Noah Kagan publicly acknowledged today that AppSumo's revenue has declined 50% over the past two years, as the digital marketplace confronts fundamental challenges threatening its business model built on lifetime software deals for entrepreneurs.
The admission came through a post on X, where Kagan, AppSumo's CEO and founder, stated that revenue has fallen dramatically while the company attempts to navigate structural shifts in how software is created, distributed, and priced. The decline represents a significant reversal for a platform that previously generated over $55 million in revenue for partners and claimed 1 million monthly site visits, according to materials published on the company's website.
The timing of this disclosure coincides with broader marketplace upheaval across the technology sector. E-commerce app installs declined 14% in the first half of 2025 despite session growth, while platforms face mounting pressure from AI automation and changing consumer behaviors. AppSumo operates in the digital products marketplace vertical, selling software tools, PDFs, online courses, WordPress plugins, ebooks, template libraries, and Chrome extensions to small businesses and entrepreneurs through heavily discounted lifetime access deals.
The company's original value proposition centered on providing entrepreneurs with software tools at up to 95% discounts in exchange for upfront payments and user feedback. Partners received new users and product validation, while customers obtained permanent access without recurring subscription fees. This model thrived during an era when software companies needed user acquisition and distribution channels more than they valued recurring revenue streams.
Responses to Kagan's announcement revealed widespread customer dissatisfaction with the lifetime deal model's sustainability. Multiple users on X reported purchasing 6-7 lifetime deals through AppSumo only to find the software companies shut down operations, effectively rendering those purchases worthless. One user claiming to have spent six figures on approximately 1,000 AppSumo purchases over a decade stated they lost access to more than 100 lifetime deal products, describing the platform's customer support as inadequate.
The complaints centered on what customers characterized as violations of AppSumo's guarantee program. Users reported that the platform's "got your back guarantee" failed to provide refunds when software companies ceased operations shortly after the one-year warranty period expired. Jan, an X user, stated that AppSumo denied refunds for products like Fable despite websites remaining operational, only for those companies to shut down days after warranty expiration. Toby Gerard compiled a list of failed lifetime deals at saasyrank.com, documenting systematic product failures across the platform's history.
These sustainability problems reflect deeper economic pressures facing software companies participating in lifetime deal programs. Veena Prashanth, who launched a WordPress plugin on AppSumo, explained on X that she discontinued using the platform because the lifetime model proved financially unsustainable for ongoing product development and support. Prashanth suggested that AppSumo should pivot toward offering discounted first-year subscriptions rather than permanent access, arguing this approach would enable more sustainable business models for software vendors while maintaining value for customers.
The fundamental economics of lifetime deals create perverse incentives. Software companies receive immediate cash infusions but assume indefinite support obligations without recurring revenue to fund ongoing development, server infrastructure, or customer service. This structure works temporarily for companies seeking user acquisition or market validation but breaks down when products require sustained investment. The resulting pattern sees companies either abandoning lifetime deal customers after collecting upfront payments or shutting down entirely when operational costs exceed initial revenue.
AppSumo's marketing materials emphasized the platform's role in launching thousands of digital products, with statistics indicating more than 2,000 products listed as of October 2021 and over $55 million in revenue generated for partners. The company positioned itself as the "#1 digital marketplace for entrepreneurs," offering free product listings and access to a 1.5 million email distribution list, 350,000 social followers, and affiliate networks spanning bloggers, influencers, and YouTubers.
Partner testimonials from the website highlighted different value propositions. Rikki Pitt, founder of Jamcode and Paced Email, cited access to user feedback as the primary benefit. Lynette Chandler, founder of Thrive Anywhere, emphasized customer connections and feedback shaping product roadmaps. Guillaume Moubeche, CEO of Lemlist, characterized AppSumo as a market testing platform. Andrew Gazdecki, CEO of Microacquire, credited AppSumo with enabling Bizness Apps' success. Andrew Walters, co-founder of Vidds.com, reported sales beginning on the first day with no promotion and valuable feedback for product development. Lakshmanan Raman, working on growth at Vmaker, noted the platform reached nearly 30,000 users within six months of launch.
However, X responses to Kagan's announcement suggested these success stories represent outliers rather than typical experiences. Multiple software vendors reported negative outcomes from AppSumo launches. Milenko stated they purchased 6-7 lifetime deals that subsequently failed, characterizing the experience as being scammed repeatedly by AppSumo paying for products never truly delivered as promised. CD reported spending six figures across more than 1,000 purchases over a decade, losing access to 100-plus lifetime deal products, and experiencing deteriorated customer support compared to earlier years when AppSumo actively assisted customers with failed products.
The platform's revenue share model has reportedly become less favorable for vendors over time. Ervin Kalemi identified several problems in lifetime deal communities: many founders conducting cash grabs with low-quality software, AppSumo taking larger revenue cuts than six years ago, and excessive competition from alternative platforms making it difficult to bring innovative products to market. Minh Pham questioned why companies achieving $10,000 monthly recurring revenue would launch on AppSumo, suggesting the platform's value proposition weakened for successful ventures.
Industry observers identified broader structural shifts undermining AppSumo's model. Daryl noted that software companies have spent the past year publicly stating that software creation has become easier and cheaper than ever, comparing this to Rolex announcing their watches cost nothing to manufacture. This commoditization directly threatens AppSumo's positioning as a discount marketplace - if software development costs approach zero through AI automation and no-code tools, the perceived value of heavily discounted lifetime access diminishes.
Al characterized the transformation as a shift from "software as a service (passive)" to "service as software (ROI / outcome driven)," arguing that buyers increasingly evaluate tools based on measurable business outcomes rather than feature sets or upfront cost savings. This evolution favors subscription models with ongoing optimization and support over one-time purchases with limited vendor accountability.
Chris Rempel outlined two fundamental problems with AppSumo's model in a detailed X thread. First, the brand promise violates basic economic principles by offering lifetime access at unsustainable prices. Software companies require ongoing revenue to fund development, infrastructure, and support - commitments incompatible with one-time payment structures. Second, the lifetime model selects for vendors experiencing cash flow crises or lacking conviction in their products' long-term viability, creating adverse selection where the best companies avoid the platform while struggling ventures seek quick capital infusions.
Vijar Kohli suggested AppSumo should transition from selling bundled third-party software to developing and selling its own software products, arguing the company possesses sufficient historical data about successful software models to build proprietary tools. This pivot would improve profit margins while reducing exposure to partner failures, though it would require fundamental changes to AppSumo's business model and operational capabilities.
The platform's infrastructure faces competition from multiple directions. AI automation has transformed how marketing professionals evaluate and implement software tools, with companies like Amazon launching AI agents for automated campaign management and Meta deploying Advantage+ automation despite advertiser skepticism. These developments enable businesses to accomplish tasks previously requiring specialized software purchases through integrated platform capabilities.
The timing of AppSumo's revenue decline mirrors broader challenges facing digital marketplaces and platform economies. Marketplace dynamics have shifted as companies like Criteo and Mirakl Ads launch integrations targeting mid-to-long-tail advertisers, while retail media networks expand beyond traditional boundaries into travel, financial services, and other verticals. These competitive pressures create alternative monetization paths for software companies, reducing dependence on discount marketplace distribution.
The sustainability concerns extend beyond individual vendor failures to systemic risks in the broader software ecosystem. Open source software faces economic challenges as industry surpluses supporting free development evaporate. Rising interest rates, investment reallocation toward artificial intelligence, tech sector layoffs, and maintainer burnout threaten the foundation supporting much of the software infrastructure that discount marketplaces depend upon for their product catalogs.
Ved Rasic, who launched with AppSumo twice for LeadDelta and Autoklose while referring three additional successful launches, expressed continued support for Kagan's efforts despite acknowledging the platform's challenges. This sentiment appeared repeatedly among X respondents who recognized AppSumo's historical importance while questioning whether the original model remains viable.
The responses revealed a community grappling with fundamental questions about software pricing, sustainability, and marketplace economics. Wes Foster acknowledged the pain points affecting vendors and customers but suggested at least one new opportunity remained for groupon-style promotional models, though without elaborating on specifics. Tanner Mullen proposed pivoting to a Product Hunt-style business model allowing anyone to launch products rather than maintaining AppSumo's curated marketplace approach.
Kagan responded to several critical comments with brief acknowledgments. When Thee_machinist reminisced about AppSumo's peak influence between 2014-2018 when Facebook communities actively discussed which deals to purchase, Kagan replied that "ups and downs happen" and expressed confidence that "we will go up." When Plant And Tractor Trader praised Kagan's honest assessment, the CEO thanked them for their support. When questioned about whether multiple launches could solve the problem, Kagan acknowledged the company had considered whether curating launches or enabling everyone to launch would prove better strategically.
The fundamental challenge facing AppSumo reflects broader tensions throughout the software industry about how to balance customer acquisition, sustainable revenue models, and long-term product viability. The lifetime deal model thrived during an era when software companies prioritized user growth over immediate profitability, when software development required substantial upfront investment, and when monthly subscription models had not yet achieved dominant market position.
Today's landscape presents different dynamics. Software development costs have declined through no-code platforms, AI-assisted coding, and cloud infrastructure. Monthly subscription pricing has become the expected norm across consumer and business software categories. Customer acquisition costs have risen while attribution has become more complex. Companies increasingly compete on ongoing service delivery and continuous improvement rather than one-time feature sets.
These structural shifts render AppSumo's original value proposition less compelling for all stakeholders. Software companies with viable products increasingly avoid lifetime deals to preserve recurring revenue streams. Customers have experienced enough product failures to question whether upfront savings justify the risk of unsupported or abandoned software. The marketplace itself struggles to maintain deal quality while competing against platforms offering superior discovery, integration, and support infrastructure.
AppSumo's website materials outlined ambitious goals for partners, including brand exposure to 1 million monthly visitors, thousands of new users, targeted access to new markets, roadmap development through feedback, and viral marketing through the platform's distribution networks. The site positioned AppSumo Select as an exclusive program for established SaaS companies seeking to scale globally and become category leaders like Zapier, Shopify, and Hopin.
However, the disconnect between marketing materials and customer experiences suggests a platform struggling to deliver promised outcomes. The website's earnings estimates, based on top 50% of marketplace partners across 12-month periods with explicit warnings that "actual earnings will vary," now appear optimistic given reported partner dissatisfaction and product failure rates.
The company's "60-day money-back guarantee" and "yours forever" positioning emphasized commitment-free software access with permanent licensing. Marketing materials stated that entrepreneurs could "never pay full price for software again" while AppSumo handled growth, marketing, and distribution. The promise was simple: focus on building the best product while AppSumo serves as the engine for growth.
This vision depended on a sustainable ecosystem where software companies could afford to honor lifetime access commitments. The widespread product failures documented by customers indicate that ecosystem has broken down. When users report losing access to 100-plus lifetime deals despite AppSumo's guarantees, the fundamental trust required for marketplace viability erodes.
The statistics AppSumo published on its website - 1 million monthly site visits, $55 million in partner revenue, 2,000-plus products listed, 1.5 million entrepreneurs saving $550 million since 2010 - reflected a different market era. The current 50% revenue decline suggests those metrics no longer translate to sustainable business performance as the software landscape transforms around the platform's static model.
Industry precedent for pivoting away from unsustainable pricing models exists across technology sectors. High-profile projects including MongoDB, Elasticsearch, Terraform, Neo4J, and Sentry have adopted more restrictive licenses in recent years after discovering that fully open approaches created unsustainable economics. While these projects still provide source code access, they implemented restrictions incompatible with pure free and open source principles to ensure business viability.
AppSumo faces similar pressures but operates in a commercial marketplace rather than open source ecosystem. The company must determine whether modifications to its lifetime deal model can restore sustainable economics or whether more fundamental restructuring becomes necessary. Potential paths include shifting toward first-year subscription discounts as Prashanth suggested, developing proprietary software as Kohli recommended, or reimagining the platform's role in software distribution entirely.
The human dimension of AppSumo's challenges extends beyond revenue statistics to affect real entrepreneurs who relied on the platform for software tools enabling their businesses. CD's account of spending six figures across 1,000 purchases over a decade represents not just failed transactions but trust violated and business capabilities lost when promised lifetime access disappeared. Jan's experience purchasing products that failed immediately after warranty expiration suggests timing patterns indicating possible knowledge about impending shutdowns.
Customer support deterioration compounds these failures. Multiple users reported that AppSumo's assistance for failed products has declined significantly compared to earlier years when the platform actively worked to remedy situations where vendors abandoned lifetime deal customers. The introduction of a one-year warranty for Plus members, characterized by CD as "bogus," appears to have replaced more comprehensive support for product failures.
The marketplace's two-sided nature means both vendors and customers experience pain from the model's breakdown. Vendors like Prashanth who achieved successful launches ultimately abandoned the platform because lifetime economics proved unsustainable. Customers who trusted AppSumo's guarantees lost access to tools they paid for without adequate recourse. The platform itself watches revenue decline 50% while searching for viable paths forward.
AppSumo's founding premise - that the tools entrepreneurs need to grow their businesses shouldn't put them out of business - addressed real pain around software costs and accessibility. For a period, the platform delivered meaningful value by connecting budget-conscious entrepreneurs with emerging software tools at prices that made experimentation possible. The question now is whether that original promise can be fulfilled through different structures or whether it represented a temporary market inefficiency that natural economic forces have corrected.
The broader implications extend beyond AppSumo to the entire lifetime deal ecosystem and software pricing models. If lifetime deals prove systematically unsustainable, as mounting evidence suggests, then customers who purchased tools through this model face ongoing risk of service discontinuation regardless of platform. Vendors considering lifetime deal launches must weigh short-term capital needs against long-term support obligations. Marketplaces built on this model must either adapt or face decline.
Kagan's public acknowledgment of the 50% revenue decline marks a notable departure from typical startup communication patterns that emphasize growth and optimism. The transparency, while appreciated by some community members, also signals potential difficulty finding private solutions. Public disclosure of business challenges often precedes significant strategic pivots, acquisitions, or other major changes when internal efforts prove insufficient to reverse declining trajectories.
The X conversation following Kagan's announcement illustrated community fragmentation between those maintaining faith in AppSumo's ability to adapt and those viewing the platform's challenges as terminal. Plant And Tractor Trader's confident prediction that Kagan could adapt and turn the situation around reflects belief in founder capabilities and past track record. Thee_machinist's sadness about AppSumo's decline from its peak influence period reflects nostalgia for an era when the platform commanded daily discussion among deal-seeking entrepreneurs.
Tanner Mullen's Product Hunt comparison suggests a potential adaptation path where AppSumo maintains discovery and launch infrastructure while reducing curation overhead and financial exposure to individual vendor failures. This model would shift risk away from the platform while maintaining relevance in software distribution. However, it would also reduce differentiation from existing launch platforms and potentially accelerate the quality deterioration that users already perceive across lifetime deal offerings.
Stefan Ploskov's simple declaration of being "a big fan of the platform, rooting for you!" captures the emotional investment that AppSumo cultivated through years of operation. Building a community of 1.5 million Sumo-lings, as the company's materials describe its customer base, creates relationships extending beyond transactional software purchases. The platform became part of entrepreneurial identity for many customers who participated in daily deal discussions and shared experiences of building businesses with discounted tools.
This community loyalty provides a foundation for potential recovery but also creates pressure for solutions that honor past commitments. Customers who built businesses around lifetime access tools reasonably expect those commitments to be honored. Vendors who participated in launches based on specific revenue share agreements expect consistent treatment. The challenge lies in adapting the business model while maintaining trust with stakeholders who made decisions based on AppSumo's historical practices.
The software industry's transformation toward AI automation and agentic capabilities fundamentally alters what entrepreneurs need from software marketplaces. When platforms launch AI agents for automated campaign management and major companies integrate AI directly into advertising operating systems, the value proposition of purchasing standalone tools diminishes. Entrepreneurs increasingly access capabilities through integrated platform features rather than assembling collections of specialized software.
This shift threatens discount marketplaces broadly, not just AppSumo specifically. When Google, Meta, Amazon, and Microsoft embed advanced capabilities directly into their ecosystems, standalone software companies lose relevance. When AI monitoring becomes essential for brand management and companies must track mentions across ChatGPT, Claude, Gemini, Perplexity, and other platforms, the complexity exceeds what individual lifetime deal purchases can address.
The response diversity in Kagan's X thread - from empathetic support to harsh criticism - reflects genuine uncertainty about whether AppSumo's model can adapt or represents a business structure whose time has passed. No clear consensus emerged about optimal paths forward, with suggestions ranging from developing proprietary software to pivoting toward subscription discounts to reimagining the platform's fundamental purpose.
What remains clear is that AppSumo's original model - selling lifetime access to third-party software at steep discounts - has broken down economically for all participants. Software vendors cannot sustain permanent support obligations funded by one-time payments. Customers cannot rely on lifetime access when vendors routinely shut down operations. Marketplaces cannot maintain revenue when the underlying economics prove unsustainable.
The platform's future depends on whether it can restructure around more sustainable principles while retaining community trust and market relevance. The 50% revenue decline over two years provides quantitative evidence of model failure. The question is whether the decline represents a temporary setback during transition or the beginning of terminal collapse. Kagan's public acknowledgment suggests the company recognizes the severity of challenges ahead.
Who: AppSumo, the digital marketplace founded by Noah Kagan in 2010, serving 1.5 million entrepreneurs and having launched 2,000-plus software products through lifetime deal model.
What: The company has experienced a 50% revenue decline over the past two years as the lifetime software deal business model faces systemic sustainability challenges, with widespread customer complaints about products shutting down after purchase and vendors abandoning the platform due to unsustainable economics.
When: Kagan disclosed the revenue decline publicly today through X, covering performance during 2024-2025 after the platform's peak influence period between 2014-2018.
Where: The challenges affect AppSumo's global digital marketplace operations across software, PDFs, online courses, WordPress plugins, ebooks, template libraries, and Chrome extensions sold to entrepreneurs worldwide, with particularly acute problems for customers who purchased 100-plus lifetime deals now losing access.
Why: The lifetime deal model has broken down because software companies cannot sustain permanent support obligations funded by one-time payments, leading to widespread product failures that undermine customer trust while AI automation and platform consolidation reduce demand for standalone software tools that previously drove marketplace revenue.
