The concept of subscription versus perpetual licensing has been around nearly as long as software licensing has existed, and computer networking played an early and ever increasing role in expanding software licensing options. As such, purchased and owned perpetual licenses are a significant asset in the long run. Viewed over a long time frame, perhaps 10 years, the difference in cost becomes substantial. Perpetual license M&S costs are lower than the yearly subscription costs, and as a result, long term costs for a subscription are higher than perpetual license costs, with the cross-over usually occurring in the 3rd to 4th year of usage.
As a generalization, it can be said that software monetization is achieved on the basis of purchasing a license for usage, with a generalized further extension that software licenses are either perpetual or subscription, which correlate to an entitlement to use a software license permanently or only for a defined and limited time.įrom a financial standpoint, the main difference between perpetual licenses and subscription licensing is that for perpetual licenses, there is a large up-front investment with additional yearly maintenance and support (M&S) costs. Over time, the challenge of how to price software has received a great deal of attention as demonstrated by the amount of effort Independent Software Vendors (ISV) expend at getting the right systems in place to monetize their development investments. This gap between investment to create software and the value it brings must of course be spanned by some means of compensation, and the “soft” nature of software has spawned many methods of creating a quid pro quo conduit.
Software’s intrinsic value originates from the effort that goes into creating it, and is completed by the benefit or value that users can get from it. The “soft” nature of software implies it to be amorphous compared to its computer counterpart “hardware”, but certainly it is software that brings “muscular” value to hardware. The term “software” is ubiquitous to a degree that few hearken back to review the origins of the word.
0 kommentar(er)
