Advantages for LastPass offering a lifetime subscription option:
1 - reduced overhead - no need to process those transactions ever again - at a minimum it is costing you the broadband traffic, the per transaction fee and factoring to process the payment. You may be able to negotiate a better rate with the company that processes your payments if the amount is over an agreed minimum; i.e., the 3% you pay for each $12 transaction might be reduced to 2.5% for transactions over $75 - You are also paying for the network traffic which costs you the same for a $12 transaction as it does for $100 transaction - Cost of IT systems (applications and hardware) to manage your business - People required to answer questions to purchasers Many times the question is the same whether it's for a 1 year subscription or a lifetime With luck, you never have to pay human to talk to the customer again
2 - Established customer base - Everyone who buys a lifetime subscription is your customer for life. That means they aren't looking at the services offered by your competitors. Also, a new competitor may be heavily bankrolled by vulture capital. The easiest and least expensive way for them to get customers is to BUY them; i.e., buy YOUR company - The value of your company is primarily based on the number of subscribers you have - While your lifers aren't a source of Premium subscription income, they are the prime customers as the bigger company that bought you rolls out additional products
3 - Unanticipated income - Let's say you sell the lifetime subscription for $120. 1000 users take you up on it. That's 10,800 you get to deposit that you had not anticipated. It's not in the budget! Because you're paranoid you invest it in something safe yielding 2%. That's $216 that didn't cost you anything, didn't increase the load on your servers, etc. It's as if you signed up 18 new users. Of course, if you do a lot better than that, say get 10,000 people to sign up, then you're looking at $108,000 laying around in cash - Companies looking to feed on smaller companies for growth have a special warm spot for any company that has cash on the balance sheet.
The rest of this is just some experiences from my prior consulting and business diary:
I would like to add my voice in support of a lifetime membership. It's extremely rare that a subscribe to any service or product that requires repeating payments. Of course, right now LastPass fits my needs particularly well. I feel a level of loyalty as for several years I was able to do everything I needed to do with a free membership (the fact that you offer a free membership is evidence that the load and traffic created by a single user is negligible in your business model). I opted for a Premium membership when LastPass began supporting Android. Still, every first of the year I worry that I am going to miss that email or not update my billing info and have to go throw a substantial process to rescue my account. A lifetime account makes that whole worry go away.
Additionally, with several other services creating tools (mostly by analyzing LastPass and developing from your model) competitive products are increasing daily. There is always the question of whether LastPass will be acquired by one of these other companies that is heavily bankrolled (the cheapest way a business gets customers is to buy them through the acquisition of a competing business that's too small to say "no"). If I have prepaid 10 years of service the takeover company can usually wriggle out of LastPass' obligation simply by stating that the service LastPass offered no longer exists. However, I have discovered that when a takeover happens, the new company MUST honor lifetime obligations of the takeover target. I don't know the law behind, but it really came to my attention when Delta Airlines bought Western Airlines. I had a lifetime membership to Western's Horizon Club (private lounge, private check in, free drinks and munchies, clean bathrooms, TV, etc). Delta tried to avoid offering those of us who had signed up an equivalent membership in their Crown Room. FTR - Airline clubs are a huge profit center and for those of us who fly a lot, a great way to streamline travel. If you don't believe me, next time you travel pay the shocking fee for membership during your travel. Although your wallet will be screaming, your body and mind will be saying, "I'm pretty sure it was worth it." All I can remember is that people who had prepaid their membership at Western were offered Delta membership through the end of the year, regardless of the term they had prepaid. Any subsequent years were lost. Delta was forced to give all of us who had lifetime memberships equivalent access to the Crown Room. I still have my card today and I always appreciate the pampering.
Another benefit for you is that the cost of the Premium membership is a paltry $12. Even if it should go up, most of us won't respond violently. You, however, have to go through the entire accounting procedures for this amount of money as you would for a $120 transaction. It probably costs you about $3 in office overhead to process the Premium membership renewal and verify/maintain rights and privileges (based on standards with time and motion studies). With a lifetime account there would be no need to run the decision tree, you would simply BUN and continue. Simply stated, since you don't have to determine if this user is up to date, you save a few cycles on the CPU, I/O traffic and the "lifers" actually get a couple of milliseconds faster service.
One of the few subscriptions I have purchased is with PLEX. I have been a free customer for about 7 years, but again, it was the mobile access that triggered the upgrade. Additionally, I receive new and more capabilities. Recently PLEX became Amazon Fire TVs go to DLNA application. With that, development at PLEX has taken off. By offering lifetime subscriptions they were able to acquire a sizable chunk of money. I'm sure a lot of it went into development, but a sizable portion may have been invested providing the company with another source of income: interest income and increased values if they have invested wisely. Even at a lowly 2% should 1000 customers opt for a lifetime subscription at $120 (just throwing a number out there) you would enjoy an income of $2,160/year that would be new money. That's like acquiring 180 new Premium customers with ZERO impact on resources or office activities. You don't even have 180 new customer records that someone might be tempted to hack!