What are the real pros and cons of an LTD? Is it really just a risky upfront buy for a longterm gain?
I keep seeing more and more LTD’s pop up to the point that I think this trend will only keep growing. And it’s such a great sell!
Back in the days, everyone was accustomed to buying things outright one time and done. But lately, everything has recurring subscription model. It’s not just in the WordPress eco-system but in the real world, too. TV channels, music streaming, car wash, car leases, razor blades, shampoo, blah blah you get the point.
So for somebody to come up to and say, “HEY! Pay this one price and you get to have this recurring service forever!” Well f**k, that sounds like a pretty good deal.
And it is!
…as long as you know the gotchas…
1. It’s a low maintenance service.
This is the most believable and realistic LTD deal. The only way a lifetime deal can truly be sustained for a lifetime is that it’s such a low maintenance business for the company.
For example…let’s say I paid a lifetime subscription to someone guy who shares his stock buys every week. That’s believable. He doesn’t spend extra time sending his market tips. It’s the same 3 clicks whether he has 500 subscribers or 5 million subscribers.
Or how about some automated software that doesn’t have to work any harder or require any intervention. Again, plausible.
Or how about those MXroute guys that run email servers with their automated/replicated server stack? They don’t offer any support and they don’t do any extra work managing more servers. That’s very sustainable, too….although you do wonder how cheap their servers are.
However…you have to beware this isn’t a service that might one day benefit greatly from human intervention. Or that you yourself might require human intervention.
2. There are limitations.
Have you ever been to an ALL-YOU-CAN-EAT korean BBQ restaurant? Or AYCE sushi restaurant? There’s limits to the deal. You can’t order more than 2 dishes at a time. You can’t leave food behind. You can’t order the super premium expensive stuff. And on and on.
In the software world, reasonable lifetime deals don’t always come with lifetime updates and support. But at least you can purchase those add-ons at a small reasonable fee. In this sense, the LTD is more like a special a la carte pricing for the core service. This is reasonable!
Again, lifetime deals can’t run companies below the profit line.
3. It’s a limited time deal.
This another reasonable LTD occurrence. It’s only there to build brand exposure and attract new customers. Gives them a chance to build a customer base. Get some helpful feedback going and ultimately grow into a product that commands a higher price point. It also rewards early/loyal adopters.
But what if the LTD keeps coming back? Hmmm…that’s not a deal; that’s a business model. Well, the sort-of good news is you know you got plenty of time to decide later. So take your time and make sure you like the product before you go all in. Hopefully the LTD has a long-enough return policy.
4. LTD’s are their primary sales source.
Ok, now we’re getting in the shitty-LTD territory. When you start to get the feeling a company makes more money on LTD sales than they do on regular subscription sales. You really gotta ask yourself….
- Why is this company making more on LTD than on recurring subscriptions?
- Why are their recurring subscriptions so low?
- Is their something wrong/undesirable with their service?
The only way to protect yourself from these is to have used the service for at least 3-6 months so you know for sure it’s the right one for you. Another thing to watch for is if it seems the company is pushing really hard to sell LTD’s. As if they need those sales!
5. The company doesn’t really make any money on recurring subscriptions.
Why would any company abandon a recurring subscription model for a one-time sales model? It’s easy…because they know most customers will quit! This is similar to fitness gyms selling 3-year plans upfront.
Because why would any *smart* company give up higher profits in the long run? Cell phone carriers don’t do LTD’s. Netflix doesn’t do LTD’s. I can’t help but feel companies don’t even value their own product when they offer LTD’s.
6. It’s a failing business.
Yeah, this is a straight cash-out scheme to sell off product before it loses all its value. Like those retailers getting rid of last years models during Black Friday. Or those businesses investing just enough in themselves to sell to an unfortunate buyer.
I shouldn’t even be this nice about it. It’s a flat out pyramid scheme. It’s the very epitome of un-sustainability. As the business owners are knowingly taking money under the pretense of longterm value they know won’t be provided.
7. It’s getting acquired.
Another classic cashout tactic. Make as much as you can before you sell off the company. Slightly less shady than a pyramid scheme but also still dishonest. I don’t know who really loses in this one. The new management because it’s saddled with promises made by the old owners? Or the customers when new management no longer honors previous promises?
8. It’s an abandoned product.
Still shady. Still dishonest. Company sells you an LTD on a product they will no longer invest in. Not only will they not invest in it…but they’re planning to upsell lifetime users of LTD product to their NEW product.
Yeah, that’s flippin’ shady. Absolute LTD abuse. On technicality, it seems fair because you “got what you paid for”. But in reality….what seemed like a discount on the future, was actually a price-hike on the past. Basically, you paid for the new product but only got the old version. And then you will pay again for the new product.
Of course, they might give a discount for existing customers. But the thing is…by the time that new product is out…there’s a good chance other competitors will exist and might even be better. So now you’re stuck deciding on investing more money on a 2nd place brand. Or cutting your loses and moving to a new brand, losing all your “loyalty discounts”.
9. The LTD complements or competes (cannibalizes) with their recurring plans.
This can be good or bad. In the best case scenario, the LTD is a modified version of their recurring plans and caters to different userbase. This way the product/service is different enough that it could practically be a different service.
Kind of like buying car vs leasing it. It does different things for different people. Buying is keep it and modify however you want. Leasing is expense write-off and free-maintenance, then trade for newer model sooner.
The worst case is when the LTD is sold directly to the same people buy their recurring subscription plans. You really have to ask yourself here…if the LTD competes with the subscription, which one is the company standing behind more? Which users will get screwed in the long run? The LTD ones or the recurring ones? (Of course, it’s more likely the LTD ones.)
10. The LTD came out of nowhere.
I see only two legitimate times in the product life cycle to launch an LTD deal. The beginning and the end. The beginning cycle (launch phase) makes sense because the LTD theoretically establishes the initial following while providing much-needed startup cash. The end cycle (maturing phase) makes sense because the company knows exactly how much their product profits…and therefore knows the right pricing to provide sustainable value over time.
But if you see an LTD in the middle of the product life cycle, or erratic multiple repeat LTD releases with no reason at all…you should be skeptical! Either they’re having problems, or they’re pivoting their business model, or something (that you don’t know about) has changed.
The best way to buy an LTD?
Don’t buy an LTD from a company you haven’t used before.
It’s as dumb as buying a car you’ve never driven before. Try things out as much as you can before you make longterm decisions that affect your business!
Try out all competitors before buying an LTD.
No matter how much you think one company is the answer to all your problems, there’s a good chance another one can do similar things and possibly even better or at a better price. You really never know. Things change fast. That one company that just showed up with all the answers could be just as easily shown up by another company months later.
Monitor companies before buying their LTD.
How have their products, prices, and overall service quality changed over time? Does it seem like a stable company with predictable changes? Or do they seem desperate trying random things? Have they kept their promises?!
Just look at successful restaurants, ok? Busy ones almost never change their menu. The empty ones change their specials every season. Cuz the food ain’t that great, and they don’t have a loyal clientbase. So they’re forced to reinvent themselves every other month. New this, new that.
Remember this…successful companies (typically) never like to change!
Don’t buy an LTD.
The smartest financial decision might actually be to not buy that LTD. Especially if you’re broke and bootstrapping things. Why not save your money, stay agile, and not lock yourself into any longterm contracts. Rent, lease, go month-by-month. Pay as you go, and cancel things when you don’t use them.
The truth is most pricing you see out there is intended to benefit the business, moreso than the customer. That probably means most LTD’s aren’t worth it.
I notice many people buy LTD’s because of FOMO (fear of missing out). And in a funny way…I see people suffering even more FOMO because of buying those LTD’s. They spent cash that they can’t use on other new products or don’t want to try other products because of the sunk-cost feeling.
No matter what you buy, there will always be new shit coming out that makes you feel like you’re missing out. Control yourself, people!