Software drives your operations, but choosing the right one — with the right pricing model — can be overwhelming. Licensing models are one element of the software vetting process that you should know about before you go through it.
Below, we’ll break down the pros and cons of perpetual licensing and subscription models to help you make an informed decision.
Perpetual license: The one-time investment
A perpetual license allows you to purchase software outright, giving you the right to use it indefinitely. This model has long been favored by organizations that prefer a one-time investment rather than ongoing payments. Once you purchase the software, it’s yours to use for as long as you need without worrying about monthly or annual fees.
Pros
- Ownership: With a perpetual license, your company owns the software. You can use it forever without any recurring costs.
- Cost predictability: Since there are no ongoing fees, the cost is predictable and upfront. If you have a tight budget, you may prefer this arrangement over a subscription.
- Control over deployment: In a large enterprise and/or complex IT environment, you may like being able to tailor the software to meet your specific needs without relying on a vendor for changes or updates. You’ll be able to precisely integrate with your existing systems and processes, too.
Cons
- Stagnation risk: A key disadvantage is the lack of included access to future updates. As software ages, it can become outdated. To get the latest features, security patches and compliance updates, you’ll likely need to purchase costly upgrades or a new version of the software.
- Maintenance costs: Although the initial purchase may seem economical, you’re responsible for any maintenance or additional support. If your software vendor no longer supports the version you own, maintaining the software can be both expensive and challenging.
- Lack of flexibility: Perpetual licenses are inflexible. If your business needs changes, adapting or upgrading usually requires another significant investment in either new licenses or custom development.
Subscription model (SaaS): Pay-as-you-go pricing
The subscription model, or Software as a Service (SaaS), requires ongoing payments, typically monthly or annually. Unlike perpetual licenses, SaaS gives you access to software for as long as you continue paying for it. This approach is increasingly popular today as businesses prioritize flexibility, scalability and continuous access to the latest technology.
Pros
- Continuous updates: One of the primary benefits of a subscription model is that it usually includes automatic updates. Your software remains current with the latest features, security enhancements and compliance requirements.
- Lower initial costs: Subscriptions often have lower upfront costs, so they’re more accessible for smaller organizations or departments and teams requiring fewer licenses. You pay only for what you need, and costs can scale with your usage.
- Scalability: As your business expands, SaaS can keep up. You can add or reduce features, users or storage as needed without a significant financial commitment.
Cons
- Ongoing costs: The most obvious downside to a subscription model is the recurring payment. Over time, those costs can add up and may exceed the cost of a perpetual license if you use the software for many years.
- Dependence on a vendor: With a subscription, you’re dependent on the vendor not only for access but also for ongoing service. If the vendor goes out of business, changes pricing models or discontinues the product, your access could be disrupted and leave your business vulnerable.
- Limited customization: Some subscription-based software is designed for broad use and may not offer the level of customization you require. If you need specialized features, a subscription model may not provide the flexibility you need without additional costs.
The subscription model wins — with the right vendor
It may seem like the choice between perpetual licenses and subscription models depends on your business’s specific circumstances and strategic objectives.
However, even if you value ownership and long-term cost predictability and operate in a stable environment where frequent updates are unnecessary, a perpetual license is not the best choice for a modern enterprise. Counterintuitive as it is, perpetual software licenses don’t offer infinite value. The rate of technological evolution demands a more agile approach to software commitments.
A subscription enables you to edit your licenses and services over time, maintain robust security and achieve scalability with minimal upfront investment. The risks associated with subscription models are avoidable when you choose the right provider.
The best software vendors have a long history of reliability, commitment to innovation and world-class support. A software company that values customer success, offers transparent pricing and provides comprehensive support can drive your organization’s growth and efficiency.
Redwood Software, with 30 years of automation expertise, offers subscription pricing for all its automation fabric solutions, including ActiveBatch by Redwood for workload automation and JSCAPE by Redwood for managed file transfer. Book a demo to ask us how this model can meet your business needs now and in the future.
