Subscription Future Token

Was thinking about the SaaS software pricing, and the gap between $0..$10 B2C apps and $1000+ enterprise apps.

SaaS pricing is hard. Apart from following the herd, there are two typical strategies here: “capture as many users as possible” and “try to deduce how much this company could pay”, both are shit.

The first option turns users from customers into the product, the second one results in gross pricing mismatches and makes a lot of markets impenetrable to outsiders.

Both of them make it really hard for investors to estimate the value of the vendor itself, and at the same time require large amounts of investment upfront to either survive the growth stage or to get through the corporate sales teams.

Which again makes only 100x businesses attractive—10x is not enough for the fund to cover the other 50 which will fail. And all this math is relevant to me because almost everything I want to do turns out to be a niche tool.

Idea

Meanwhile, we all have all those crypto ppl trying to invent the mythical “utility token which is not a security” to keep lawyers happy out of thin air.

How about we kill both with one shot?

We introduce a token which you have to spend to access your subscription. Assume 1 token is worth a month. Tokens are sold first-come-first-served, for a specific month (this is important.)

For each particular month, the first buyer pays $1, next one $1.01 etc. So you end up with something like “September for $2, October for $1.85” and so on.

If you’re going to use the service for a long time—you purchase tokens in advance. This continues until the price rises to the perceived value of a subscription. Success!

Bad service? Not for you? You can sell them, possibly netting some profit too. If that was your plan—well, OK, but beware they’ll burn if unused.

You need to distribute them to actual users. Which in turn creates the distribution market! And nobody calls regular software licenses “securities”, even when they could be re-sold.

Details

“Specific month” is important here—otherwise you can just enter “year 2999” and get tokens for $1 instead of $5.

Second, if you’re just evaluating is it worth buying—price distribution over time gives a lot of transparency into the company, much more than just “share price”, arguably even better than traditional, lagging financial reports, and certainly better than grand ICO prospects.

For a regular user, this creates a bit of a nuisance where they have to find a distributor, but it’s only a matter of time before token exchanges will start offering bulk packages—and that can be merged entirely under in-app subscription UI as well.

And for vendors, it does create a space for a multitude of small companies to exist. Targeting different small niches, leveraging the pre-purchase funds, and without killing the usability while trying to please everyone “because scaling!”

Initially, I thought to call this a Subscription Payment Option Token, but then I realized it works much better as a bucket of futures with corresponding expiry dates, so Subscription Future Token it is.

Future work

Instead of a fixed price, now you have a shape of the pricing curve—is it exponential, quadratic, linear, something else?

The shape depends on the particular unit economy and the particular market.

It also remains an open question about how to do discounts, though they could be measured in tokens.

What do you think?

Ideas, experiments and projects by Oleksandr.
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