it forever, a so-called Perpetual, or Try-and-Buy model. That way, users are able to temporarily realize the value of your product for free, and at that point, they have an easier time justifying the one-time price.
The Subscription Pricing Model
The streaming app could, maybe more realistically, choose to impose a continuous fee. Let’s say a monthly fee of $12. Does that sound familiar? That is called a subscription model, and it can be beneficial from a business model perspective since you get a more predictable cash flow each month, and you might be able to attract users who are not willing to pay that high one-time price. The lifetime value of a customer can still be very high if they continue to use the app for a long time.
The Pay-per-Use Pricing Models
The last pricing model is to charge customers differently depending on how they use the application, the so-called Pay-per-Use model. The music streaming app could charge customers, let’s say $1, for every hour of streamed music. The more you use the application, the more you pay at the end of the month! This can create a more fair pricing plan – big users of your product pay a high price but they get a lot of value, small users pay a bit less but at that price, they still think it’s worth it.
Implementing Pricing Models with Cryptolens
So how do you implement these pricing models in practice? It all begins with a software licensing system. In short, the system is linked to your payment provider such as Stripe or PayPal, and it makes sure that only people who pay get access to your application.
With Cryptolens, you can implement an easy-to-use software licensing system within minutes with our comprehensive guides. Hundreds of innovative companies are using our licensing as a service (LaaS) platform to license all kinds of applications.