Is Subscription or Perpetual Licensing Better For You?
In the old days, when you purchased software, there was a tangible element: You received a package of one or more floppy disks or CD-ROMs, which you then used to install the software. Licensing typically meant one license for each physical package. For businesses with many computers, this meant a whole lot of physical disks to keep track of, and when a new version came out, you had to start all over again.
Software distribution and licensing have come a long way since then, and one of the most important enhancements is the emergence of the subscription licensing model, to go along with the older perpetual licensing model. Essentially, these models are described as follows:
- Perpetual licensing: This is the traditional model, where you pay up front for a software license that is yours forever.
- Subscription licensing: In this model, you pay for the right to use the software for a limited period of time, typically one year, with an option to renew.
Many software products, including DSI’s EFDC Explorer, are available with both perpetual and subscription licenses. Each of these models has advantages and disadvantages. Depending on your situation, one option may work better for you than the other. Read on to learn more about the pros and cons of each type of licensing and how to decide between the two options.
Subscription Licensing: Pros and Cons
The advantages of subscription licensing include:
- Free upgrades: Updates are typically included in the price. When a new version comes out, all you need to do is install the update.
- Support: Technical support is typically included.
- Regular and predictable costs: Budget directors love this because there are no surprises.
- Lower startup costs: Startup costs are typically lower, reducing the barrier to entry.
The disadvantages of this model center around the total cost of ownership (TCO) over the planned life cycle. Depending on how long you expect to continue using the software and how important it is to have the latest version, you may find that a subscription is not a cost-effective option. For example, if your organization pays for a subscription license for 5-6 years, you will likely be paying more than if you bought a perpetual license and paid annual maintenance during that same period. Additionally, subscription licenses are often licensed to a specific individual and are not easily transferred to other users.
Perpetual Licensing: Pros and Cons
The advantages of perpetual licensing include:
- One-time acquisition cost: After you pay for it, you own it and can use that version of the software as long as you want.
- Offline capabilities: Unlike subscription licenses that require the software to check license validity on an ongoing basis, perpetual licenses allow for offline activation and use through the use of dongles.
- Transferability: Perpetual licenses are usually easier to transfer between users because the license is typically owned by an organization, not an individual.
On the other hand, technical support for older versions will eventually be terminated, requiring you to upgrade to a more recent version should errors or bugs appear. Many software vendors charge less for upgrades than for initial licenses, but in the case of a very old version, they do not allow upgrades, and the customer has to start over with an initial license for a new version.
Additionally, users who want to keep their software current need to consider the cost of annual maintenance; therefore, the TCO analysis should take maintenance into consideration. Annual maintenance costs can be 15-40% of the original license cost; therefore, the ongoing cost of keeping the license up to date must be considered when deciding on software. EFDC+ Explorer annual maintenance is 20% of the current license cost.
Conclusion: Do Your Homework
To decide which license model is right for you, estimate your TCO for each option by asking yourself the following questions:
- How long do you expect to use the software?
- How important is it to always have the latest version?
- What is your budget and what works in your budgeting cycle?
- Does your organization prefer subscription or perpetual licenses?
- Do you want to transfer the license to another user when you are done with your project?
For assistance in determining the best option for your project needs, contact Dynamic Solutions International today.
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