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Free versus Paid Upgrades
There is a long-standing debate in MicroISV circles about whether developers should charge a fee for product upgrades, or provide upgrades free of charge for the lifetime of the software application. While some developers may feel passionately about the subject, consider the following facts when deciding whether you should offer lifetime upgrades free of charge:

Fact #1 - Livelihood

Some developers are able to live off the money earned from a software application's upgrade fees. In other words, the upgrade revenue generated over the course of the products lifetime exceeds the revenue from the initial product sales.

Fact #2 - Statistics Do Not Lie

Revenue earned from upgrades can account for a very large percentage of a software application's sales. Upgrade revenue can be significant.

Fact #3 - Customer Benefits

Charging for upgrades is beneficial to the customer, at least indirectly, because it gives the developer an incentive to continue improving existing software applications. Lets face it, development time is limited, and developers need to choose what they are going to work on. Developers are more likely to work on products that have a financial incentive and will generate revenue.

Fact #4 - Perceived Value

Educated customers assess a product and a company's stability. Charging for upgrades instills confidence in the application and reinforces a company's stability.

Fact # 5 - Customers Expect To Pay For Upgrades

The majority of customers do not expect to receive a lifetime supply of software upgrades. Large software companies have trained consumers well. Customers are accustomed to paying fees in order to gain additional software features. Paid upgrades are not a novelty -- they are expected.

Fact # 6 - Alternatives Exist

Keep in mind that charging for upgrades is not a black-and-white issue. There are a number of options that exist for upgrades, so it does not have to be an absolute. Some developers provide free upgrades for a specified period of time. Others sell upgrade insurance for a fee and provide any upgrades available during the specified time free of charge. Still other MicroISVs offer minor "updates" (which generally include bug-fixes and minor improvements to existing features) free of charge to all customers, while charging an upgrade fee for major version changes.

Upgrades can be a profitable revenue stream for software developers. After a program is released, developers will often improve the software by adding features and enhancing the product's functionality. These improvements can result in a great source of upgrade revenue for a software company.

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