Ramblings & ephemera

Business models for software

From Brian D’s “The benefits of a monthly recurring revenue model in tough economic times” (37 Signals: 18 December 2008):

At 37signals we sell our web-based products using the monthly subscription model. We also give people a 30-day free trial up front before we bill them for their first month.

We think this model works best all the time, but we believe it works especially well in tough times. When times get tough people obviously look to spend less, but understanding how they spend less has a lot to do with which business models work better than others.

There are lots of business models for software. Here are a few of the most popular:

* Freeware
* Freeware, ad supported
* One-off pay up front, get upgrades free
* One-off pay up front, pay for upgrades
* Subscription (recurring annual)
* Subscription (recurring monthly)

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