@Andreas_Philipp1 Well Schiit is totally different in my mind, they sell me a piece of hardware. The only exposure I have to them is the warrantee, but at the price of their gear I’m happy to accept that counterparty risk; in general I don’t think that hardware warranties are usually that useful / likely to pay off, so I accept as a rule of thumb that “if it breaks, it’s my problem, and if I get a refund replacement I’m psyched”. Schiit seems to stand behind their gear nicely so I figure I’m better off than my baseline hardware assumption.
Sonos is a much clearer comparison in my mind. They easily could have gone out of business. I know a few people who work there, and they have had financial challenges. The biggest issue is whether / when someone buys them. But I’m a believer that in the “reasonable” lifetime of hardware gear, which is… what… 6-8 years, maybe 10 if you’re lucky?.. that they’ll still be around. And I think a much more likely scenario is that someone buys them for the tech / IP / lawsuit avoidance and continues to support the install base. Admittedly that’s a conclusion, but even when they were private (they’re public now, and just had a banger quarter) they were not that tight-lipped. So I made an informed gamble. I do tell my friends when they ask if they should get Sonos that I figure that their half-life is five years, and so they should make a calculation that something better will have come along in that time frame whether or not Sonos exists and is thriving.
But you pose a fair question. I think the real difference is that Sonos makes no claim to “lifetime” (as their S1->S2 upgrade debacle showed, people had mismatched expectations). I think of it as a piece of hardware, and I’m getting updates. But I’m not buying a license in perpetuity, and I think of the hardware as having a useful lifetime just like a router. Thanks for posing the question - made me think.
Super helpful, thanks. I thought I’d gone through the site, but realized that once I’d started my trial I hadn’t gone back to look. Durh. Appreciate the pointer.
Here’s what I gleaned:
Five years old
40 person team, geographically distributed
bootstrapped[?] “invested our own money” / “don’t spend money we haven’t earned”
growing but slower than they could if they threw everything they could at it
“prioritize lifestyle”
So let’s assume that’s all right, and trust me - those are all good things… but my big question (and this is not something I’d expect they’d let me know) is whether they get enough annual/monthly subscribers to really have recurring revenue that covers their costs. When they add a lifetime sub (and I bet a big portion of us on the forums are lifetime subs) they get all the revenue they’re ever going to get from me up front. So they get an infusion of cash, but there’s one less person they’re going to get (the pool of potential customers is smaller). Right now this might be construed as a niche product. And so the question is whether they can create a broad enough appeal product to charge people monthly on an ongoing basis that they can continue to fund supporting me. All the above stuff makes me more likely to assume the near term is fairly rosy (especially with a pandemic bump), but in a sense I wonder more about the long term. Got to build a spreadsheet model with some guesses
Now that I have read this thread, I swear I will not buy anything in my life and I will keep the money in my pocket (not at the bank, because I do not have the staff list and the bank’s financial reports)…
Perhaps, but I suspect that lifetime subscribers are a small percentage now of the roughly100,000 subscribers. Roon labs themselves don’t see the lifetime sub being offered for ever…
I do too, and after reading the post linked below, I decided to stick with the $120/year subscription. I was not using Roon five years ago, and I’ll be (pleasantly) surprised if I’m still using it five years from now.
As long as Roon Labs continues to deliver service that I value, I’m delighted to keep renewing my subscription. It feels good to not be financially locked into the platform and to support their work, much like supporting artists whose music I enjoy.
In particular, I draw your attention to this bit:
The lifetime should not be an aspiration for Roon subscribers. It hurts us as a company and is not a viable business model for our future. If the price increase has reduced demand for lifetime subscriptions, that’s a good thing for our business.
It’s unlikely that we’ll offer a lifetime option forever. If you enjoy Roon and believe in what we’re doing, the best way to support it is to subscribe annual. We will do our level best to earn that support for many years to come.
The annual is STILL $119 for a year. That’s $10 a month. If Roon isn’t worth $10 a month to you, then we are doing something wrong and you should go elsewhere. It certainly brings me more joy than $10 every month, and our business vision is to do the same for every one of our subscribers.
That is super helpful. Thanks for bringing me up to speed. The fact that they are using a phrase like “junk food” makes me think that they have their heads screwed on with the correct threading.
The second thread you pasted that outlines their belief that the lifetime model hurts the company and is not sustainable means they get this. So I’ll be surprised if there aren’t more price increases on lifetime coming. Got it.
All good news that that philosophy is publicly acknowledged. Would still like to figure out revenue guesstimate and costs, but I’ll do that in private
I didn’t purchase a life membership and instead went with yearly subscription for the reasons you have outlined also as I thought another product might come along that I preferred, been with them for 4 years now, ops should have purchased a life membership
Do what’s most advantageous for you and your situation. But I encourage you to include in your analysis the fact that Roon becomes less useful after Roon Labs is no longer around to support it. An annual (or monthly) subscription does not guarantee that Roon will be around forever, but it helps.
I feel the lifetime offer does raise concerns for some of company stability. To me it is a form of increasing cash flow for startup purposes.
Personally, I would like to see it go away and use a K.I.S.S. pricing model. Not even an annual price. Just 9.99 a month, cancel anytime. It would attract more users as they have no risk. A model that is used by most credible companies.
My guess is they do about $8 million in annual sales. The say they have 100,000+ subscribers. Not likely they are all paying $120/year. Take out lifetime subs, and I think they also have a perpetual license embedded lite version with Elac or somebody. There are likely comps for friends, family, business partners, manufacturers, industry types, etc. So, likely less than than $12 million. If 70% of subscribers are paying annually that’s $8.4 million. So it could be more. Or less.
Another way to look at it is revenue per employee. Industry average is probably around $200K per employee. So if they have 40 employees that’s $8 million.
Nucleus hardware sales would add to their overall revenue. Hard to guess how much. But even with roon’s premium markup the gross margins are likely thinner than the software side.
Anyway, the real answer is who knows? And as you note, they aren’t obligated to tell us. But just back of the envelope guesstimating suggests they have a nice niche business. They could be making a decent profit, depending on back-end infrastructure and licensing costs, which are likely much higher for software like roon as compared to other music playback software.
Yes I saw the addition of the new monthly pricing. That is the only reason I signed up this time as I have been sitting on the fence for some time. Still, the lifetime option should go away for good as it raises concerns and is always an unwelcome topic on the forum for most. Should not be a problem if Roon does not need the extra cash flow.
Agreed. I can see a case for making Lifetime an option exclusively available at the time of purchase of a new Nucleus/Nucleus+. Roon Labs might even lock the subscription to the hardware ID, making it non-transferable (limited to the lifetime of the device itself). Probably not worth the development effort for Roon Labs to do so, but I can see why Nucleus owners would prefer lifetime. The Nucleus becomes an expensive doorstop without an active subscription…
I suppose that’s technically true, but $2.5k for a 7th generation i7 NUC to use as a generic PC is pretty terrible value for money.
Essentially, my point was that the Nucleus does not make much sense without a Roon subscription. As such, a lifetime option that’s exclusive to Nucleus owners might make sense.
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