The Curious Case of Subscription Price Increase

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The Curious Case of Subscription Price Increase

Postby photoGrant » Mon Apr 04, 2016 4:28 pm

Hi all,

I want to begin by prefacing this with acknowledgement of a few things. I'm about to embark on a small rant regarding the sneaky (intentional, or otherwise) tactics of how Phase One handled the price increase for subscribers of their software.

Apparently despite every single invoice stating (including the original) that the cost was $10/ month. I should've known that the price would increase in a year to $15/ month. I should have known this because it was written in small type when I initially signed up.

I should've also known when it would increase and by how much, without the need of a reminder or courtesy e-mail to inform me. I should've also known that despite the invoice saying $10/ month, it was actually $15/ a month with a $5 discount.

From a personal scale this means little to nothing. $5 extra a month isn't going to break the bank. But when you look at the numbers and also consider the lack of transparency from Phase One when they started charging $15/a month instead. It's not a small amount of change.

Let's say there's a conservative number of 1,000 subscribers. By not informing those 1,000 subscribers that the price would jump on your next invoice to $15, Phase One managed to pull together $5,000 in 1 month or $60,000 a year.

Here's where I think Phase One dropped the ball:

    - They should've put a $5 discount line on each invoice.
    - They should've put a disclaimer on each invoice.
    - They should've grandfathered in first year subscribers for loyalty.
    - They should've e-mailed their subscriber list at least ~1 month prior to the price change
    - They should not rely on customers remembering a small addendum on the initial signup a year earlier.
    - If you have to increase first year subscribers' plan an extra $5 . You either undercharged initially or there's cashflow issues.

To upgrade a license from 8 to 9 costs $100? Why am I paying $180 a year? You basically only do a full iteration on your software with point releases once a year. How does this make financial sense for your subscribers? I feel subscription based models make sense to inject continual cash flow into the development of software. But at the detriment to your customers wallet and trust? I'm astonished by this behaviour.

Image

I brought this up with their sales team and was met with the same excuse. I should've remembered the small note when I signed up a year ago.
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Re: The Curious Case of Subscription Price Increase

Postby photoGrant » Wed Apr 06, 2016 11:38 pm

Further thought -- once you end a subscription, you don't retain a Capture One license.

There should be an ability after X amount of monthly payments, to be able to keep a perpetual license for the version you initially signed up for.

OR the subscription route should be cheaper overall than the license path as you never get to retain use of the software once you end your subscription. If this isn't accurate, I'd love to hear from someone.
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Re: The Curious Case of Subscription Price Increase

Postby MikeFromMesa » Thu Apr 07, 2016 1:20 am

While I am not commenting on the "discount" or the "price increase" I wanted to say that there was a great deal of discussion about the pros and cons of the subscription service when it was first introduced. I opted for the perpetual license and discontinued my use of Photoshop because of the subscription service as I do not think they are worth the cost over the long run. However they do make sense for those people who don't already own the software and only plan to use it for a relatively short time. This is especially true for Photoshop as the initial cost of Photoshop used to be very, very high and even CaptureOne, which is cheap by comparison, is still expensive.

The subscription service is also worth the cost for those with limited funds for the initial purchase and for companies that find they do not have a constant and continual need for the software as they can purchase the subscription and, at the end of the period, discontinue it. However for most people I agree that the cost of the subscription service is just too high to justify using it. As much as I like CaptureOne I would stop upgrading if the only path I had was for the subscription service. Fortunately I could do that as I have the perpetual license.
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Re: The Curious Case of Subscription Price Increase

Postby harald_walker » Thu Apr 07, 2016 10:46 am

photoGrant wrote:I'm astonished by this behaviour.

Same happened to me and I agree with what you wrote. My first action was to turn off auto-renewal so that it doesn't happen again and I am not going to renew the annual subscription when it ends later this year (nor pay the full price again to get a license). At the moment I am paying for a subscription I am not using any longer. :(

1) Subscription price is too high compared to perpetual license and yearly upgrades. It is not in balance.
2) Subscription price is too high compared to the competition.
3) They should be offering an upgrade from subscription to perpetual license. I probably would have chosen that path at the end of the first year. For me the subscription was more like a payed trial.
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Re: The Curious Case of Subscription Price Increase

Postby jknights » Thu Apr 07, 2016 3:37 pm

All the reasons why I prefer to take a hit once off and have the perpetual license option.

If only Adobe were as available to options as PhaseOne then I would have Photoshop CS8 or whatever CC is called.
Instead I am stuck with Design Studio CS6. No problem as it does all I need, except for updates to ACR for RAW processing.
Rant over.
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Re: The Curious Case of Subscription Price Increase

Postby MikeFromMesa » Thu Apr 07, 2016 6:25 pm

jknights wrote:All the reasons why I prefer to take a hit once off and have the perpetual license option.

If only Adobe were as available to options as PhaseOne then I would have Photoshop CS8 or whatever CC is called.
Instead I am stuck with Design Studio CS6. No problem as it does all I need, except for updates to ACR for RAW processing.
Rant over.

As with you, I would probably now be using CS-whatever if Adobe had not gone to the subscription model. But the change made me start looking for an alternative and I found Affinity Photo (for the Mac) which turns out to be a pretty good choice as it either now does everything I need or soon will (as the next release is supposed to include HDR functionality). So, all in all, I guess I came out better since Adobe forced me to find an alternate pixel editor.

I am not sure there is a decent alternative on the Windows side.
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Re: The Curious Case of Subscription Price Increase

Postby SFA » Thu Apr 07, 2016 7:09 pm

MikeFromMesa wrote:
jknights wrote:All the reasons why I prefer to take a hit once off and have the perpetual license option.

If only Adobe were as available to options as PhaseOne then I would have Photoshop CS8 or whatever CC is called.
Instead I am stuck with Design Studio CS6. No problem as it does all I need, except for updates to ACR for RAW processing.
Rant over.

As with you, I would probably now be using CS-whatever if Adobe had not gone to the subscription model. But the change made me start looking for an alternative and I found Affinity Photo (for the Mac) which turns out to be a pretty good choice as it either now does everything I need or soon will (as the next release is supposed to include HDR functionality). So, all in all, I guess I came out better since Adobe forced me to find an alternate pixel editor.

I am not sure there is a decent alternative on the Windows side.


Well, the windows version of Affinity is due to move into beta testing quite soon ...

But meanwhile Serif's previous product - PhotoPlus - provides enough obscure (as per PS in my opinion) functionality for my rare needs.


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Re: The Curious Case of Subscription Price Increase

Postby Grant Kernan » Fri Apr 08, 2016 3:56 am

I looked at the subscription...and I said no...
But I paid the US $299 over 12 years ago with version 4 and the upgrades have been sometimes on sale...the last one was US $80...I figure I have saved big time over the years...
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Re: The Curious Case of Subscription Price Increase

Postby SFA » Fri Apr 08, 2016 10:20 am

As I recall (even though I am NOT a subscription customer and I have huge reservations about the entire subscription model concept) the introduction of the model clearly advised that the was a first year discount (just as Adobe originally touted with their version of the fiscal model). In addition, when "fears were raised" that Phase was about to follow the Adobe model there was a clear response that that was not the intention and that in the main the subscription model was expected to be mostly used by multi-seat business users who have variable levels of users to support and a need to be able to pre-budget at known and controllable costs.

Clearly the scheme offered other options - like low relatively low cost extended "trials" - which would suit some people well but might not be a mainstream objective for the marketing plan. No doubt there were also some potentially interesting business options for cash flow smoothing too from the vendor perspective, depending on the level of uptake.

As fas as I am aware nothing has changed on that EXCEPT that the introductory discount will have expired for early adopters.

There is absolutely nothing unusual in that scenario. It's an offer model that is used in many businesses for many "products". It's not a price increase - it's the end of a beneficial introductory discount. That's all.

As for the economics, well I'm not a great fan of other people controlling my cash flow but it seems that many major companies have elected themselves to do exactly that as part of their business model. Some are doing is already others are planning to do it. When the likes of Microsoft suggest that their operating systems will become subscription only one has to wonder how far the subscription concept might be taken in terms of a form of perpetual "taxation".

At the moment I suppose that we call all fall back on "free" alternatives should we object strongly. Linux for example and a number of Open Source RAW convertors and image editors if our objections are strong enough.

Of course if enough people went down that road the big boys would simply flash a little financial muscle and buy out the the developments that seemed to be threatening their business plan. Or crush them some other way.

Phase offers a choice. It's quite a generous choice for the full Pro licence holder with up to 3 machines allowed by the activation. I wish I could justify spending the cash to buy two more machines that would be capable of running C1 successfully ...


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Re: The Curious Case of Subscription Price Increase

Postby lewisl » Sun Apr 10, 2016 7:16 pm

The subscription model is certainly offensive. It is more offensive for Phase One than Adobe.

Adobe offers more value. You may not want their particular value, but it is there. For a lower price than Capture One, you get Lightroom, Photoshop, Lightroom Mobile, image syncing across devices, and image storage with web galleries. Again, you may not want any of these things but it is more value for the price.

Generally, the only time I find subscription pricing legitimate is when a service with ongoing benefit and cost is being offered. Generally, such things are "online" or "mobile." Said service may or may not be desirable to a particular user or it may or may not seem over-priced to said user, but at least the business model--a subscription price--matches the service delivery.

This is a case in which Phase One saw what they thought the market would bear. The "evil competition" did it, so why not us?
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Re: The Curious Case of Subscription Price Increase

Postby SFA » Mon Apr 11, 2016 3:37 am

lewisl wrote:
This is a case in which Phase One saw what they thought the market would bear. The "evil competition" did it, so why not us?


You seem to be prone to making a lot of assumptions about corporate policies and competencies.

Do you have insider knowledge or are you just making unsubstantiated statements?


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Re: The Curious Case of Subscription Price Increase

Postby Paul Lindqvist » Tue Apr 12, 2016 9:32 pm

Never ending story... :|
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Re: The Curious Case of Subscription Price Increase

Postby Paul Lindqvist » Wed Apr 13, 2016 7:48 am

Cancel you'r subscription if your not happy with it, simple as that.

Stop whining over pocket tchange (in terms of photography investment it really is) and get something that you think is worth you'r hard earned money.
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Re: The Curious Case of Subscription Price Increase

Postby lewisl » Wed Apr 13, 2016 5:56 pm

@SFA
You are quite the apologist for Phase One. They make good products with some human error involved, like all companies, and are not saintly. None of us are saintly.

Microsoft started the bandwagon for subscription. The business model of a single upfront price with occasional upgrade pricing becomes hard to sustain when the market for a software product reaches saturation because there will not be enough future revenue from new buyers. The costs of upgrades, bug fixes, adapting to context changes (OS versions, hardware, internet, mobile) are ongoing but the revenue shrinks so management looks for ongoing revenue. But, there is customer resistance. To overcome the resistance, some sufficient benefit must be offered. Microsoft started with "upgrades included with your subscription." This worked if a customer actually wanted the upgrades. When this was no longer adequate because: 1) customers didn't want the upgrades; 2) the upgrades were disruptive; 3) the upgrades became less frequent and less relevant; then the shift was to offer ongoing benefits that could match the ongoing payments. Online and mobile services are the most obvious such benefits. But, Capture One offers neither.

Compare Adobe's pricing to Phase Ones:
Adobe: 149 perpetual. $10 / month for LR + Photoshop, mobile apps, online storage (or $120 per year). No discount for prepayment. On monthly you can cancel at any time.

Phase One: 299 perpetual: 3 seats. 15 / month: 2 seats for just Capture One with 1 year commitment. 35 / month for 1 year commitment: 5 seats, 3 month commitments also available. The 3 month price is listed at 25 / month for 2 seats so the discount for a 1 year commitment is significant.

On an annualized basis:
15 / month is annually $90 per seat (and realistically this is one user with 2 machines but that is acceptable)
35 / month is annually 84 per seat.

For 3 months:
25 / month is 37.50 per seat, which would be $150 per seat per year.

Not having Adobe's product repertoire, Phase One is using number of seats and commitment period as their incentive system. This makes sense for a small photography/production/marketing services business though less so for an individual.

What's happening is that all software companies feel the same business model pressure. When a couple of giants have made the early steps to test the model and gain some user acceptance, it becomes less risky for others to follow even with less of a "sweetener" to the deal.

Perpetual licenses are a good deal if you will use the software for a long time (say, at least 3 years) and the company is responsible about bug fixes and hardware/OS adaptation, even if no major enhancements are included (requiring a separate upgrade purchase). This also matches how consumers grew accustomed to buying tangible goods. So, it made sense as the initial model for software pricing. Then, revenue from future new customers looked more dubious as a way to support the business and the financial pressure lead to recurring revenue models.

For consumer products, this is a tough sell. In enterprise software, the upgrades and even bug fixes have never been free. Most so-called enterprise software is sold with a nearly mandatory 18% (of initial purchase price) annual "maintenance fee". If you don't pay, they won't pick up the phone or provide ANY fixes. This meets with objections from buyers, but if the company provides good service, some extras, and some occasional discounts it's bearable. Obviously, it is a non-starter for consumers.

The summary is that the transition to recurring revenue is challenging for consumer software unless what the company offers is tantamount to ongoing access to a web service of some kind. And even that is challenging in a world of competing free--read advertising supported--services. The companies try to adjust based on consumer reaction, competitive pressure, and financial pressure. Recently, the publishers of Text Expander raised effective prices with an all-subscription model and quickly relented.

So, yes SFA, I know of what I speak. My criticism of Phase One is based on two points. First, their subscription model is less favorable to consumers compared to the value bundled into Adobe's--assuming: i) you even want Adobe's products at all; and ii) you perceive value in the extra contents of their offer. Second, customer criticism of Adobe's subscription model was initially very overt so that some people perceived Phase One as a sort of "safe haven", but in many ways Phase One's subscription pricing is even less favorable. Phase One has a smaller product repertoire with no mobile (accept phone control of tethering) or online offers so it is more challenging to craft an offer that is attractive relative to subscription pricing.

As Paul L. correctly points out, we have a choice of either pricing model, several companies, and it's all cheap compared to a good lens or new camera. We can do what we want. The vendors can do what they want. So, why bother commenting at all? There is a window of opportunity for Phase One to significantly expand Capture One sales. Strictly opinion: they might not be making the most of the opportunity.
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Re: The Curious Case of Subscription Price Increase

Postby SFA » Thu Apr 14, 2016 5:30 am

lewisl,

Nothing you have written is new information.

You may consider that you have answered my point about insider information with your "I know of what I speak" comment but that entirely misses the point I was making in my earlier post.

You may not be aware that a question was posed to Phase One, in the forum, some months ago about a possible move to all subscription pricing and the reply was clear - it is an option for those who want it and might appeal in certain business situations more obviously than it would for personal use.

Your apparent "rationale" for your comments:

"There is a window of opportunity for Phase One to significantly expand Capture One sales. Strictly opinion: they might not be making the most of the opportunity."

is more than a little assumptive about a company's business strategy.

Indeed one might suggest that in some ways the "gains" you allude to during your proposed "window of opportunity" might not be entirely desirable. Only time will answer that for us.

I doubt Phase feel that they have a need for an "apologist". However your apparent claim to only be interested in commenting in order to help them find ways to "significantly expand sales" seems to be at odds with an approach that comes across as overtly critical on all matters.

That is entirely your right of course and readers can presumably make up their own minds about your opinions if they prepared to read them in depth and compare them with their own experiences. Communicating through the internet that may not happen consistently. In part that is why Phase have quite reasonably set out some ground rules for acceptable contents for this forum. Since they provided it is seems reasonable that they should set the terms of use.

I doubt that continuous public criticism from a personal perspective is a sound way to encourage the "sales expansion" you seem to be claiming to desire.

There may well be reasons why you and others have seemingly negative experiences when many others do not. Perhaps I am fortunate to be in the "others" group and generally having a positive experience in line with what I experience with all other types of software.

On that basis it seems reasonable to provide a counterpoint to the typically negative thrust of comments that internet forums are renown for and, perhaps, a little encouragement for the supporters and developers. In my experience, on both sides of the developer/consumer business model, positive comments, even when being critical, produce more effective responses and results.

Maybe that is what you refer to as "Apologist"?

Grant
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