SaaS Lifetime Deals (LTD): Definition, Pros & Cons, Strategies
The pandemic has put thousands of businesses on a glacial crawl. Thousands more succumb to the virus’ impact and crumbled entirely.
But there are a handful of sectors that remained unaffected. And one of these is the SaaS industry.
In fact, the pandemic has helped SaaS companies experience exponential growth. But heaven-sent though this was, it also intensified the competition in an industry that’s already saturated.
That’s unsurprising. According to Gartner, the SaaS industry is poised to grow its current $145 billion value to $171.9 billion in 2022.
For established SaaS giants, this is a massive opportunity. But for SaaS startups, it’s quite the mountain to climb.
After all, unless you have a SaaS tool that’s unique and address a persisting pain point of customers, it’s difficult to attract attention to your product. Or is it?
Enter SaaS lifetime deals.
What is a SaaS Lifetime Deal?
If you’re a fledgling SaaS company, it can be a nightmare getting people on board to try your product. You have no social proof, let alone proven data, to claim you have a working solution.
But some are willing to take that risk. For a price.
And that price is a SaaS lifetime deal. As the name suggests, SaaS lifetime deals are offered to early adopters who are willing to give your product a chance in exchange for a perpetual license.
Once they pay for your product, they have lifetime access to it. They no longer need to pay a monthly subscription or an annual plan.
Some aren’t interested in going down this road, while others are more than eager to try it out.
Let’s explore why this is starting with the downside.
The Drawbacks of SaaS Lifetime Deals
There are a few drawbacks of SaaS lifetime deals that SaaS owners need to deeply consider. They are:
- Lifetime customer support
- The 30/70 split
- Growth urgency
- Demanding Clients
Lifetime Customer Support
As you may have guessed, once someone gets a hold of a perpetual license, you’ll need to support that customer forever. You can look at it from the perspective of a monthly subscription. Here’s an example.
Supposed your SaaS product’s monthly subscription is $15. And your customer stays with you for two years.
That customer’s Lifetime Value (CLTV) is $330. If your customer acquisition cost (CAC) is $100, you have a net revenue of $230.
Now, a customer with a perpetual license might stick around for that long too. But what if they don’t? What happens when they stick around for three years? For five years? For an entire decade?
You’ll have to support that usage out of your pocket. In other words, you just acquired yourself a long-term liability.
Of course, you can offset this liability by implementing a couple of strategies. We’ll discuss them below.
For now, let’s talk about the 30/70 split.
The 30/70 Split
For the uninitiated, a lot of lifetime deals out there are launched on LTD platforms. The most popular of which is AppSumo.
AppSumo has an extremely strong following, which is why a new SaaS company is willing to launch its product on that platform. The potential to acquire thousands of early adopters is remarkably high.
But there is a catch.
Whenever you sell your SaaS product on AppSumo, it gets 70% of the revenue while you’re left with 30%. It’s quite the drawback but SaaS startups are still willing to go through it as they believe the benefit offsets the drawbacks.
A good example is Lemlist, a sales automation and cold email solution with personalized images. They launched their lifetime deal on AppSumo and managed to accumulate 3,304 users.
Those users generated a total of $161,896 after the lifetime deal offer has been completed. But since it’s a 30/70 split, Lemlist only got $48,596 out of that deal, while AppSumo got $113,327.
On top of that, Lemlist will need to support those users for an indefinite period.
Lemlist co-founder Guillaume Moubeche admitted that it was a scary experience. The influx of new customers was a bit overwhelming. Especially since Moubeche and his two co-founders were the only people answering their users’ questions.
Are you prepared for such a commitment? For Lemlist, they said it was. More on that later.
Since lifetime deals are essentially lump sum payments, you won’t receive a monthly recurring revenue (MRR) from your customers. That’s great in the short term.
You generate a lot of cash for your marketing and SaaS sales campaign to acquire other customers. But you’ll need to act fast and efficiently.
Let’s go back to our example earlier. Your monthly subscription for your SaaS company is $15. You received a lifetime deal purchase from a new customer priced at $199.
199/15 = 13.33
That means you have 13 months to find new customers to offset that particular client with a perpetual license. In short, you’ll need to experience urgent growth within that period before you’re paying out of your pocket to support your lifetime deal cohort.
Here’s a fun fact. A McKinsey study found that a SaaS company growing at a 20% annual rate has a 92% chance of failing after a few years. Fun, right?
So once you’ve received your lifetime deal cash, you should already have a strategy for how to allocate it. Your sales, digital marketing, social media, and email campaigns should already be laid out before you launch your lifetime deal.
Always remember that during your lifetime deal strategic planning.
Another factor to consider is the influx of new customers. Are your customer support team ready to assist this new army of users that’ll flood you with questions?
In the case of the Lemlist guys, the answer is yes. They were able to support their customer influx but they needed to dedicate a lot of time to do so.
On top of that, LTD clients are quite demanding. You have to understand that these customers are price sensitive. It’s why you managed to convince them to buy your product in the first place even when it’s at its infancy stage.
But they’re expecting a lot from you and your product in return. This can place tremendous pressure on your shoulder. And if you can’t handle that pressure, well…
You might be one of those SaaS companies the McKinsey study pointed out.
But you don’t have to be.
You can put up several safeguards against foreseeable headaches down the line. That way, when they do come up, you’re ready to squash it before it becomes a migraine.
And for the unforeseeable issues, you’ll just need to stay on your toes. React accordingly and always make sure you’re making decisions based on informed data.
The Advantages of SaaS Lifetime Deals
With all of the drawbacks listed above, why are certain SaaS startups still willing to offer lifetime deals? Well, as you may know, now everything isn’t doom and gloom.
Here are the advantages of SaaS lifetime deals:
- Passionate community
- Revenue cushion
This is by far the best benefit you get for a lifetime deal. True, your LTD clients don’t pay for a monthly plan or annual plan to boost your MRR and ARR. But what they offer is arguably better.
At least that’s what the guys over at and Lemlist and Infinity experienced. And best believe that other successful SaaS companies you see thriving out there will tell you the same.
LTDs will help you build an engaged community with people who genuinely want to see you succeed. As the Infinity team succinctly put it:
People don’t get attached to the product, they get attached to the vision and team behind it.
First, these users will provide you with valuable feedback to help improve your product. An early adopter coming from the AppSumo community or other LTD groups out there is tech-savvy.
That means they know how to use your features for their campaigns. What’s more, they can stress test your SaaS tool and help you spot irregularities that need improvement.
Of course, you’ll need to do a lot of engagement with these users first to nurture them even if they have a perpetual license.
Why do you ask?
Well, if you do it right, your nurtured early adopters will help spread the word. And we all know how powerful word-of-mouth is in marketing.
It’s even more compelling than Facebook, Google, and Twitter. Plus, 90% of people are more likely to trust a business if it’s recommended via word-of-mouth.
It’s social proof and free advertising rolled into one. There’s really nothing that could compare to it. Digital marketing, email campaigns, sales funnel – all these strategies need time and resources to execute.
But word-of-mouth doesn’t need such fuel. Of course, nurturing a community will take time and resources too. But once you successfully execute it, you’ll no longer need to maintain that effort.
You can go ahead and focus on developing your SaaS solution, which will be guided by the feedback you’re getting from your amazing community.
As mentioned earlier, a lifetime deal revenue puts you on a deadline. But during this period, there is a lot of room for you to expand your team and upgrade your features.
You can increase your customer support, digital marketing units, and software developers to help carry the load. And thanks to the revenue cushion you received from your lump sum lifetime deals, you’re able to pay these professionals. For a time, at least.
But there’s still the question of how to meet your deadline.
Are there strategies out there you need to follow to increase your chances of success?
Strategies in How to Launch SaaS Lifetime Deals
Now that we know the pros and cons of lifetime deals, let’s look at the strategies needed to mitigate the outlined risks:
- Proper pricing
- Refund SOP
- Get clear about specific coverage
- Upsell plans
- Dedicate extra time during your lifetime deal launch
Since the revenue you’ll receive from your lifetime deals essentially acts as your momentum generator, you need to price it properly. How?
Take your monthly subscription payment model and multiply that by 14 months. So let’s say your most basic pricing tier is $15.
Your lifetime deal is $210. Of course, you shouldn’t confine yourself to this. You could also offer a pricing tier for your LTDs.
You can have your basic, advanced, or premium LTD options. Each of these should offer increasing benefits for your early adopters.
That could range from:
- Limited to unrestricted features in the future
- Limited to unlimited data storage
- Limited to unlimited keyword research
- Limited to unlimited email engagement options
- Limited to unlimited member inclusions
These are but some of the many examples you can choose from depending on your SaaS product.
But always remember that your most basic LTD offer should be compelling enough to your potential lifetime users. Anything above that will be up to the buyer.
Refund is one of the things that are constantly brought up in social media lifetime deal communities. That’s fair since you can’t please everyone, even if your SaaS solution has been developed to the nines.
So always prepare for this scenario. A great rule to follow is that multiple people on your team should have an idea of your lifetime deal refund policy. Specifically, delegate them to those who are monitoring the in-app chats.
By doing so, you’re signaling to every potential lifetime user that you have a smooth refund SOP. This would tell them that they won’t experience any hassle if they want to refund their payment.
As such, they’re more than willing to try your SaaS tool since there’s basically no risk on their end. If they don’t like the product, they can just request for refund. Done.
Get clear about specific coverage
Here’s one of the most common mistakes you’ll see SaaS startups make. Always take the time to explain to your potential buyers what their lifetime access will cover.
These are just some of the questions you can expect:
- Will my LTD still apply if the product undergoes major upgrades?
- If my LTD only covers the product as-is, am I going to need to switch to a subscription payment?
- Do LTD members have discounted subscription payments?
- Am I allowed to buy multiple perpetual licenses?
- Am I allowed to resell these licenses?
- How many metrics (this well depends on your product) will this LTD cover?
All of these are reasonable questions you’ll need to prepare for. Thus, map these out and create a page dedicated to them. This page is sort of acts like a FAQ section where interested lifetime deal buyers can read so they’ll understand what they’re getting into.
Your upsell plan is going to be one of your strategies that can mitigate a lot of your lifetime deal drawbacks. One of the methods that successful SaaS startups do is prepare both their basic LTD plans and their pro subscription.
That way, they can upsell to their LTD members and convert them into monthly or yearly paying clients. But again, your LTDs should have been developed well enough that your early adopters are content with their purchase.
Of course, everyone knows that a perpetual license will only get you so far. The SaaS product will eventually receive multiple improvements as the company evolves. And that’s where you should focus on.
Your future upgrades should be features that everyone needs. As such, your product roadmap will play a significant role in converting your lifetime deal members down the line.
Design it in a way that these valuable features are launched before your revenue cushion is depleted. In our example earlier, your cushion is 13 months.
As such, create a product roadmap that would convert LTD members to paying clients before the 13-month deadline hits. And of course, if you’re acquiring more clients for your subscription payment model, your LTD drawbacks from the outset are significantly mitigated.
Dedicate extra time during your lifetime deal launch
Lemlist, Infinity, and a host of other SaaS startups out there have repeatedly said to prepare for your lifetime deal launch. If you’re thinking you’ll need four weeks to cover your launch, extend that to five weeks.
Moreover, you need to have more than one member of your support team to answer the avalanche of questions that’ll come your way.
That’s not even mentioning the fact that your LTD members might be in different time zones. Some may be in the US, Europe, Asia, or Australia.
So always prepare your support team and ensure they have enough members to cover the influx of early adopters.
A great SaaS tool to have is chatbots to assist your support team.
However, you should set it up properly so it doesn’t turn your early adopters off. Most will understand why you’re using chatbots.
But if your chatbots aren’t doing a good job satisfying simple queries, you’re just going to create additional problems for you and your support team.
SaaS Lifetime Deal: Your Potential Ticket to Success
Lifetime deals are incredible momentum generators that’ll help launch your SaaS company. However, as has been repeated time and again in this article, you should take the time to research it properly.
Read up on what other successful SaaS startups did for their LTD launch. Do the math to determine the cost you’ll need and the revenue you could generate. And best of all, ask around LTD communities.
But even with all of these, lifetime deals don’t guarantee success. So make informed decisions that are guided by data and proper analysis.
That’s how you launch SaaS lifetime deals that have a chance of succeeding. This can be your stepping stone in starting your T2D3 framework.
For more tips and strategies for your SaaS business, you can read more on our Kenmoo blog here.