Lifetime deals, particularly if they are run through a distribution-boosting marketplace like AppSumo, can help elevate brand recognition, spike sign-ups, and provide an injection of cash to fund other startup efforts
Author: Bryan Belanger
What is a lifetime SaaS deal?
We’ve been attacking lots of different startup SaaS vendor pricing questions and challenges with our Grade My Pricing Page service. We’ve noticed several of our customers offer lifetime SaaS deals.
Lifetime deals are not new and have become more common. What is a lifetime deal? Simply put, a lifetime deal is a perpetual license. A lifetime deal grants the buyer the unlimited right to use the software for the defined features and usage outlined, versus having to pay for a defined term of use, such as monthly or annually. Perpetual licenses typically refer to on-premises software, whereas lifetime deals are often discussed in the context of software that is delivered “as a Service.”
Perhaps the most notable source of SaaS deals is AppSumo. AppSumo is a software marketplace that connects software sellers seeking customers to an ecosystem of over 1 million potential buyers. AppSumo offers a compelling distribution avenue for startups seeking to quickly access customers and grow revenue. This comes at a cost; like most marketplaces, AppSumo takes between a 5% and 30% commission on sales generated through its site.
Who uses lifetime SaaS deals, and why?
A quick disclaimer — this post focuses on this question from the angle of SaaS companies that generally offer subscriptions and/or usage-based pricing, but also offer or consider offering a lifetime deal. If you’re a company that only offers lifetime deals, that’s awesome, but this guidance is probably less applicable to you based on how you’ve structured your business.
Lifetime deals are attractive to startups and early-stage companies, for readily apparent reasons. Lifetime deals, particularly if they are run through a distribution-boosting marketplace like AppSumo, can help elevate brand recognition, spike sign-ups, and provide an injection of cash to fund other startup efforts.
The initial cohort of companies loaded into our XaaS Pricing database included approximately 300 established SaaS companies of varying sizes and stages, from early-stage venture-funded startups to scaled and/or public SaaS companies. None of these companies has had an active lifetime deal in place in the time we’ve been collecting and tracking data. Contrast this with the startup sample from our pricing page grader efforts: Several offered lifetime deals, and many put these deals directly on their pricing pages, in line with their other offering tiers.
It is also true, however, that many companies we currently cover in XaaS Pricing did, at one time, use lifetime deals to drive demand and build awareness earlier in their life cycles. A quick glance of AppSumo’s blog reveals many big names within our coverage that have run deals through AppSumo. This includes major SaaS brands on the Forbes Cloud 100, such as Intercom, Zapier, Shopify and Hopin.
It’s more difficult to parse the specifics of how these types of companies used lifetime deals. Zapier, for example, is listed as having offered its Basic plan for $39 as an unlimited deal on AppSumo. However, deeper digging brought us to this site, which uncovered the original screenshots of Zapier’s AppSumo launch. The launch offered a year of Zapier’s Basic edition (which is no longer offered), including 3,000 tasks per month and 20 Zaps, for $39, available to a limited number of AppSumo subscribers.
This construct feels less like a lifetime deal as advertised, and more like a limited availability, limited time promotional offering. We’ve written about promotions before and how they are best positioned in our March 2022 Pulse Report on discounting.
Should I introduce a lifetime SaaS deal or plan for my product?
There’s a lot to learn about lifetime deal strategy from these stories of high-growth companies, as well as others that have attempted similar approaches. In particular, charting the path of a company like Zapier or Hopin, and mapping how it went from lifetime deals to flywheel subscription growth at scale, is instructive in helping to determine whether or not a lifetime deal makes sense for your startup’s growth road map and go-to-market strategy.
This article from The Bootstrapped Founder does a great job of articulating the benefits and drawbacks of lifetime deals, and outlining how you should think about positioning a lifetime deal if you are planning to offer one. We agree with the strategies outlined and suggest any startup that’s considering a lifetime deal use this article and others like it as a resource.
Lifetime deals are a nuanced topic, and like so many things in B2B SaaS, the answer to the question “Should I introduce a lifetime SaaS deal?” is “It depends.” To help navigate this question, we’ve offered some key questions to ask as you evaluate the fit of a lifetime deal strategy in a structured, step-by-step manner and arrive at the appropriate conclusion for your business.
Determining fit for a lifetime deal strategy
These questions are intended to help determine whether a lifetime deal is appropriate for your business situation:
What type of strategy is a lifetime deal for us? Is it an acquisition strategy, a commercial model, a marketing channel, all of the above?
What is the primary goal for doing a lifetime deal (e.g., acquisition of users, revenue)?
What is the quantitative benchmark that will determine we’ve achieved that goal?
What outcomes can we derive if we achieve that goal (e.g., we will generate $1 million from AppSumo, netting $X, which will fund XYZ campaign)?
What other approaches might we use to achieve that goal and deliver those outcomes?
What are the benefits and risks of each of those approaches?
What impact will the lifetime deal have on our existing and new customers?
What impact will the lifetime deal have on our operating functions (e.g., development, support and customer success, sales)?
How can we quantify those impacts, whether positive or negative?
Framing a lifetime deal strategy
These questions are intended to help design an appropriate lifetime deal strategy:
What is the appropriate way to go to market for this lifetime deal? Do we need a marketplace such as AppSumo?
How can we ensure that the offer is separate and distinct from the other editions and/or services that we offer?
How can we clearly specify the terms and conditions of the offer?
How can we specify the ideal customer profiles that are appropriate for the lifetime deal?
How can we limit the total number of customers that the lifetime deal applies to?
What is a reasonable limit on the total number of lifetime deal customers?
What is a reasonable time limit in which lifetime deal customers can access the deal?
What is our expectation of engagement from lifetime deal customers? Do we expect them to buy and go away? Upgrade?
How can we clearly define those expectations as part of the offering and to customers in the terms that we define for the deal? Is that expectation defined in terms such as features updates and usage conditions, and what are those conditions?
How do other charges for overage and/or usage apply to lifetime deal customers?
How can we clearly define grandfathering terms and conditions for the lifetime deal?
Who is organizationally responsible for the success of the lifetime deal offering?
Our best advice is to think through each of these questions and more that will arise during planning if you’re considering a lifetime deal offering. These will help you to assess the benefits and drawbacks, quantify the customer and financial impact, and make an informed decision.
For most businesses, we recommend that lifetime deals rest somewhere in the back of the traction playbook. Try other traction channels and other pricing strategies such as tweaking packaging plans, adjusting pricing and offering promotional pricing before going down the path of a lifetime deal. If you’re going to offer a lifetime deal, be very clear about the terms, and separate the offer from your other subscription plans to clarify how it fits.