How Tower Moved to a Subscription-based Model and Grew Revenue by 96% YoY

Tower is a market-leading version control client that allows development teams to manage their code base more easily, leveraging all of the most powerful features of Git. Launched in 2010, Tower has built a loyal base of customers.

Having previously sold perpetual licenses for its Mac & Windows software, Fournova - the company behind Tower - decided that their app was suited to a subscription model and wanted their next release, Tower 3, to be available as a SaaS product. As a bootstrapped company, this move would provide them with crucial cash flow, whilst allowing them to focus more on developing their product in line with the needs of their customers.

Tower were already using and reaping the benefits of a Merchant of Record (MoR) model to handle their billing but were unsure their existing provider could set them up for success in their pursuit of subscription excellence. Therefore, they set about evaluating a range of MoR providers’ SaaS features.

In addition to catering for a new SaaS audience, Tower wanted an MoR that would meet the needs of their existing client base, ranging from individual developers to Fortune 100 companies.

The team also wanted to prioritize moving upmarket and were specifically seeking a solution that could help them grow their enterprise accounts. They were looking for a partner that would not only provide the technical solution, but could also assist them with both the transition to a subscription model and selling larger contract values into enterprises.

The Tower team was immediately impressed by the flexibility of the Paddle checkout and its compatibility with B2B subscription purchases. They wanted to allow team plans to be purchased via the checkout and to offer customers the exact number of seats they required, all of which can be handled seamlessly with Paddle.

Expert advice for launching subscriptions

Working with their Paddle Account Manager, Tower were able to devise a plan to move their business to a subscription model. This plan helped build confidence with existing customers to move to subscription, and it also inspired new SaaS customers to sign up with Tower.

The plan included initiatives like running a public beta, setting annual pricing, and handling communications with existing customers on the migration and discounting strategy.

Powerful subscription billing throughout the customer lifecycle

Clients tend to start small, run some form of proof of concept to validate the product's ROI and then look to add seats. Paddle’s post-checkout capabilities make selling more flexible.

The Tower team were pleased to learn that Paddle supports the ability for seats to be purchased by business customers mid-subscription via a simple API call. This way, Tower has been able to delight its clients with the option of adding or removing seats whenever they wish, all with just one click.

Powering future growth

Moving to a per-seat billing model and Paddle’s ongoing support has opened new strategic opportunities for Tower to grow.

With subscription management capability, Tower is now in prime position to move upmarket and sell team plans to bigger businesses. An early adopter of Paddle’s invoicing tool, they are also seeing how Paddle can make selling to larger companies a streamlined and smooth process.

Successful subscription product launch & renewals

With Paddle’s subscription billing, Tower successfully launched a new product and considerably expanded the kind of customers they sell to. When the subscription version of Tower first launched in June 2018, its launch outperformed previous releases of new major versions.

A year down the line, 75% of customers who had subscribed the year before, renewed their subscription.

High subscriber retention

Tower’s second year renewals were a huge success. 75% of subscribers chose to renew their product in the second year - an incredibly high renewal rate for a high-growth SaaS company. This outcome also demonstrated the value of offering a discount on the first year’s subscription plan, as the vast majority of these customers rolled into the new version at full price.

Team plan adoption

One year on, Tower is successfully growing its team subscriptions thanks to Paddle’s flexible API. Tower customers love the ability to add seats without having to contact support for help and do so frequently. Once the number of seats reaches a certain threshold, the team engages in more proactive sales.

Strong foundations for future growth

Paddle is working with Tower on introducing new product positioning for teams to help them realize a ‘land and expand’ strategy to grow within organizations. In addition, the two teams are taking steps to increase conversions of lagging perpetual license customers into subscribers.