It's a bit off topic, but I wonder why everyone is so focussed on MRR (monthly recurring revenue). Why are you focussing only on people who want to pay you every month?
Especially for a tool that targets beginners. I mean, if someone uses your app enough to keep paying 20€ for it every month, I would assume that they'll soon want to upgrade to "real" video editing software. Adobe Premiere isn't that much more expensive.
Of course, the non-power users can just use the free version with watermarks. But who wants a watermark on their videos?
I always wonder why these SaaS companies do not offer something for casual users?
If I want to edit just a single video from a special event, why do I need to get a monthly subscription? Why can't I just pay $5 or whatever to remove a watermark from a single video?
I understand that targeting casual users may seem less profitable than targeting power users. But there's probably also lot less competition in that space, and it may help with word of mouth advertising if you don't focus exclusively on the most frequent users of your software.
Subscriptions are cool right now. It's an easy way, especially when you're a new company, to show that people like your product and need your product enough to use it on a recurring basis.
One off purchases are great for consumables. You wouldn't expect a shoe company to have recurring revenue (at least not monthly, should hopefully take a bit longer than that for shoes to wear out). But for software, the current emphasis is on making products people use, and pay for, regularly.
> Subscriptions are cool right now
> But for software, the current emphasis is [...]
Yes, SaaS is hot now, but this doesn't explain why.
> an easy way [...] to show that people like your product and need your product
This attempts to explain an advantage of Saas, but totally neglects the viewpoint of the customer. And that's the problem I have with it: SaaS is an advantage in the relation between the company and their investors (look, recurring revenue!), but for the customer it's often not a good thing.
The reason most companies have turned to SAAS is that it provides a more reliable revenue stream at the low end of the spectrum given that individuals are usually bad about paying attention to recurring billing, and much cheaper to support at the enterprise level. You don't have to support 20 versions of the same product, you just roll out one or two and support those.
I remember someone mentioning that one of the dark secrets of the SaaS world is reliance on people procrastinating on cancelling the subscription, forgetting to cancel it, etc.
I think if I had a SaaS company, I'd try to avoid doing that, and encourage people who are clearly not using the product to unsubscribe.
Most SaaS is enterprise facing, not consumer, so I don't know how much procrastination fits into it as the momentum behind decision making in a business.
The other part though is that if you want your data from a SAAS platform to migrate to another one, it's a giant pain in the ass because most SAAS platforms don't have "export data for use with competitors" at the top of their TODO lists. You need to get the data, get the new system configured, and then train your employees on that system.
Another complaint about MRR is that it doesn't take into account how much time/money was spent to earn that revenue. Is there a good alternative metric that factors in margins or profitability or something? MRR is great if you're venture-backed and don't have to worry about your marketing budget. But if you're bootstrapped (like these guys are), MRR is less useful than something that at least accounts for costs associated with the revenue.
It's true that it's harder to sell people on a monthly subscription, but once you do, the revenue is much more predictable.
From the entrepreneurs perspective, SaaS is a much more appealing business model, though of course customers would prefer to pay once instead of every month.
Also, I'm not a technical person so I might be wrong, but I'd also imagine that an online video editing tool requires a lot of money to maintain, so random one-off $5 payments might not be enough keep the lights on.
> the revenue [on a monthly subscription] is much more predictable
That's a common fallacy here on HN. But it's just not true that one-off payments aren't predictable.
If you have a large enough number of potential customers, and some small fraction of them buys your product every month, you'll end up with very predictable revenue, even if each single customer only pays once.
As the number of sales per month increases, the variance goes down, and you end up with remarkable constant revenue. I don't know enough about statistics to explain why that is the case, but I know from experience that it does work like this.
Note that I'm not saying that pay-once is more or less profitable than subscriptions. I have no clue, and I suspect this strongly depends on the target audience. All I'm saying is that subscriptions are not "more predictable".
Customer acquisition is expensive, and if you have a subscription-based model you only have to get a customer once. If you're relying on one-off payments, every transaction comes with acquisition costs.
Customer acquisition can be expensive, but that's not a given. If your product is good enough that people tell others about it, you might not have any customer acquisition costs at all. (I know that because I sell software and spend almost no money on marketing)
You can can't you. You can license
Premiere Pro for 1 month for $31 or at least it appears you can. When I go here https://www.adobe.com/creativecloud/plans.html and click Premiere Pro it gives me 3 options
1. Annual plan billed monthly $21 a month
2. Annual plan billed yearly $240 (So $12 cheaper)
3. Monthly plan $31 a month
$31 seems like an incredibly good deal to me since the software is amazing (IMO) and I probably only need it once every 2 years at the moment.
Good point. That is pretty affordable if you only need it for a short project.
But then again, I never even considered buying access to Adobe apps for just a month -- I'm wary of subscriptions, it's all too easy to forget cancelling them in time, and then you end up paying for software you don't need.
Especially for a tool that targets beginners. I mean, if someone uses your app enough to keep paying 20€ for it every month, I would assume that they'll soon want to upgrade to "real" video editing software. Adobe Premiere isn't that much more expensive.
Of course, the non-power users can just use the free version with watermarks. But who wants a watermark on their videos?
I always wonder why these SaaS companies do not offer something for casual users?
If I want to edit just a single video from a special event, why do I need to get a monthly subscription? Why can't I just pay $5 or whatever to remove a watermark from a single video?
I understand that targeting casual users may seem less profitable than targeting power users. But there's probably also lot less competition in that space, and it may help with word of mouth advertising if you don't focus exclusively on the most frequent users of your software.