On Lifetime Licenses

Today I bought a lifetime license to Infinity. If you use Asana, Trello, Notion, or Airtable, then Infinity will likely feel somewhat similar. One of the differences is that I could buy a lifetime license for 15 people for a single price of $349.

But this isn't a post about Infinity. It's a post about lifetime licenses. Because I've bought a ton of them over the course of my, wait for it, lifetime. And what I have seen is that people get really confused about what it means to buy a lifetime license.

What is a Lifetime License?

A lifetime license is a pricing strategy that allows you to make a larger purchase up front, and then never pay again. If you have purchased software in the last few years, you know that a lot of them give you a monthly or annual price. That's good for a business who wants recurring revenue. But if you buy a lot of monthly or annually-priced products, you're going to see your bank balance dwindle. On a recurring basis.

So a pay-once-and-never-again price can be really attractive.

What isn't a Lifetime License?

When we talk about this kind of license, it's important to be clear about what the term “lifetime” means. It means that you will have access – to the course, the membership, or the software – for the rest of the time that product (or service) is available.

But it doesn't mean that you'll have access to that offering for the rest of your lifetime. You don't control how long that product will be around. Only the vendor does. And what's important to understand is that the vendor is never making a commitment to ensure the product will be around forever.

Why Buy Them?

So if you buy a lifetime license for something like Infinity, what I'm doing is getting rid of monthly bills. That's a great thing. Especially if it can replace the costs I have been paying for other monthly products.

I like to trade single payments for recurring payments as often as I can – even if the cost is a bit higher. Because it frees up the rest of my money.

And if you believe that a product will get better and better over time, then paying up front is a no-brainer (even if it is a bit of a risk).

I own lifetime licenses for Gravity Forms and all the Ninja Forms extensions, for example. I believed, for both products, that they'd get better over time and so I paid a bit more to own them forever.

The thing about lifetime licenses is that they're not offered forever. So sometimes you have to make the call quickly, while they're giving you the option.

Why Offer Them?

If you are selling products, should you offer lifetime licenses? That's a good question. The answer is a bit complicated, because just like customers have to make guesses about the future, so do you.

Selling lifetime licenses can be a great way to bring in a lot of cash quickly. If you don't make the offer available forever, it can jump start your revenue and give you what you need to make an investment in your product.

Plus, lifetime licenses attract more buzz than when you're not offering one. With a time limit, it creates a sense of scarcity that can push people (who might be on the fence) to make a decision to buy.

Why You Might Not Want to Offer Them?

On the other hand, if you ever want to sell your business, the buyer will have to do some calculations to determine how they're going to attribute that revenue. One thing you learn quickly is that not all money is equal. Customers who are paying on a recurring basis are worth more than customers who aren't.

Plus you have to think about the longterm costs of support for people who are never spending another penny with you.

So it becomes really important to see if there are additional offerings that you might be able to sell those initial lifetime license customers.

How to Price Them?

If you're offering a lifetime license, how much do you price it at? For companies that are rolling out a new product (but have other products already in the market), you might look at the average length of your existing customers.

If you have customers that stick with you for an average of 2 years and then stop paying their monthly or annual fees, you might want to create a price point for lifetime that is out past the 2 year mark.

So you might price it at the 3 year price, or even the 4 year price. That's large enough to make it worthwhile for you.

But the higher you go, the harder it will be to sell the lifetime plan. So testing is key.

Customers Need to Manage Their Own Expectations

The most important thing when it comes to lifetime licenses as a customer is that we have to manage our own expectations.

The name “lifetime” is misleading. No one is trying to trick you or me. But lifetime sounds like forever. And nothing is forever.

When I bought my lifetime license, I said to myself, “if this lasts 2-3 years, it will be a great deal.” If they kill it in 2 months, I'll be upset.

But if a lifetime product reaches its End of Life in 3-4 years, I need to accept that I got a great deal and move on.

Unfortunately, when we don't manage our expectations, we can get really angry (and sometimes ugly) at a vendor who kills off a product.

I reminded myself of this tonight as I bought the license. And then I thought I should remind you.