Featured Article from Software Licensing

Microsoft’s (News - Alert) recent shift in its software licensing model – a simplified one that aligns its public and private cloud offerings – has begged the question, could you change your model, too?

The software licensing experts over at Flexera discussed this in a recent blog post, asking the question that many developers are asking – is a subscription-based model better for the bottom line? At least, that’s just one scenario many companies are looking at, and why not? Subscription models seem to be increasing in popularity, and with good reason.

Perpetual licensing and subscription licensing both carry some beneficial weight, but the latter is purely a licensing approach and does not imply and increase in cost. It may, potentially, even mean a decrease. For monetization, that’s a good thing.

Moving to subscription models makes it very easy to clearly communicate licensing requirements and to enforce policies.

For customers purchasing software, this change is actually beneficial as it lowers the overall cost of software because it helps to eliminate illegitimate uses of software.

Of course there are other models when it comes to software monetization, but as Flexera points out, you need to realize the operational impacts. Ask yourself how you’ll handle pricing, renewal processes, and, if you’re going the subscription route, make sure you define subscription periods.  

Subscription models make software accessible to smaller or growing companies, or simply ones that have smaller capital budgets to work with, and customers are able to discontinue the service completely with no initial investment loss, and can also add or remove users as the company grows. Smaller or growing companies, or simply ones that have smaller capital budgets to work with will also have easier access to your products.

It’s only natural to expect that companies will offer subscription software if they think they can make more money off of it. Depending on the user’s situation and needs, different software licensing approaches will yield different benefits.

We’re seeing subscription models go beyond software, too, from shaving clubs to snack boxes to home entertainment. Consumer buying habits are trending toward more simple and hassle-free shopping experiences, more and more companies are jumping into the subscription space and seeing incredible growth. This is true in the software community, too. When we look at the success of software-as-a-service (SaaS (News - Alert)) companies like DropBox and Salesforce.com – it's more evident than ever that customers prefer subscriptions.