I used to be able to buy software, own it, and use it forever. I could even resell it if I wanted to. Then came this annoying trend of software pricing per user per month. Why is that so freaking annoying?
First of all, it’s not cheap. If a company charges $30/mo for their software, that’s $360/year! If you do the math, it ends up being cheaper if they charged $300 for their software upfront than if they charge $30/mo. I currently pay about $250 US per month or $3,000 annually for my software tools.
Another thing is that it’s not like I have the option to buy the software anymore. It’s now a monthly subscription or nothing. I don’t get to choose whether I want to pay for a monthly subscription or not. No, that’s not an option anymore.
Listen, I get it. Software is expensive to create. And cloud-based software is even more expensive since you have to run and maintain the infrastructure for it.
So here’s the thing: when you’re a small business, you’ve got to keep costs low. But so many of the tools we’d love to use charge per user per month, and it can be a real killer.
Here is a personal example from my own experience of the per-user software pricing problem:
Nimble is my CRM of choice. It’s great for keeping track of all your clients and prospects and syncs up really nicely with social media stuff. The price looks pretty good too—it’s just $25 dollars a month!
But then you look closer and realize that’s $25 dollars per month PER USER. So if you have 4-5 people on your team? That’s suddenly $100-125 dollars a month for one tool. I have a rotating group of virtual assistants and other freelancers I work with. Now, if I want them to do any work with my clients, prospecting, and CRM, I have to buy a license for each one of them and pay for it every month.
Per-user pricing makes no sense for the customer. Sure, some companies have a very clear number of employees and they just want to pay $X/month for your software. But what about consultants? Or small agencies with 10 employees who are all contractors? Or enterprise companies with huge teams of people that aren’t all technically “employees.” What happens if you want a partner or client or freelancer to work with the software? At first, this won’t be an issue, but as soon as you scale and grow into more complex customer relationships, per-user pricing will start to hurt you in the wallet. Oh, and don’t even get me started on account managers and sales reps that don’t actually use your product: they count as users, too and you pay every month for them!
If a company offers a piece of software for $99 per month, it’s really charging the customer $1198 per year.
But, if this company charges per user, this means that if you have 100 employees and they all need access to the software, you’ll be paying $99 per month times 100 employees, which is $9,900 per month!
Also, in order to get the best deal possible, most customers will try to pick the lowest number of users they can get away with paying for. That means you’re either going to have to limit access to your software or go back and renegotiate after a certain period of time, which is just annoying!
Multiply that across all the different software programs you need for writing, spreadsheets, presentations, bookkeeping, list management, video editing… suddenly it’s a lot more expensive than it looked at first glance!
I understand software companies need to make money, but per user per month really hammers small companies.
If you’re like me, then you’re probably wondering what we can do to avoid or minimize it. Luckily, there are a few options. Here’s what I came up with:
1. Use free software alternatives—it’s not always possible, but sometimes there are free alternatives out there that may be able to get the job done! If you’re lucky enough to find one of these and it works for your situation, then go for it. Here are a few examples:
- Libre Office as an alternative to Microsoft Office
- Gimp as an alternative to Adobe Photoshop
- Wave as an alternative to Quickbooks
2. Purchase lifetime licenses for software—I love this option and have used it several times over the years. The only problem is that not all software developers offer this option. However, it never hurts to ask! One source for lifetime licenses is App Sumo. App Sumo offers lifetime pricing on a wide range of up-and-coming software, usually at a price like $59-$69 as a one-time fee. Many times you can purchase additional user licenses all as a one-time fee so make sure you buy all the licenses you think you will need in the future.
3. Look for multiple user bundles—if you know that your family or friends will also want this software, see if there’s a bundle deal for multiple users at once! You might end up saving some serious cash by doing so! Here are some examples:
- MailerLite – This is my favorite email list management system. Their Growing tier account at $9/month for 1,000 subscribers includes 3 users and their Advanced account at $19/month for 1000 subscribers has unlimited users. Of course, the price does go up as your subscriber base grows, but I can have as many team members as I want to be able to work with my email campaigns with the Advanced tier.
- Nifty – Nifty is a great task management system with a much better pricing structure. Their starter plan is $39/month for 10 users or $79/month for 20 users and so on. 10 Users at Nimble would cost me $250 per month for comparison.
4. Negotiate a lower price for multiple users—this won’t always work since companies don’t always want to give discounts on their products, but there’s nothing wrong with trying!
One software I love was very generous when I explained my use case of training virtual assistants using their software and gave me a bunch of extra licenses to use at no additional cost to what I was paying for myself as a single user.
So what is your most annoying software pricing experience? How have you worked around it?
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