Finding the most cost-effective software can be challenging and entirely depends on the use and need of the product.
For years, we have seen a shift toward subscription-based software and leasing rather than perpetual purchases. Why is that the case? Is the low upfront cost truly more beneficial than a flat-rate purchase? We’re looking at the pros and cons of leasing vs. purchasing software and how either option can be useful for end-users.
Leasing and Subscription Software
We know that the subscription model offers drastically lower upfront costs and greater flexibility, opening cost-effective options for small and mid-sized operations. Users pay a recurring fee, either monthly or yearly, to gain continuous access to software, including the latest features, security patches, and software updates.
Subscription software licenses are a practical way to get the software you need without additional purchases while meeting short-term needs.
You can use a subscription-based model in short or long-term business plans. Rate increases are usually low, so over time, the amount of money saved can be drastic. Leasing software can be ever-changing, so flexibility is key when going this route for purchases.
Perpetual Purchases
Buying perpetual software licenses may be considered out-of-date, but for some businesses, it still makes sense. Perpetual licenses tend to be budgeted as an asset, whereas subscription is usually budgeted as a utility. A perpetual license model involves a higher upfront cost but grants you perpetual access to the software. That perpetual access gives you a sense of ownership without recurring fees.
This approach is ideal for companies using older equipment or those that prefer to avoid continuous upgrades and subscription-based models. However, the lack of continuous updates, the latest features, and built-in technical support can make this model less appealing in a fast-evolving cloud computing environment.
Comparing Perpetual Licenses to Subscriptions: How to Choose
| Perpetual License | Subscription Model | |
|---|---|---|
| Pricing | - Larger up-front cost but no/few recurring costs. - Budgeted as an asset. |
- Lower up-front costs but recurring charges cost more long-term. - Budgeted as a utility. |
| Tax Implications | - Depreciable asset, deductible over time. | - Tax deductibles possible. |
| Future Proofing | - Only supported updates after purchase. | - Avoid obsolescence. - Gain access to new features as they release. |
| Asset Value | - Value retained upon resale. | - May return hardware after lease term. - No resale value. |
| Purchase Flexibility | - Short return windows. - Few upgrade options after purchase. |
- Modify plans and leases to suit needs. - Early termination fees may apply. |
Ultimately, the best choice depends on the end-user's specific needs and priorities. Users with consistent equipment of older models may prefer a perpetual license, as it offers a one-time purchase and avoids the risk of future support discontinuation for older hardware. On the other hand, those who are willing to embrace ongoing upgrades, adapt to evolving technology, and potentially manage fluctuating costs may find subscription or leasing models more suitable.
For the time being, both methods are sticking around, so choose wisely.
Find Perpetual and Subscription-Based Software with Trusted Tech Team’s Help
Choosing between a perpetual license and a subscription-based model depends on cost-effectiveness, cash flow, and access to current versions that fit your organization’s priorities. A perpetual license agreement offers exclusive ownership and avoids ongoing fees, while a subscription model ensures new features, continuous updates, and compatibility with cloud computing solutions.
Each approach has advantages, but the right choice will depend on your business needs and long-term strategy. Contact Trusted Tech today to explore how to maximize value and savings with the best licensing option for your organization.
