As many have noticed, and blogged about, NewsGator’s individual products (meaning everything except NewsGator Enterprise Server) are now all sold on a subscription basis. This includes Outlook edition 2.5, and the upcoming FeedDemon 1.6. Actually Outlook edition 2.0 was sold on a subscription basis starting earlier this year, but we didn’t make a big point about talking about it.
Lots of existing customers have asked why we did this…so let me talk a bit about it. Contrary to popular belief, we didn’t have a secret meeting where we tried to figure out how to squeeze every last dollar or euro out of our customers. :-)
So why, then?
Well, here’s the thing. Back in January of 2004, NewsGator Outlook edition 2.0 was launched, along with NewsGator Online (formerly NewsGator Online Services). Outlook edition had a license fee (it was $29), and if you wanted to use sync or any of our online features, the online subscription started at $5.95/mo.
Later, in October of 2004, we made parts of NewsGator Online (most notably the web edition and media center edition) available for free. Other services (smart feeds, premium content, mobile edition, etc) were still available on a subscription basis.
So far, so good, we thought. We were selling stuff the way people were used to paying for it – that is, some stuff for free, a license fee for software, and a recurring cost for services. Right?
Wrong, as it turns out. Problem is, customers were confused. As we started to build more cool services in NewsGator Online, and as we started making more direct enterprise sales, we realized that everyone was confused. As customers learned what was available with the online system, they wanted it…but the whole license + subscription thing was too complicated.
And when we add new products like FeedDemon in the mix, it gets even more complicated, since FeedDemon will also rely on NewsGator Online features.
So what to do. We could just have a license fee, and eat the service cost. That’s what Intuit does with Quicken, as I recall…but they shut off the services after some period of time for each software release, and they piss off a bunch of customers every time they do it. Also, this doesn’t solve the problem for a user who doesn’t want the Outlook client – we’d be back to a subscription for them.
So we went the other way. Get rid of the license fees, and go with _only_ subscription pricing. Include all of the products in the subscription bundles – including Outlook edition, and FeedDemon (real soon now). And at the same time, we dropped the pricing. Outlook edition comes as part of the cheapest business subscription plan, which starts at $1.95/mo or $19.95/year. This is $10 cheaper than the old license fee.
And, we’re constantly adding value to the subscription bundles. For example – subscribers will get FeedDemon 1.6 as part of their subscription. No extra license fee, no nothing. So for as low as $1.95/mo or $19.95/yr, you get both Outlook edition and FeedDemon.
“But wait,” you say. “I don’t care about the online system – I just want the products.” Ok – let’s do a quick analysis over 2 years to get both products:
Old pricing: $29 (Outlook) + $29.95 (FeedDemon) = $58.95 (plus upgrade fees)
New pricing: $19.95/yr x 2 years = $39.90
Cheaper after 2 years, and at the end of 3 years, you’d be roughly money-equivalent.
But maybe you didn’t want both products, but really only one of them. The free upgrades are really the advantage then. Another example:
– initial fee $29
– major upgrade in 1 year $20
total – $49 for two years
New pricing: $19.95/yr x 2 years = $39.90
With the subscription plans, you get free upgrades, new products, and access to the ever-growing services available on the online site. And we’re committed to adding cool new stuff all the time to these plans – witness what we’re doing with FeedDemon. And hey – tell us what YOU want in these subscription plans…we love suggestions.
But what happens when your subscription expires? Well, the products will no longer activate. But you’re not going to be locked out of your data or anything…you just won’t be able to retrieve new content until you re-activate. You’ll have full access to your data even after your subscription expires.
So anyway, that was a bit long-winded. But we really feel like this was the way to go, given the challenges we were facing selling into consumer, business, and enterprise markets all at once.
And I know we’ve probably already lost some existing customers over this. But we’ve tried hard to make this work for you – so riddle me this. For those who purchased Outlook edition 2.0 prior to the subscription change, we’ve offered you 2 years of free service. Try it out – use it for those 2 years. And then come back at the end of that, when your subscription is up for renewal, and tell me honestly if you feel like you’ve gotten your $29 worth – and tell me if you feel like it’s worth $19.95 for one more year.
We’ll listen – I promise.