Should I Subscribe to Software, or Buy It?

178495138By: Dan Bremner

Software vendors are increasingly using a combination of carrot and stick to induce customers to sign up for their subscription-based software licensing. The "carrots" tend to be extra features or permitted uses, while the stick may be higher prices for traditional perpetual licenses, or discontinuing the perpetual license (almost) entirely, as Adobe has recently announced.

While some vendors consider subscriptions part of their "cloud" offering (e.g. Microsoft Office 365 ProPlus, Adobe Creative Cloud), in most cases the software itself is still installed locally. Notwithstanding the cloud features that may come along with it, the question still comes up, "Should I buy or subscribe to software?"

Since the answer to this question is inevitably, "it depends," it may be helpful to list some pros and cons of software subscriptions in general, and some things to be aware of in specific cases, namely Adobe Creative Cloud and Microsoft Office 365 ProPlus.

First the positives:

  • With a pay-as-you-go subscription, you don't have a large up-front purchase, and can make your software an operating expense rather than a capital expense.
  • You always have access to the latest version.
  • Software companies like the predictable, consistent revenue stream.
  • In theory, the developers can focus on incremental upgrades that users have requested rather than having marketing drive new features based on shiny new bells and whistles they think will drive upgrade purchases.
  • Customers have access to vendor support without separate maintenance fees.
  • For customers who would normally upgrade to new versions regularly and/or purchase software assurance, the costs of subscribing will often be lower, and come with additional benefits.

Now some drawbacks:

  • If you upgrade infrequently, or skip a few versions between upgrades, you may pay more by subscribing.
  • If you prefer to stay on older versions of software, a subscription may not give you that option.
  • If the vendor discontinues a product, or stops offering the service, you may lose the right to use it, which would not be the case if you bought a license.
  • If they raise subscription prices, you have to pay a higher price for the subscription, or find an alternative product. If there is a strong competitive marketplace for similar products, it should help keep pricing in line. If the vendor feels they have a virtual monopoly (or high cost of switching products) it may make this a more likely scenario.

It looks like this model is being adopted by more and more software vendors. Adobe has been among the most aggressive, announcing that they will no longer sell new versions of their Creative Suite products (which include such stalwarts as Photoshop, Illustrator, Premiere, etc.), as perpetual licenses. The CS6 versions will be the last available for purchase. Further, they have recently announced that they will stop selling the CS6 bundles; only CS6 individual products will be available for sale. All new features and future upgrades will only be available to subscribers to Creative Cloud.

Both Adobe and Microsoft include additional features such as simplified cloud download and installation, cloud storage, and the ability to install the products on multiple computers for the same user. With Microsoft, the license extends to 5 devices for each user, including a home PC or Mac, even if your company is paying for the subscription. Both companies also offer the entire suite of products to subscribers, which is great if you need or can use those products, but not all that relevant if you don't.

Whether you prefer to buy or rent/subscribe, there are options out there for you, but more and more customers are finding the pay-as-you-go model to be a compelling and attractive option. As always, we consider our role as a technical and business advisor to be one of our most important contributions to our customers' operations, and that includes helping to analyze how best to procure the software licenses you need. We include that advice and analysis at no extra cost to our Managed IT customers.

Please contact us if you have questions about software subscriptions, or anything else technology related. And if you're not currently a Managed IT customer, feel free to contact us about that, too!


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