Business modeling

Here’s an interesting thing about Software-as-a-Service (SaaS)— you’re not buying a permanent license to use it; you’re paying a monthly (or yearly) subscription to have access to it. The approaching-senility set may recall, in the dim-dark past, subscribing to things called “magazines” (or even “newspapers”), which arrived at their doorsteps either by delivery or mail. Back when mail actually got delivered.

SaaS is like that, only it’s an application showing up on your computing device.

There are a number of attractions to SaaS in the enterprise world: you don’t have upfront costs of buying a huge license at an even huger price, and you don’t have to have the hardware and platform infrastructure (also expensive) to run the application, since SaaS is most often hosted at an independent data center somewhere. Also—new releases just propagate themselves in the ether, and tech support for users is generally handled directly by the software vendor, not the client company.

Basically, SaaS means that companies don’t have to have IT staff to install, maintain, upgrade or support these sometimes very complex software systems. In return, the client company pays subscription fees—usually based on the number of users licensed to access the application—on a monthly or yearly basis.

To lure consumers and small businesses into their software capabilities, some SaaS companies give free access to basic versions of an app with limited capabilities. Kind of like drug dealers hanging out by a schoolyard and handing out little tastes of crack. You get accustomed to the functionality. Then—if you want more—you gotta pay.

Well, I’ve been working with someone who really likes Evernote as a collaboration tool—note taking, document sharing, that sort of thing. So I signed up for a free account using my junk email address. (That’s the one I use for Meetup, Dice, email lists and everything else that I don’t want cluttering up my blog, personal or job-seeker email accounts.) Yeah, it looked fine.

Then my friend sent me something through Evernote using my personal email account, so I had to log in using that one instead of my junk mail account.

Both of those activities were about a month ago.

Last week I got two come-ons from Evernote, offering a special deal if I buy a year’s subscription. But notice the difference in how much they want me to sign up.

The offer to the junk mail account—which I opened, played with for 30 minutes and then never accessed again—is six months free with a one-year subscription:

In the offer to the account associated with actual exchange of information with a paying subscriber I only get an extra month with a one-year subscription.

Now this is something I find very interesting—and I see it throughout the business world. They’re so busy trying to woo a new customer, they basically blow off the one who’s already using their product or service. What I find interesting is that they don’t really bother to disguise that at all.