Why don't developers offer payment in instalments?

[quantum7]

Interesting topic. If you need to make payments for a measly £100 piece of software, you may want to rethink your long-term financial strategy, or you will be dirt-poor your entire life. Most of us have been stupid in our youth with over-extending our credit debt. Heck, it took me 40k in CC debt in my mid-30's before I finally wised up, sacrificed and paid everything off in by the time I was 40. I now only have only 1 CC only for emergencies, own my vehicles, and only finance my home. I make more money in my mid-40's than I've ever made in my life, but am not at all tempted to finance anything other than my home. Due to my financial strategy I'm happy to say that I have a $500 per month music budget that doesn't at all stress my family's budget at all. Not being a slave to debt is the greatest feeling in the world.

[masterhiggins]

If you need to make payments for a measly $100 piece of software, you may want to rethink your long-term financial strategy, or you will be dirt-poor your entire life.

That's the first thing I thought when I read the first page. These payment plans would probably cater to the same crowd that watches reality court shows like Judge Judy or Judge Joe Brown interspersed with commercials for payday loans and zero down/zero credit car dealers.

[trimph1]

If you need to make payments for a measly $100 piece of software, you may want to rethink your long-term financial strategy, or you will be dirt-poor your entire life.

That's the first thing I thought when I read the first page. These payment plans would probably cater to the same crowd that watches reality court shows like Judge Judy or Judge Joe Brown interspersed with commercials for payday loans and zero down/zero credit car dealers.

Yep. The idea that one could save money up is so sorely lacking here at times. Le Sigh

[C-note]

devine machines did that..you see where this leads to..

Yeah!

[deastman]

After reading through nine pages of debate, there is very little left for me to say. I'll just add a few assorted thoughts.

There are several ways to acquire something which you don't currently have the funds to purchase outright. Ultimately this comes down to:

-Credit: Someone else finances your purchase. There has to be something in it for them, of course. Usually this amounts to fees, or the statistical likelihood that you will not pay them back on time and will accrue interest payments. Car dealers, jewelers, Guitar Center: the thing they have in common is that they are not really in the business of selling consumer goods- they are in the business of selling credit.

-Rental: You don't actually own the thing you are paying for, but only get to use it for a limited amount of time. This is good if you only need it for a short period of time. Common sense suggests that renting an apartment is not a sound financial investment for the long term, whereas buying a house generally works to your advantage.

-Layaway: You make monthly payments but don't actually get the thing until all your payments have been made. This is one option for people who lack the discipline to save up for a product without external intervention. Alternatively, it allows one to lay claim to a scarce commodity without having the financial resources to do so up front. I have no experience with layways, but I assume that failure to make subsequent payments results in forfeiture of any money already paid, which would be the incentive for a dealer to offer such an option.

-Rent to own: This is what you are really proposing. Its like a car lease where you have the option to purchase the vehicle outright at the end of your lease. Except in your case there is no purchase fee/balloon payment after the lease ends. That sounds like a pretty good deal for the customer, not so great for the vendor.

Subscription/rental models like Adobe only work because they are the dominant player in a vertical market. I pay my Adobe subscription every month because there is no other viable alternative. I cannot envision paying a monthly software rental for the rest of my life. Eventually, an alternative will appear, and I will dump Adobe in a heartbeat.

Cakewalk is offering something similar to what you suggest, but it isn't exactly the same. The intention of both this and the Adobe subscription is to get you hooked into more frequent updates so you will continue to pay them perpetually. They (rightly) decided that it wasn't fair that you be left with nothing if you ended your subscription. With Adobe, I could end my subscription ten years from now, and all I'd be left with is CS6 Production Suite.

What is in it for the vendor? In all cases, they want more money. Credit comes with interest payments. Leases require additional payments if you want to buy out the lease. Subscriptions generate steady, predictable income over time, which reduces the risk in development costs. Also, Adobe and Cakewalk both charge higher rates if you pay month-to-month rather than paying up front for an entire year (Cakewalk) or committing to an entire year's payments up front (Adobe).

What you propose is that it would cost exactly the same amount whether paid in full or stretched out over multiple payments. Why would a vendor offer that option? You say that sales will increase if they adopt this model. What evidence do you have to support that belief? If you are correct, how much will sales increase? How desperate would a vendor have to be to defer payment in full on a sale for several months without any benefit to them beyond the basic fact of making a sale?

And what about the costs associated with providing this option? I have already seen you dismiss every suggestion that it would add an additional cost burden to the developer, so I won't waste my breath itemizing the costs here. But surely you have to acknowledge that there must be *some* cost associated with offering a different product, payment method, and copy protection scheme? Additional revenue would have to outweigh these additional costs by some appreciable amount.

[pdxindy]

Subscription/rental models like Adobe only work because they are the dominant player in a vertical market. I pay my Adobe subscription every month because there is no other viable alternative. I cannot envision paying a monthly software rental for the rest of my life. Eventually, an alternative will appear, and I will dump Adobe in a heartbeat.

I've already dumped Adobe. I will never ever pay them one dollar in subscription fees. I'm still using my already paid for Adobe software, but will not be upgrading anymore.

I've owned Photoshop for almost 20 years and it has paid for itself hundreds of times over. Most times when they have come out with a new version, it did not have stuff I really needed so I have upgraded every second or third paid upgrade.

The subscription model forces one to always 'buy' the latest upgrade, whether one needs it or not or even if one prefers the older version.

The 'latest and greatest' is a lot of marketing crap to keep selling people stuff they don't need. The subscription model forces everyone to be on the fast track and support the relentless upgrade frenzy. No thanks.

I do think there are viable alternatives for most people.

[VariKusBrainZ]

Assuming the OP is in the uk, why not set up a bank overdraft.
Theyre cheap a chips since they overhauled the repayment schemes and now you pay a reasonable interest on the amount you have gone over of the actual available money in your account.

I think I was over by about £200 over christmas and was charged £0.77....bargain!
Better than the previous £25 charge for going over!

If you cant afford it you find an alternative equivalent of the software that costs less or is free or buy a second hand version.

You seem intent on hammering a square block into a round hole when youre surrounded by convenient square holes at your disposal lol


How many devs sell a 1000 copies a day by the way, referring back to a previous comment?!?!?

[basslinemaster]

Ok....

First, there are some devs that do offer installments- Kong Audio for example. I am sure it helps them to sell their product. However, they also have to send out a new license file every three months to keep it working. Once paid off you have to contact them to get a final license file. This is great, unless, like me, you are nine months in, the new file does not show and you have to wait for a new one to be sent to you.

Second, no matter what the cost, if a dev accepts installments this IS them giving you a loan. In essence they are loaning you the product until it is paid for.

Why can't you even understand the basics of what I was proposing? Endless posts by people who can't even understand what I proposed, attacking strawmen.
They are SELLING you a one month use version of the product, for a third of the price. They are not loaning you the product.

Most devs are not in the banking department. Keeping up with thousands of individuals doing this would be a headache...automated or not. There are a million things that can go wrong.

You obviously didn't read the several previous posts where I explained exactly how this works in an e-commerce website:
1) Developer creates a new product on the site, 'One month expiry VST X'. This takes about two minutes. I know, I've added hundreds of products to e-commerce sites for clients, so I know what's involved. It is incredibly easy.
2) 'One month expiry VST X' comes with 10 points. When the customer buys it, 10 points are added to their account. This is all automatic. Nothing has to be done by the developer whatsoever to 'keep track' of this.
3) Customer buys 'One month expiry VST X', the DRM is set so that the product can be used for one month from installation. Or 50 uses, or 100 hours, or whatever the developer wants to offer.
4) Customer now has 10 points in their account. Customer buys 'One month expiry VST X' again - maybe in two months' time, maybe as soon as the original one expires. They now have 20 points in their account.
5) Customer now buys the full priced, unexpiring version of 'VST X' for £99, but uses their 20 points to get a £66 discount, so they only pay £33. THIS IS ALL AUTOMATIC AND DONE BY THE E-COMMERCE SITE. There is NOTHING for the developer to 'keep track' of.

Finally, there ARE larger products out there- Komplete, Omnisphere, V Collection, etc. which are expensive out the door. By not offering a installment program they keep these products where the belong- in an elite place. If you can afford it, it is yours. If you cannot, you have to wait and save, or charge it. Either way someone has to hold money for a period of time before it is totally yours.

"they keep these products where the belong- in an elite place"...
What does that even mean...
I can afford all the VSTs I want, this is nothing to do with me not being able to afford a given VST...

If the current devs went to installments as a whole, I think the end user would end up screwed.

Nobody is suggesting they ONLY offer instalments (which I presume is what you are saying), yet another strawman argument. Sheesh.

No matter how much we love their products, and no matter how much devs love music and making their products...it is a business. They are there for the money. And they should be because as long as we are giving the money we can ask for bigger and better products. Lets keep it that way.

Jon

WTF? How does my proposal stop it from being a business, or the devs being there for the money? Simply unbelievable...

[basslinemaster]

Assuming the OP is in the uk, why not set up a bank overdraft.

Christ on a bike. How many more times. It's not about ME not being able to afford any VSTs... it was merely an idea to help developers make more money. How stupid of me.

[basslinemaster]

Interesting topic. If you need to make payments for a measly $100 piece of software, you may want to rethink your long-term financial strategy, or you will be dirt-poor your entire life. Most of us have been stupid in our youth with over-extending our credit debt. Heck, it took me 40k in CC debt in my mid-30's before I finally wised up, sacrificed and paid everything off in by the time I was 40. I now only have only 1 CC only for emergencies, own my vehicles, and only finance my home. I make more money in my mid-40's than I've ever made in my life, but am not at all tempted to finance anything other than my home. Due to my financial strategy I'm happy to say that I have a $500 per month music budget that doesn't at all stress my family's budget at all. Not being a slave to debt is the greatest feeling in the world.

Another American who can't tell the difference between the £ sign and the $ sign. You do know there are other countries outside of the USA, right? They aren't 'counties' WITHIN the USA, do you know that?
I specifically said £99 - that's U.K. POUNDS, not dollars. It is about $150. And it's nothing to do with ME not being able to afford a VST. Sheesh...
Nice to hear about your wonderful financial situation, however, it is totally irrelevant to my proposal...

[basslinemaster]

It's all very simple: Cakewalk are doing it, because they think it will make them more money. I can see the attraction in it.

It's not the same though - for instance, with your proposal, I could pay a few months for Sonar, then stop, then wait 9 months, pay a month, get the next version, stop, then 6 months later continue to pay so I've made 12 payments, and now my software won't time out.

With the Sonar thing, as I understand it*, if you drop out before the 12 months, that money is lost, and if I wanted to rejoin the membership scheme, I start again at month 1. It isn't really a pay by installments thing, but it *is* a way to begin to use the software without paying a large upfront cost (like all rent-to-use models).

Edit: *Yup. From the FAQ:

"If I choose Monthly Membership payments, can I cancel before 12 Months?

Yes, but 12 consecutive monthly payments are required to permanently activate SONAR and any updates you have received."

So no, the Cakewalk thing is not exactly like what the OP is suggesting, and nor is it marketed as such.

It's as near as needs to be - it's offering PAYMENT IN INSTALMENTS.
If it makes you happy, let's change my terrible proposal to one exactly the same as Cakewalk's. Immediately people would have said "But what if I can't afford to pay in the third month? I lose everything." So I took account of that, seeing as it costs the developer nothing if the customer's one month license has expired and they can't pay for the next month's use, does it?

Can't win with you, isn't that how it works? Cakewalk is offering PAYMENT IN INSTALMENTS, yet everybody on this thread is attacking this idea - so why aren't you attacking Cakewalk for doing the same thing as I suggested? (Yeah, I know, my proposal is SLIGHTLY different because I offered the customer the chance of not paying every single month... therefore it's completely different - you wish.) From your post above it is quite clear that you aren't interested in discussing the merits of my proposal, but of somehow proving it is a 'bad idea' no matter how much I try to explain it... It's no skin off my nose, I'm not a developer, I can afford all the VSTs I want, I was foolishly trying to help developers earn more money. It would be very nice to hear from developers on this - preferably ones who understand how their own e-commerce systems work.

Going back to what somebody was moaning about earlier, who came up with a load of hypothetical 'support problems' - if you've just been paid £33 by somebody who only gets to use your VST for a month, and they e-mail you with a support problem, how long does it take to answer the average e-mail? Two minutes? Five? Let's say ten minutes - which is a long time to answer an e-mail. That's one sixth of however much you earn an hour. Say you have five extra sales a day of the 'one month expiry' VSTs, at £33 each, and EVERY customer sends you a support e-mail which takes you ten minutes to answer (which is never going to happen, but say it does) - so that takes you one hour a day to deal with, but you have turned over an extra £165, which you wouldn't have made if you didn't offer instalments. (Again, this is all hypothetical). Quite obviously - every time you sell a product, you are PAID for it, and any support that arises from that sale is accounted for in the price of the product. Now, don't tell me... somebody who pays three times for a VST, is going to contact you three times as often as somebody who pays for it once. LOL.

[Dominus]

.....

What are the odds that you're right and EVERY OTHER PERSON RESPONDING is wrong?

[trimph1]

What is it with SAVING up the $$$ that is so terrible?

[whyterabbyt]

What is it with SAVING up the $$$ that is so terrible?

Jebus, mate, get a 'kin clue. Its not dollars. Its pounds. Exactly £99 to be precise. Not £98. Not £97, not £100, not $50, not $99. 99 pounds UK sterling. Nothing else. How hard is that to understand?
Its very specific, so try and goddamned remember it. Its such a special amount of money that no other amount of money in any other currency can be used in its place at any point of time, ever ever ever. Anyone trying to talk about this proposal for any other amount of money is just wrong.
This proposal is not for anything at any other pricepoint. Not even £99.99. Just £99.
And for the record, saving up a whole £99 is impossible. Any other amount of money can be saved up, but not £99. Its special.

£99. And only £99. So there.

[trimph1]

Must be...it's a numerological thing, that.