In trying to keep up with other software-as-a-service models like Microsoft Office 365 and Adobe Photoshop, Google is also going to be offering subscription services on Play. This will allow developers more leeway and better pricing schemes for their apps.
This can have a huge impact for Android developers. For one, Google Play pricing has always been a single payment option. For another, apps are sold and subscriptions (at a lower cost) are not available. The flexibility of this scheme will allow developers to set a price which is flexible and more accessible for a wide range of users, including corporations and enterprise-level.
Software-as-a-service (SaaS) or cloud computing has been around for quite some time. So far, it has been a single payment option for Android developers. Alternatively, Android developers can sell their software/service at a lower price, with upgrades as separate options, products or services.
With a subscription service, developers can offer their product to customers at a lower price, but paid out over a longer period. The lower price point would entice more users to avail of the services. In addition, they can also offer more services on top of the initial app, to keep the customers on the subscription plan.
This can also be advantageous for customers. They can make use of the app or services for as long as they need it, and stop the subscriptions when they no longer need it. This can be cheaper for users as well. This type of subscription service has long been in use for desktop-cloud based services like those offered by Evernote, Dropbox, and Google.
Corporate sales and discounts
So far there has been minimal corporate pricing schemes for the enterprise. Microsoft has thrived on corporate pricing and discounts for a long time. They offer seat-based licensing. Other licensing schemes include different pricing for the number of processors in a machine, which is typical of mainframe class computers.
With corporate sales counted in the hundreds, the pricing scheme can be set lower per piece as the number of users increase. Having a standard app for the whole company can be an easier way to sell Android apps, considering the increasing use of mobile devices in offices.
The pricing structure can start with tens, then hundreds, and can go as high as counting in the thousands. A three-level structure would suffice for most apps. These would be subscription based, and would end when the enterprise customer stops paying, or does not renew the subscription.
Try before buying
The subscription plan is best in a “try before buying” sales scheme. This has been shown in online video rental or membership stores. Typically, the initial fee could be $1 per month for one to three months, with unlimited downloads. The fee for succeeding months would revert to the full fees. This will allow the user to try out the software or the service as best they can. If the users like the service, then they can continue to subscribe. For individuals or for personal use, this type of subscription would be a good way to start using a software.
Music subscription services also use this kind of service. If any of them, like Spotify, were to use it, then it be able to have a leg up on the competition. It allows a user to get a better feel on whether they like the software, without shelling out the full price.
Increasing the Compensation
Google aims to help the developers to increase their exposure with potential customers. They have also made sure that this would benefit the developers even as the customers pay an initially discounted fee. Both Apple and Google have also revised their compensation split with developers. This gives the developers more incentive to create better products.
The mathematics, however, is totally different between for compensation split for subscriptions and single payment systems. Apple and Google also had to make adjustments in their compensation scheme. For iOS developers, a subscription must be maintained for at least 12 months before the 85/15 split comes into effect.
Movies and Songs
Subscriptions would also help in selling movies and songs. Spotify and the YouTube Red service would benefit from a subscription model. This would be closer to the pricing model used by Hulu and Netflix but with more content from independent creators. Spotify’s service is already subscription based, however when paired with Google Play, they would be in a better position for selling the service.
Creators can hope to have better sales with a subscription based system. The subscription can be for availing the service for a given length of time, like monthly, or for watching for a certain number of hours. Creators can enjoy the split as part of the movies watched during the subscription period. Currently, the model used is to pay for a movie, much like watching in theaters.
Overall, a Google Play subscription model is an idea whose time has come. This will allow users to pay less while trying out software, watching more movies or listening to more music. On the other hand, they would also be more likely to keep their subscription. With a captive audience, Google would be in a better position to serve more content for the subscription. It is a feedback loop which only grows better with more subscribers. In the long run, this can be a better model for some services, like streaming media, or for cloud services. It can also change the pricing model for other software marketplaces.