Transcription
The first rule of the LCD community don’t talk about the LCD community.
What’s going on everybody? It’s dave here from profitable Tools. Sorry for the dramatic intro but I wanted to get your attention because I think I have something that’s important that we need to talk about and that is lifetime deals, the LCD community and the path going forward. So let me start at the beginning. What is a lifetime and deal, if you’re not familiar with that term?
It’s just the idea that you’ll pay once for software rather than having to pay a monthly subscription. I started doing this back in about 2013, back when we all started kind of getting comfortable with the idea of having monthly subscriptions for software. Some companies would try to attract new users by offering a larger upfront lump sum payment and then you could use the software indefinitely. You’ll still see this tactic all the time. In fact it’s being used now more than ever.
There are probably five or six Ltds being launched to the business community every single day. It’s getting insane. It’s actually really hard to keep up with. At the same time, I’m seeing a lot of problems with these offers. First of all we’re seeing a lot of companies get acquired that offer lifetime deals, which can be a great thing if you’re an early adopter you might think, well then I’ll be rewarded as the company grows.
That is the expectation anyway. However, we’re not always seeing that. Sometimes companies that get acquired or receive a large amount of venture capital then start to slowly push away those early adopters and kind of make them be the same level as say, free users. Now this is obviously not always the case, but it has been happening more frequently now than I’ve seen in years past. The other thing that’s happening more frequently is Ltd.
Companies are simply dissolving. They launch a product to create fanfare, the developers are very active during the promotion and then after the launch you never hear from them again. Six to twelve months later the product is dissolved. Oh, we couldn’t find a way to get reoccurring revenue, it’s just not going to work for us. And then they start building their next product to launch as an Ltd.
Now often different marketplaces have a positive response here. They might refund the users with credits or do something to make it right with their customers. But a lot of times we’re just kind of left in the lurch. It’s dependent on the marketplace and how they’re going to react to the specific scenario. So who should we blame here?
Should we blame the marketplaces? The company is actually selling the Ltds because they didn’t do their due diligence, they didn’t research the developers enough, they don’t have ironclad contracts or should we blame the developers themselves? Why would they agree to be acquired? Why would they receive venture capital dollars if it meant sacrificing their relationships with their early adopters. Now these are both reasonable things to be critical of, but truth be told, we can’t actually affect them much.
So worrying about them is kind of a waste of our energy. What we can do is change our own behavior that affects how these companies act in the future. Now I started off this video by saying the first rule of the Ltd community is don’t talk about the Ltd community. I’m going to explain what I mean by that in a second. But first, let’s discuss lifetime deal offers in general from a perspective as a consumer you might not have thought about before.
What are the pros and cons of a software launching with a lifetime deal offer? When does it make sense for a consumer to buy into a product given that we know it might fade away, that it might not necessarily work out in our favor? Well, in my opinion there are three different types of lifetime deals that really make a lot of sense when things fall outside of the scope of these three types of deals. Well, it might be worth further investigating before you click that buy button. The first one is what you probably assume all lifetime deals are and that’s the early adopter method where a company is brand new, they’ve got a brand new product, no customer base and they’re looking to get some people using their platform.
That way they can find out how customers are using things, improve their product and then eventually launch to a reoccurring model and become a household name just like Zapier or Dropbox, which by the way, both did AppSumo deals way back when. The second type of lifetime deal that I think is worth considering is what I call the lifetime lifetime deal, meaning that it’s a product designed to be sold as a lifetime deal. It doesn’t mean that it could never switch over to a monthly offer, it’s just they set it up to win with lifetime deals and as long as it’s still working, there’s not a lot of motivation for them to change it. This would be products like Thrive Cart or Convertbox, products that have been available for many years as lifetime offers. And yeah, maybe sometimes the companies use some false scarcity and make you feel like the lifetime offer is going to go away.
But in reality it’s just a math problem and they know their numbers. So every software company is going to know the lifetime value of their customer. How long will the average customer stay on paying a monthly fee? What is the overhead for supporting that customer? And then what is left is their profit.
This is the same reason that you see annual discounts when you subscribe for software. They know that the average lifetime user might cancel after six or seven months. So if they can get you to prepay for ten months in advance, well, they’re still coming out ahead. You can be sure when a company like Thrivecart is able to offer the same deal for five, six or seven years, that they are making a fairly healthy profit off of it. Not to mention they don’t have any marketing costs because the only time they pay anything to acquire a customer is when they use an affiliate system to pay someone else who has done the promotion for them.
Now, this business model might sound a little sleazy and apart from the false scarcity, I assure you it’s really not. It’s just a business decision. They decided they can make more money with this offer. Maybe they saw that their conversion rates would be a lot higher on their sales pages so they could acquire more customers and their lifetime value would go up on each customer because maybe the more they sold, the less likely people would be to continue using the software for a long time. The third type of a lifetime deal that I really like is self hosted software.
This is going to be things like self hosted applications, WordPress plugins, things where you’re paying the bandwidth and electrical bill and the developer is really only on the line to continue development. So they have to pay their developers, which is obviously not inexpensive, but it takes a lot of the burden off of the company when they don’t have a giant AWS bill looking them down the throat every month. The bottom line is if an offer seems too good to be true, if they’re going to replace every facet of your business and reduce your monthly expenses from thousands of dollars a month to a one time payment of $500, you can be sure that it probably is too good to be true. And it will probably disappear sometime in the not so distant future. Another warning sign to look out for is when you see a tool reappear on an online marketplace over and over again.
And that tool has a lot of monthly overhead. So something like a video hosting platform or a webinar tool where, you know, they’ve got a lot of bandwidth costs they can’t possibly be affording to give away so many lifetime offers, and yet they still churn up on the Lifetime Deal Marketplaces over and over again because they’re not able to secure their own monthly recurring revenue through traditional marketing. The one exception to this, of course, is if they have a really good upsell. So maybe they are great at marketing. They’re using the online marketplace as a lead magnet, so they’re selling lifetime deals but then they can turn a lot of those customers into monthly recurring revenue because they offer another product that is actually worthwhile and people will be happy to pay for.
So what did I mean at the start of the video when I said that the Ltd community shouldn’t talk about the Ltd community? Well, the idea here is that if you find a lifetime deal and it’s software that is really improving your business, improving your life, giving you back time and money. Well, then don’t tell anyone you got it for a lifetime deal. Promote that product, tell the world about it, even sign up to be an affiliate for that software. Make video reviews like I do.
Whatever it is that you can do to help spread the word about that software is going to be the best thing overall for all parties involved with the Ltd community, us, the customers, the marketplaces selling the tools as well as the developers making them, because we need these tools to succeed. If we’re going to continue to invest in them and have them stick around, we need to tell other people about them and encourage them to pay monthly for it. Just because you got a good deal doesn’t mean you need to tell everybody else and rub their face in the mud and tangentially to that point, the next time you see someone asking about a good alternative to Buffer or Hootsuite, maybe they want to save a little bit of cash, but they still need a good social media management tool or whatever. You fill in the blank here. Don’t just send them over to the Ltd yard and say, oh, this one’s on sale right now.
You should buy that. Only do that for products that you’ve bought, you love, you’ve tested, you can figure out whether the developer is actually sticking around or not, then make the recommendation. Don’t just blindly support anything on the marketplace, support products that are actually doing a good job. That way the person you refer to won’t end up screwed a little bit later on. And if you’ve bought an Ltd in the past, that’s the perfect time to recommend it.
Hey, grab Hubbler, it’s awesome. I’ve got an affiliate link down below. So the internet tells us that 45% of all businesses fail within the first five years. You do the math on that and it’s clear why so many Ltds seem to be going out of business these days. There’s just more ltds.
Compound that with the fact that more and more companies are getting these huge injections of capital upfront from their Ltd, but they really haven’t proven themselves yet. They haven’t got a marketing plan in place that can reliably acquire monthly recurring revenue. So they might overhire, they might overspend, and before you know it, they either need to be acquired or they’re going to end up flat broke. So that’s just some things to think about. The next time you head over to the Ltd yard, you’re going to click that buy button.
What I’d really love to see you do is click Buy, try it out, see if it’s a good fit for your business, if it’s working for you. If it does, tell everyone in the world about it. But don’t mention the Ltd, just keep it shut. If it’s terrible, if it’s the worst product that you’ve ever seen, in your life, which these days might be a coin flip. Return it.
Find out the return policy before you buy it and then just return it if it’s not any good, no need to do anything else. Just promote products that are great. Don’t try to tell everybody about Ltds. They’ll find out when the promotion is running companies like Appsimo have huge marketing departments. They’ll let people know.
You don’t need to just okay, are we good? What do you think? Leave me a comment down below. Let’s start the conversation and hopefully we can all not talk about Ltds.
