How does Serif keep getting payed?

[ZombieRofl]

I was just wondering about something. Adobe made to the move to let users pay a monthly fee to keep their business running. It is the main reason why I jumped on the Serif ship. But how do they keep supporting themselves with users paying a single price for the software? For now, the software is new to a lot of people, but what about two years from now? How does this business model evolve? 

Any idea? =)

 

[MEB]

Hi ZombieRofl, 

Only minor updates are free (1.5, 1.6, 1.x). Major upgrades (from version 1 to 2 for example) are paid.

[MikeW]

Yep. Back to the old model of actually attracting new customers, providing support for existing customers and creating compelling reasons for existing customers to buy the major upgrades.

 

Btw, Adobe mainly switched to the SaaS model for tax liability issues. Under a SaaS model, they pay less taxes than a perpetual license scheme due to their chosen tax reporting method. This is what has maximized their profitability.

[harrym]

Hi MikeW, that's very interesting sounds like a valid legal loop whole wonder why it hasn't been closed.

[MikeW]

The method Adobe uses for accounting isn't a loophole. It is a standard method of accounting. I cannot recall the ins & outs of it now, but if I recall it has to do with whether a "thing" is a physical product (perpetual licensed products are considered a physical product) or whether the "thing" qualifies as a service that is basically provided by a contract (SaaS).

 

Updates to a physical product are themselves a taxable commodity using the accounting method they use. So for Adobe under their accounting method to provide free updates cost them x dollars to the taxman. One could argue that they could change their accounting method to avoid those tax dollars, but I suspect that the method they use saves them in many other ways.

 

That tax needs an overhaul altogether is a given. But I don't think there is the political will to do so.

[emmrecs01]

Isn't Adobe's move to the subscription model also driven, at least partly, by Sarbanes-Oxley legislation?  https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act

 

Jeff

[MikeW]

Probably. It certainly helped Adobe and others to change their accounting methods. But Adobe wouldn't switch to SaaS for nearly another 8 years after the passage. So I cannot imagine that was the driving factor. If it was, they certainly were slow to jump on the SaaS bandwagon fully.

[dmstraker]

Assuming Affinity gets massively popular (like it deserves to be), then an interesting crossover point happens at some point where Adobe begin to feel the pain of people switching to Affinity. What then does the Adobe gorilla do? There's plenty of historical examples of big companies scratching such itches, even with such underhanded methods as repeatedly suing the smaller company for no purpose other than to drain them of resources (Dyson got a lot of this, btw).

[ZombieRofl]

Hi ZombieRofl, 

Only minor updates are free (1.5, 1.6, 1.x). Major upgrades (from version 1 to 2 for example) are paid.

But are you asking a full price again for the 2.0 version if you bought the 1.X?

[gdenby]

But are you asking a full price again for the 2.0 version if you bought the 1.X?

 

Serif hasn't yet asked a price for v.2. Given the value of v.1+, not hard for me justify a full price next time round.

 

FWIW, where I live, reliable internet connectivity is unavailable, and the speed is ludicrously slow. Paying for a cloud connected software service would only add insult to injury. For a half day less than a week ago, I could at least use Affinity when I had no more than 15 min/hr connection. 

[MikeW]

Adobe CC applications phone home once a month. They do not need a constant connection. They will retry if a connection isn't available. At some point they will warn you about connecting and if that isn't possible one can call in and have that period extended.

 

I know in the bush missionaries using CC. They manage.

[R C-R]

Btw, Adobe mainly switched to the SaaS model for tax liability issues. Under a SaaS model, they pay less taxes than a perpetual license scheme due to their chosen tax reporting method.

It isn't entirely up to them or just about their chosen reporting method. In the U.S., each state determines what qualifies as "software as a service" & if or when it should be taxed. Not only does each state do this differently, the governing statutes or interpretations thereof may change over time.

 

This article discusses the issues in detail -- you don't have to read much of it to understand what a confused mess it is.

 

If you are just curious about which states tax SaaS & their justifications for that, this page provides a simplified state-by-state overview, with source links (which often don't make anything any less confusing).

 

Edit: In the U.S., sales taxes are paid by the buyer, not the seller. So Adobe is not saving anything besides the administrative costs of collecting the sales taxes they pass on to the states.

Edited April 13, 2017 by R C-R

[myclay]

Games also are bought for that price point and give a good margin out...

 

International global marked; many customers.

official language support for a lot of languages and languages which
are also known by a much lager group thru second- language acquisition.

Don´t forget that with the release of the windows version,
Serif magnified the possible customer base by a big factor and thanks to having an own store for that bigger customer base, they where able to reduce the current ~30%  income cut-off which they have with other stores.
With other words; they already looked at a way to conveniently secure and increase their income.