When it comes to subscription based licensing versus perpetual licensing, at first glance it may appear that requiring users to pay a yearly fee just to renew their product license might initially seem like it would be off-putting to many users who would rather just own a product outright, but in truth, both have their pros and cons. It really comes down to the end needs of the user, and what they are looking for in a product whether that be a spreadsheet or word document.
1. The Subscription Model
The subscription based licensing model operates under the agreement that a user will pay a subscription fee at set renewal periods, be it monthly or annually. A baseline amount of technical support is offered so long as the license is valid, and the software updates are included in the subscription. This model is beneficial for businesses that may only need licenses on a temporary basis, based on the number of employees at a given time. They can add and cancel subscriptions as necessary, and not have to worry about spending hundreds on a license that they may eventually be stuck with down the line if their staffing needs shift.
The other benefit is that subscription based licenses are usually less costly in the short term than perpetual licenses. In the case of something like Microsoft Office, which has plenty of free competitors such as Google Docs, the lower price point doesn’t really help them, especially considering that Office used to be standard with all new PCs. When using software like Microsoft Excel for spreadsheets and Microsoft Word for word processing. Program packages like Adobe’s Design Suite, on the other hand, massively benefit from the cheaper short term cost the subscription based licensing allows. Photoshop alone could cost several thousand dollars for a perpetual license before subscription based licensing really took off, and a new version was usually released every two years or so. Subscription based licensing alleviates this prohibitively high price barrier offering Photoshop for over £70 per year, allowing more people to purchase the software and in turn garners more profits for Adobe due to the quantity of users now able to afford their programs.
2. Perpetual Licensing Model
The perpetual model has a user pay a onetime fee, or pay instalment fees towards purchasing a license outright. Once paid off, they own the license permanently. This is usually a good option for companies with specific software needs where constant updates or having the most up to date version of a program isn’t going to make or break their business. The biggest downsides to perpetual licensing are that aside from bug fixes and patches for the current version, version upgrades usually require purchasing a new license. Also, using outdated software can lead to hardware incompatibility issues as well as security risks depending on the kind of software involved, and if you no longer need the license or if you can no longer run the programs involved, you’re stuck with them.
3. Users moving to Freeware
Whilst businesses that frequently use complex spreadsheets and may use word more than an average user might be prepared to pay a subscription, there are many users who will not. Those users who do not frequently use software like Microsoft Office or just use a word processor or spreadsheet ad-hoc might find it not worth the continuous fee. We spoke to The Excel Experts, a group of Excel specialists based in London who told us – “Many users are opting to move to Google Docs or to open source projects like Open Office, we still get many medium to large businesses contact us specifically about Microsoft Excel but smaller businesses aren’t keen on the idea of paying for something they are not going to get the full benefits from.”
Overall, both subscription and perpetual licensing have their place and purpose, and depending on your individual needs, one may be a better value to you than the other. Subscription licensing tends to be more accessible and efficient in the short term, allowing seamless transitions from one version of a program into another, but tend to be more costly in the long term. Perpetual licensing is more costly in the short term, but if you don’t plan on upgrading at every update and will use the programs until they are no longer compatible with current hardware, perpetual licensing can save you quite a bit of money down the line.