Subscription vs One-Time Payments: Which Model is Right for Your Extension?

Choosing between subscription and one-time payment models is one of the most important decisions for your extension business. Each model has distinct advantages and trade-offs.

Subscription Model

Advantages

Predictable Revenue Monthly recurring revenue (MRR) makes financial planning easier and business valuation higher.

Higher Lifetime Value A customer paying $10/month for 24 months generates $240 vs a one-time $50 payment.

Ongoing Relationship Continuous interaction with customers provides feedback and reduces churn through engagement.

Motivation to Improve Recurring revenue incentivizes ongoing development and feature additions.

Disadvantages

Higher Friction Users hesitate more before committing to recurring payments.

Churn Management Must constantly deliver value to prevent cancellations.

Payment Failures Credit card expirations and payment failures cause involuntary churn.

One-Time Payment Model

Advantages

Lower Barrier Users more willing to make single payment vs ongoing commitment.

Simpler No subscription management, billing cycles, or dunning required.

Appeals to Skeptics Users who dislike subscriptions will prefer this model.

Disadvantages

Lower Lifetime Value Single payment limits total revenue per customer.

No Recurring Revenue Must constantly acquire new customers to maintain income.

Update Motivation Less financial incentive for ongoing improvements.

Which Model to Choose?

Choose Subscriptions If:

  • Extension provides ongoing value (productivity, automation, monitoring)
  • Regular updates and new features planned
  • Server costs or API usage scales with users
  • Building a sustainable business is the goal

Examples: Email trackers, tab managers, password managers, analytics tools

Choose One-Time If:

  • Extension solves a specific problem once
  • Minimal ongoing maintenance required
  • Feature set is stable and complete
  • Targeting users resistant to subscriptions

Examples: Theme generators, converters, simple utilities

Hybrid Approaches

Lifetime Deal

Offer one-time payment for lifetime access as alternative to subscription.

Pricing: Typically 12-24x monthly subscription price ($99-299 for $10/month service)

Pros:

  • Appeals to both customer types
  • Large upfront cash injection
  • Lower churn for these customers

Cons:

  • Cannibalize subscription revenue
  • Support costs without ongoing income
  • Harder to sunset product

Pay-Per-Feature

Base extension free, charge for specific premium features.

Pricing: $5-50 per feature pack

Pros:

  • Users only pay for what they need
  • Multiple revenue opportunities per user
  • Lower barrier than full subscription

Cons:

  • Complex pricing to communicate
  • Feature bundling decisions difficult
  • Development prioritization challenges

Pricing Strategies

Subscription Pricing

Monthly Plans:

  • Hobby: $5-10/month
  • Professional: $10-25/month
  • Team: $25-50/month

Annual Discounts:

  • Offer 15-20% discount for annual commitment
  • Improves cash flow and reduces churn
  • Example: $99/year vs $10/month

One-Time Pricing

Tiers:

  • Basic: $20-50 (core features)
  • Pro: $50-150 (advanced features)
  • Lifetime: $150-500 (everything forever)

Real-World Examples

Grammarly (Subscription)

  • Free tier with limited features
  • Premium: $12/month or $144/year
  • Business: $15/month per user
  • Result: Billions in revenue, sustainable business

Honey (Ad-Supported)

  • Completely free for users
  • Revenue from affiliate commissions
  • Acquired for $4 billion by PayPal
  • Trade-off: User privacy concerns, required scale

Making the Switch

From One-Time to Subscription

Grandfather existing customers:

  • Honor lifetime purchases
  • Offer optional migration to subscription for new features

Communication is key:

  • Explain reasons (server costs, ongoing development)
  • Provide clear migration path
  • Offer incentives for early adopters

From Subscription to One-Time

Rare but possible:

  • Usually when sunsetting a product
  • Offer lifetime deal to existing subscribers
  • Can help with final revenue boost

Financial Modeling

Subscription Math

MRR = Active Subscribers × Average Price
ARR = MRR × 12
LTV = ARPU ÷ Churn Rate

Example:

  • 1,000 subscribers × $10/month = $10,000 MRR
  • $120,000 ARR
  • $10 ARPU ÷ 5% monthly churn = $200 LTV

One-Time Math

Monthly Revenue = New Customers × Average Price
Annual Revenue = Monthly Revenue × 12

Example:

  • 200 customers/month × $50 = $10,000/month
  • $120,000/year
  • Must maintain customer acquisition to sustain

Recommendations

Start with Subscription If:

Your extension is a tool users need regularly, you plan ongoing development, and you want predictable revenue.

Start with One-Time If:

Your extension solves a specific problem, requires minimal maintenance, or your target users strongly prefer one-time payments.

Consider Hybrid If:

You want to maximize revenue from different customer segments and can manage the added complexity.

Conclusion

Both models can work. The key is aligning your pricing with:

  1. The value you provide
  2. Your development plans
  3. Your target audience preferences
  4. Your business goals

Start with the model that best fits your situation, then iterate based on customer feedback and financial performance.

Ready to implement payments in your extension? GateVector supports both subscriptions and one-time payments.