The subscription model has become many consumer-facing businesses’ favorite new revenue model, even if they aren’t a newspaper, magazine, or cable provider. It’s not difficult to understand why, who wouldn’t want a more predictable revenue stream in these uncertain times?
These days every content provider on Earth seems like they are introducing (or racing to introduce) a “+” or bundled version of their products, Disney+, Paramount+, Apple TV+, ESPN+, Discovery+ and on and on.
While some of this is no doubt fueled by increased media consumption because people are staying home during the pandemic, it seems there’s a bigger trend at play, and it seems equally likely that it’s only a matter of time before this trend makes the leap from B2C to B2B and enterprise subscriptions.
There are some obvious and novel ways that these models already benefit consumers.
Sticking with the media example, suddenly you have access to a seemingly infinite library of movies and TV shows on-demand on every device wherever you are, instead of having to buy or rent each program individually (which of course adds up quickly).
It’s certainly not unprecedented for retail customers to buy some products this way, not just from publishers and media companies, but historically even many kinds of “payment plans” or “rent to own” schemes were essentially akin to today’s subscriptions, although they generally resulted in the customer owning the product outright at the end, think auto loans or layaway plans.
Nowadays, many consumers are opting for the subscription model for non-media goods & services because they feel they get many of the same benefits as purchasing outright, but often at a better price point and sometimes without the “hassles of ownership.”
And how is this different? Well, in the old days you might lease an automobile instead of buying it for some of the same reasons (price, maintenance, frequent updates), but even leasing still has many of the same drawbacks like insurance, fees, fuel, etc. Plus (pardon the pun), you generally only get one choice when you buy or lease. If you switch to a subscription mobility service, many of those issues go away. You can get a bigger car for shopping trips and vacations, and a fancier car for a night on the town, or you might even opt to have someone drive you around which wasn’t even an option for most people previously!
More Consumers are Choosing Subscriptions
One could make the case that this has also already applied to the “home labor” market as well, with services like TaskRabbit, Instacart, Doordash, and more offering up humans to work on-demand as repair contractors, house cleaners, personal shoppers, and delivery drivers. There are even services like Care.com that can provide babysitters, in-home health care, and pet sitting.
Today, even eCommerce juggernaut Amazon is trying to make almost every order a subscription model instead of a one-time purchase with features like Subscribe and Save, going so far as to offer discounted prices for your promise to purchase more over time.
It may not work for every industry, and compounding subscription upon subscription will have its limits for consumer budgets as well, but it’s easy to see why someone would want to order from the “all you can eat” buffet instead of having to choose from an a la carte menu, especially when they’re hungry!
Now it’s Big Businesses Turn
So what about industrial and enterprise customers? Don’t they deserve these same benefits, just on a larger scale? In some ways, it may even flip the standard consumer model on its head of “unlimited consumption” to “all you can produce”.
Certainly, the CFO’s office has long measured the tradeoffs between CAPEX and lease expenses, more and more so over the last decade, which perhaps just coincidentally has paralleled the rise of both mobile devices and cloud computing along with the emergence of “subscription everything.” Much of the enterprise software world is already shifting to a subscription model via SaaS and hybrid desktop software.
But, in the same way that Tesla can unlock premium features for your shiny new auto long after you’ve taken delivery, why couldn’t John Deere? Maybe you don’t need every feature of that tractor on day one but you do once every quarter or at harvest time? Using John Deere’s (hypothetical) new “Plus” plan, you get even more value out of your CAPEX without having to spend more upfront, giving the owner the capacity to achieve “all you can produce” when you need it, not just when you planned for it.
If you’re doing commercial property maintenance, maybe Grainger should offer you a subscription model for paint and materials products in the same way that Amazon is trying to for home cleaning products.
Subscriptions & CAPEX
Likewise, for any product with historically high CAPEX and short amortization, furniture comes to mind (see Feather in the consumer space). What business wouldn’t want to have the latest advances in ergonomic furniture for their employees (even if they are working from home), instead of having to furnish entire buildings with upfront CAPEX or expensive financing.
Why shouldn’t Fedex offer small businesses a monthly subscription-based on average shipping volumes with the incentive that the business can get a discount on increased volumes during peak seasons or when a burst of activity occurs? Or a plan to help deliver all that furniture and equipment to and from home offices!
Of course one of the biggest expenses in many businesses is labor, and we’ve seen the good and bad ways that this can play out. Certainly, there have been temporary staffing agencies for a long time, but now the employee (ahem, independent contractor) can actually decide when they want to join the workforce on their schedule and at their convenience. The rise of Upwork and Fiverr seems to be making a dent in how businesses can deploy talent for their constantly changing needs.
Another reason businesses will want to offer subscription model is obvious: predictable revenue. There’s also more subtle reasons, like being able to better segment customers, especially those with changing habits and rapidly growing needs.
Subscribing to a Better Future
While it’s impossible to predict the next decade with complete accuracy -- I often say my crystal ball is even more occluded than most -- one thing that does seem clear is that the benefits of subscription services that consumers have been choosing from are bound to continue to become more and more available to businesses of all sizes.
What Does the Subscription Model Mean for Entrepreneurs?
The trend toward turning all products and services into subscriptions will have impacts on all our businesses. For entrepreneurs in the technology fields, there are some key takeaways that can help guide you through this transition.
Take a New View of Your Market Through the Lens that Subscribers are Your Most Loyal Customers
We all want to segment our customers to make sure that our product marketing efforts are having the most impact. Now, instead of just focusing on customers that make repeat purchases or purchase your high-end products, think of those who purchase subscriptions as being in your most loyal tier.
Skate to Where the Customers Are Going Customers increasingly want the flexibility, convenience, and predictability of subscriptions. By offering your goods and services in new subscription packaging, you can give them all the benefits of your top tier at a price point that makes it easy for them to buy.
Find Partners to Help This transition can seem daunting, and there are indeed challenges, not the least of which are provisioning and customer support. You shouldn’t hesitate to seek out a partner and/or vendor that has the experience, capabilities, and flexibility to help guide you through the transition and support you and your customers going forward.
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It has become clear that Apple has been slowly moving toward subscription-based pricing models for its software products over the last couple of years. Subscription-based models offer users access to always-current content or services within an app on an on-going basis. While the users get consistently updated software products, app developers receive a steady, reliable revenue stream as well.
While shifting an app’s pricing model to subscriptions is not “rocket surgery” as they say, it can be challenging to implement subscriptions in a way that benefits both the customer and the business. I want to offer some best practices to app publishers that might be implementing a subscription model for the first time.
Consistent Value Delivery is Key
There is an ongoing debate in the app world between free vs paid apps. Throw subscription apps into the mix and it gets even more complicated. Not only must an app be attractive enough to pay for once, but it also needs to be compelling enough for a customer to continue paying on an ongoing basis.
This means developers need to consistently demonstrate value to their customers. Updates and support for new iOS/Android releases, new features or functionalities, and other innovative functionality additions show customers that their ongoing financial investment is not wasted. How many people would subscribe to Netflix if they stopped adding movies? What if Netflix constantly added movies but didn’t communicate it to their customers? Creating value over time and communicating that value to your customers is the key to keeping them engaged.
Continuous Quality Focusing on the Customer
In the app world, user tolerance for bugs is lowest when paying a subscription. Stay on top of the quality of new features when driving improvements to the app. It should go without saying that your app must be responsive, high-performing, and function at an exceptional level of dependability. Continuous regression testing is crucial to catch bugs early. If peak levels of app usage may cause customer interruptions, customer service skills are key to remediating any issue brought to your attention. The faster customers get answers to any complaints, the greater the chance they remain loyal.
Create a Pricing Model, Then Simplify It
Pricing models are the kind of thing that tends to attract a lot of attention in enterprise companies. Generally, when multiple stakeholders design a customer-facing feature, more people means a more complex feature. Your pricing model should be as simple as you can possibly make it. For most companies this means a flat, monthly rate for all customers. Higher-priced products will often offer a reduced price on yearly subscriptions and some apps have multiple value tiers. With complex pricing, you risk losing the trust of your customers when you want to continue building it as you work to turn paying customers into brand advocates.
Make Interface Controls Easy to Find
This sounds like a no-brainer, but keep in mind this still the most common mistake in enterprise app development. The user experience (UX) has to be smooth as customers navigate through your app. Many companies try to “innovate” basic features like login screens and navigation when that energy is best spent on the product itself. As the saying goes: “UX is like a joke. If you have to explain it, it's not that good.”
“Generally, when multiple stakeholders design a customer-facing feature, more people means a more complex feature. Your pricing model should be as simple as you can possibly make it.”
Hallway testing should be part of every app development process at some point, using the least technical users you could find. Most app developers will have fairly technical colleagues give feedback on usability. Non-technical users will relate to the look-and-feel, enjoyment or dissatisfaction, and functionality within the app. If a subscriber can’t find what they need easily without much thinking, your app runs the risk of failing.
Bonus: The Unwritten Rule
Disclaimer: I am about to share some personal opinions in this section.
One thing subscribers expect is what I call the Unwritten Rule of Internet Media. It goes like this: I will either put up with ads or pay a subscription fee to enjoy content, but not both.
Now Netflix, to their credit follows this rule, but Hulu on the other hand shows ads with their subscription model (Hulu is a joint venture of Disney and Comcast). I see this as a division between old-world media companies and digital-native ones. Cable television companies prospered for years because they charged customers for the sale of content and charged advertisers for ads. Companies like Netflix, Pandora, and YouTube are proving the idea that customers will pay a fee to eliminate ads. My advice is to be aware of the customer expectation that paid-subscription apps should not have ads.
Last Thoughts
If we looked at things from the point of view of “What pricing model will get me the most revenue-per-customer and the highest customer satisfaction?”, subscription models are by far the best way to sell apps. While this model was popularized by SaaS companies, it is easily the best way to grow a steady revenue stream while continuously providing new value to your app to keep your subscribers renewing consistently on an ongoing basis.
Nami, of course, is your best way to help make that happen. We are committed to helping you grow app revenue, with the smartest way to sell subscriptions. Sign up for free today.
This past month we have been able to celebrate a few big wins at Nami. There is nothing we can announce yet but I’m sure you will hear from us on that front later. In an exercise of gratitude I have been given a chance to reflect on the origin story of our company and why Dan and I founded it two years ago. A big part of every company’s story is the motivations of the founders. As companies grow, these stories tend to get glossed over by the veneer of corporate public relations content. However, today I want to share with you, my personal reasons for deciding to build this great startup.
As the Co-Founder of Nami, I have my own indie developer history. It started when I got a brand new Titanium Powerbook at the original Palo Alto Apple store in 2001, and wondered to myself “what’s this developer tools disc?”
This was back before Xcode. All we had back then was Project Builder and Interface Builder. With those tools and Aaron Hillegass’ original Cocoa Programming for Mac OS X, I fell in love.
I had programmed on and off since I was a kid. My first language was BASIC on the Apple II but of course I also tried Pascal and even 6502 Assembly using ORCA/M. Professionally, when I worked at Apple in the 90s, I wrote a ton of AppleScript and Macromedia Director Lingo but also dabbled in C and C++ in MPW. But when I got this new Titanium Powerbook it felt like everything was new again.
Eventually, I released a program, Anthracite, and thus began my journey as an indie developer.
Long story short, I struggled for years.
I made a major mistake with pricing and marketing, thinking I’d made a companion tool to software like Dreamweaver and BBEdit and priced it accordingly. Companies of all sizes on four continents were using it as part of integrated workflows that they depended on for day to day use. They were in fields like financial publishing, forensic accounting, government analysis and so much more. My price point was far too low.
What turned out to be far more valuable than the measly amount of revenue it generated, was that I got introduced to the Mac indie development community. I attended my first WWDC as an outsider after having attended many times when I worked at Apple.
Through this experience, I met so many amazing people. I could never hope to list them all but people like Brent Simmons, Buzz Anderson, Gus Muller, Daniel Jalkut, Chuck Soper, Mike Piatek-Himinez, Luis De La Rosa, Christopher Atlan, Jeff Bigus, Steve Shepard, Dan Messing, and many, many more.
Basically, all the folks from the MacSB mailing list.
It was an incredible community that I’m still to this day honored to have been a part of, and to the extent that the community still exists and I can help in my latest incarnation, I’m eager to still be a small part of.
This is why Nami is so committed to helping the community. Not just the old timers I mentioned (sorry, we’re old now), but the new generation of developers staking their claim in this wild, wild west.
We say indie developers a lot now, but really what these people are is entrepreneurs. These people are willing to take a risk on their ideas and create something for others that they believe will help the world. Whether that’s a critical tool for today’s crisis (looking at you David Hodge) or something to help keep people entertained.
When Dan Burcaw (my co-founder and the CEO of Nami) and I did our last business, Push IO, we were primarily focused on the high-end of the sports and media industries. We always wanted to do more for the indie developer community. Our product was too expensive for most indie developers, but we hosted a free party every year at WWDC and 360iDev.
We also repeatedly sponsored iPhoneDevCamp and helped with the development of their satellite event program that went on to have events around the world. In fact, Push IO was born out of the original iPhoneDevCamp Colorado event in 2008, which fast forward to today, is arguably why Nami exists.
And that’s why today, part of my personal mission is to “give back” to this same community. Which is where Nami comes in. We looked around the mobile development ecosystem and have seen some alarming data.
Despite there being millions of unique titles on the App Store, fewer than 3000 apps were making more than a million dollars a year. That means that the vast majority of indie developers are struggling to break through.
Sure, many indie developers are “evenings and weekends” folks who may have a day job to feed their families, but no doubt even many of those aspire to be able to achieve their dreams and devote themselves full time to their passion of making apps. Now, when there is so much uncertainty world wide about what will happen next, wouldn’t it be great if we could help those indie developers achieve some financial freedom?
This is the essence of what Nami does, we help the people who make apps make more money.
I’ll spare you the technical details (most of which appear in our Free for Life announcement), but what we have is a set of tools that do three main things:
Make it as easy as possible to implement StoreKit on iOS and Play Billing on Google Play. This is done to enable app developers to sell in app purchases and subscriptions, allowing users to create consistent revenue streams from their apps.
We have a cloud-based paywall creator that makes it possible to do things that couldn’t be done before, like test creative, copy, product offerings and pricing without having to constantly write new code for your app.
We’re using on-device machine learning to help predict the user behaviors in apps that result in sales. This is done in a way designed from the ground up to be as privacy-centric as possible, using no personally identifiable information.
We’re already committed to helping indie developers however we can, including our #SupportIndieDevs initiative which you can find on GitHub and our Twitter feed. Our new free Developer tier has been rolled out to give all independent developers the Nami features required to help grow app revenue.
We’ll also be providing some helpful resources for developers during this year’s first virtual WWDC. We’re even working to continue our tradition of throwing some kind of party after-hours as well. We’d love your input on what we can do to help, and your feedback on how we’re doing.
We never thought that 2020 would turn out like this. As a business, we have to remember that all of our customers are humans that could all use a partner to help them succeed. We want to empower every app developer to be able to support themselves and navigate through these rough times with a profitable, growing business.
Good news! At Nami ML, we are excited to share that our Developer tier is now free for life. This includes the key foundational features you need to start selling subscriptions and in-app purchases on the App Store and Google Play.
Why would we do this?
From Day 1, our mission has been to help app developers succeed in the App Economy. We know it can be challenge in normal times, let alone a global pandemic, to make a living in the App Economy especially for small and indie developers.
Our cloud-service offers a range of capabilities for app publishers small and large to monetize using subscriptions and in-app purchases. We are extremely passionate about our product and the team at Nami would like give back back offering a free offer with the right features so you can start generating revenue. With this new Developer tier, you will receive:
Mobile Subscription Management
Our SDK automatically handles the complexities involved with managing subscriptions using the for official payment mechanisms on the App Store and Google Play. This means you don't have to build any client-side or server-side code to interface with StoreKit or Play Billing. We handle all the details for you, automatically, including receipt validation or purchase token verification.
Cloud Paywall Designer
We make it even easier to get selling with our Cloud Paywall Designer. This means you can build your storefront from your web browser, and have a native UI component up and running in minutes with your subscription or IAP products. The Paywall Designer offers a range of flexibility so you can not only get up running fast, but deploy something that fits with your app experience.
Performance Snapshot
Finally, we provide an at-a-glance snapshot of your app's key performance metrics including real-time conversion rates, active subscribers, and generated revenue. This gives you a real-time view of how you're doing both now and over time so you have a pulse on your monetization efforts.
Is it really that simple?
Yes, it is. Nami’s industry-leading proprietary design gives every developer an easy solution when building out mobile apps. It is as simple as installing Nami’s SDK into the app and watching it feed your dashboard immediately. Nami allows you to control your app's purchase experience from the cloud. This means you can experiment and make changes without shipping app updates.
Your Developer plan is yours forever. We have app developers making money on the App Store and Google Play while on our Developer Plan. We have other developers who are scaling up and we offer paid plans as well. If you're on the Developer Plan, the Nami platform is yours to use with no obligation to scale up.
As consumers have become increasingly connected by apps, more and more companies have exploited user trust by sharing and selling personal data with third parties. Over time, the need for privacy has become the most important feature in any app. As app publishers collect more information on their customers, those users have begun to see the increasing downsides to expanded data collection. Data privacy is more important today than ever. Companies should be highly concerned with their data privacy practices and procedures for many reasons.
Why does this matter?
Simply put, your private information should be yours and yours alone. While consumers will often happily share photos, opinions and locations online, it’s a given that health and financial information must always be kept securely out of reach from third parties. Unfortunately, mobile advertisers usually share much more data than consumers are led to believe. In a study conducted by researchers at Oxford University, a staggering 90% of free Android apps in the Google Play store were found to be sharing data with other organizations.
App publishers today often face the choice of using advertising platforms with considerable threats to private data. Nami is proud to be leading the industry with data privacy protection as a core tenet of our company mission. First of all, as a design philosophy, we seek to limit any data we collect to the absolute minimum. Secondly, any potentially personally identifiable information (PII) that we might encounter is processed and stored locally on-device and never transmitted to or stored on our servers. To further underscore our commitment to privacy, our servers will reject calls made to our APIs if a customer/developer tries to send us identifiers that are not valid hashes or universally unique identifiers (UUIDs).
Nami creates a random UUID for each device (not user) in order to provide personalized experiences. Our personalization engine runs on-device allowing users to experience custom offers, without transmitting personal data to us. Beyond this, the Nami SDK will not collect email, or geolocation information (except at the country level, in order to meet regulatory compliance), email, IP address or even any device identifiers. Data minimization is employed to limit any information collected to be only that which is absolutely necessary. This is dramatically different from many other mobile SDKs that collect as much data as they can without protecting user’s privacy.
“We shouldn’t ask our customers to make a tradeoff between privacy and security. We need to offer them the best of both. Ultimately, protecting someone else’s data protects all of us.” - Tim Cook, CEO Apple
A company’s approach to privacy comes from a set of corporate beliefs. When privacy is a reaction to regulation, the implementation will always fall short. Consumers are demanding better accountability and will reward companies that make data privacy a central part of their business strategy. The next generation of mobile apps will need to have a higher standard of privacy than ever before. Nami’s mission is to help app publishers grow their revenue using in-app subscriptions. We want to help app developers build their businesses in a way that benefits the company and the customer.
“Sell your app, not your users.” - Joe Pezzillo, Co-Founder Nami ML
“BCE” is an acronym that you may not have heard before, so what does it mean?
We first learned about BCE from Dan Springer, currently CEO of DocuSign where he was recently ranked the #3 CEO in the entire high tech industry to work for, so he must be on to something, right?
We met him during the acquisition of our prior company, Push IO. He had arrived at our offices to meet the team, learn about our work and plans, and share his vision for the future of our combined companies. As our team sat with him in the conference room, he captured our interest and imagination, and at one point began writing acronyms on the whiteboard and asking if anyone knew what they meant.
The first few were straightforward enough, terms like “ARR” (annual recurring revenue), “LTV” (lifetime value) and “ROI” (return on investment). Our team was savvy enough to know most of these immediately. But then he wrote “BCE” on the board and we were honestly stumped.
After a silent pause on our part, he explained “BCE” means Best Company Ever and it’s what we strive to be.
“BCE” means Best Company Ever and it’s what we strive to be
At its essence, BCE is a way of doing business such that everyone who comes in contact with your company should be able to leave that experience feeling like they’ve just interacted with the Best Company Ever. Certainly BCE incorporates the idea of “Core Values” as was well documented by Jim Collins' “Built to Last” (still one of the best business history books of all time).
But it’s not about just brainstorming a list of those Core Values (which is by no means a simple task to begin with). It’s a spirit and an attitude that we want our company to strive for, and that permeates our work day in and day out. And while it may sound cliche to say so, it’s really more about the journey than the destination.
We will always encounter new and unknown situations that we have to navigate, and with BCE, hopefully we give our team a North Star to guide them to do the right thing in unfamiliar situations. It’s something that we can ask ourselves with each decision we make, “Is this decision consistent with being the Best Company Ever?”
And we try to ask it about every participant and stakeholder we encounter, “Is this BCE for our employees and their families? Is this BCE for our Customers?” It doesn’t stop there, either. It should also involve our vendors and suppliers, our landlords and neighbors, and for that matter probably even our competitors.
NAMI ML + BCE
And while it is no doubt going to be a never ending process that we can continuously improve upon, we do have some touchstones we’ve identified already that we believe we must keep central to our efforts to help us move closer to the goal of being BCE. Today, those are:
Happy Customers
We must strive in everything we do to put the Customer first, and dedicate ourselves to how we can help them win at their goals, with alacrity.
Top Talent
We must make sure we attract and nurture the best talent, both because it makes our company, products and processes better, but also because they are a joy to work with.
Engaged Investors
As a company that is built with outside capital, we want to work with investors who understand our mission (including BCE) and will lean in with more than just money, but also the strategic assets they willingly bring to help us move forward.
A Commitment to End User Privacy
Perhaps the most important thing we can do in today’s connected era is commit to protecting end user privacy. We are constantly innovating ways to accomplish our mission of helping our customers that respect the critical relationship they have with their end users, to make our tools work without requiring any end user identity, to give our customers something they can be proud to tell their end users about.
* * *
These are just the first steps we’re taking on the path to becoming the Best Company Ever.
We’d love to get your feedback as to how we are doing to meet these commitments, and crucially, how we can improve.
