25 May 2018  |  Guide

Comparing The One-Off Billing Models

5 minute read

We profile the most common one-off billing models and how they relate to your business needs.

If your product is of the impulse variety or will be used infrequently, you’re highly suited to one-off billing. However, there are multiple types, all applicable to your situation.

Simple One-Off

This is the simplest, and oldest model: simply giving a copy or perpetual license code in exchange for a fixed sum.

Bjango homepage

This approach is particularly interesting if your product fits some of these criteria:

  • Apps that are not used regularly
  • Low price point
  • Impulse purchases

The main drawbacks of this model? Cash-flow and frustratingly infrequent updates.

First you need to do all the work upfront without any revenue. Secondly, you typically experience a couple of weeks (or months) with very high order volumes at launch, followed by lesser sales over time. Thirdly you need to bear the cost of any new feature or support request until the next major paid release.

This bears a real risk: as opposed to the predictability of recurring monthly revenue coming from subscriptions, if your next major version doesn’t sell well you could end up in real troubles, without any forewarning.

It is also very frustrating to have to sit on many developed features, sometimes for 12 months, until you can launch a major version you can charge for. UX improvements, features that your customers are constantly asking for, or that your competition just launched…

If you take this approach, you therefore need a solid grasp of your financial needs and an excellent understanding of your customer base and what product / pricing combination you can offer.

Do your customers see the value of your product instantly? If not, it’s worth letting them try it for free, prove that value and then sell your software.

You can achieve this with either a time-based trial, a usage-based trial or a feature-based trial (or more rarely, a combination of these). You should decide which one suits your product best by figuring out the best way to showcase the full value of your product.

One-Off with Time Trial

Most time trials occur in a 7, 15 or 30 day free trial.

Skylum homepage

Skylum offers a powerful photo editor but occupies a highly competitive and crowded software segment: letting users test the software for a limited period can alleviate fears and increase conversion rate.

Skylum trial

This trial mode is ideal if the value you provide takes time to demonstrate. Is there a significant learning curve? Do people see results after they’ve used it a couple of times? Is your product linked to a specific lifecycle, e.g a week’s worth of team work?

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One-Off with Usage Trial

Alternatively you can also limit based on the number of uses - generating 3 reports, converting 1 file…

This is especially interesting if your ideal customers could batch all their usage in a short period of time - for example converting thousands of files, analyzing many websites for keyword research…

This mode is also very appropriate if you know the tipping point when customers are hooked. For example CleanMyMac is free for the first 500mb of data cleanup - just enough to prove that it works, whilst making sure that customers are left wanting more.

CleanMyMac

This is one of the benefits of using an in-app checkout like the powered by our Mac SDK: frictionless purchase when reaching this tipping point is incredibly more effective than redirecting the user out of the app and into a website.

One-Off with Feature Limited Trial

Time or usage trials are not recommended if you’re selling a product where you see a high level of disengagement quickly after purchase, for example a short game or a one-off use.

Take for example a product converting video files into different formats. Two customer personas come to mind: people who wish to regularly convert files, and people who just have one file they’re trying to convert.

If you want to monetize the latter, you’re better off with a feature limited trial - for example applying a watermark to the video file to show that it works whilst encouraging a full purchase for real use.

Avast feature limitation

Similar examples include antiviruses, PDF compressing softwares etc. The cycle is simple: prove the value, reach maximal buying intent / frustration with the limited version, offer to bring that value with a full purchase.

One-Off with Additional In-App Purchases

In-app purchases (IAP) can help you expand the functionality of your product in a more modular way.

You can for example introduce new features as an in-app purchase rather than calling it a new version of your software.

It also lets you cater to different customer personas within one software: for example offering dashboards and analytics as a paid add-on for the CFO persona.

Agenda premium features

IAP can be a first step towards a more recurring billing model, if you want to experiment with subscriptions.

You can for example sell additional seats, or usage-based packages as IAP, without jumping to a monthly subscription straight away. This is a great way to gauge customer appetite and understand the unit economics in practice.

IAP can also be extremely successful if you’ve built a thriving community around your business. Content IAP such as training material, design templates, icon packs etc. created by your community have many benefits:

  • They incentivize and reward user generated content - no work for your product or marketing team!
  • New ideas you’d never have considered can come from the fans, helping you build a strong product overall
  • You can generate significant additional revenue

Realmac Rapidweaver community

Your Model

We’ve showcased the main one-off billing models, through this you can find something that suits or can be adapted to your own product. As your needs change so to will your models.

Keep reading more guides

Read the previous guide in the series:

Weighing up One-Off, Subscription or Hybrid Billing Models

Read the next guide in the series:

Finding the Right Subscription Billing Model

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