Are you looking for a licensing model that offers full software ownership for a flat rate? Or are you more interested in having continuous access to the latest updates and features without owning the software?
As the software industry evolves, the perpetual license vs. subscription model debate continues to be a topic of interest.
In this article, we’ll cover the key differences between perpetual licenses and subscription models for software, helping you make an informed decision for your software licensing needs. We’ll also discuss the benefits of third-party support and how Spinnaker Support can help.
What is a perpetual license?
A perpetual license is a software license that grants the licensee the right to use the licensed material with a one-time upfront fee.
For example, when you purchase a perpetual license for Microsoft Office, you pay a one-time fee to obtain the license.
You can use programs like Word, Excel, and PowerPoint and access essential software tools for as long as you like without the burden of recurring subscription fees.
Perpetual licenses can benefit industries that rely on large-scale enterprise software products that would be cumbersome to reconfigure frequently — this might include manufacturing, healthcare, government organizations, aerospace, and nonprofits.
Benefits of the perpetual licensing model
Some advantages of opting for a perpetual license are:
- Ownership and control: You get exclusive rights to use the software indefinitely without being dependent on the licensor.
- No renewal expenses: This model eliminates the need for ongoing subscription payments. It provides cost predictability and can be particularly advantageous for businesses using software for a long time.
- Offline access: Perpetual licensing allows users to use the software even when not connected to the internet — useful for individuals who work in remote areas or frequently travel where internet access is unavailable.
- Customization options: Perpetual licenses grant users the right to modify the user interface, add or remove features, or integrate other tools or systems.
- Data security: Perpetual licenses often allow you to install the software on your own servers. This reduces your dependency on external servers and cloud-based solutions, giving you more control over data security measures.
- No vendor lock-in: Even if the vendor discontinues or changes their product, the customer can continue to use the software.
Limitations of the perpetual licensing model
While there are benefits, there are some disadvantages too:
- Higher upfront costs: Since it’s a one-time fee, there’s a significant investment in the beginning.
- Lack of access to the latest features and updates: Users purchase a specific version of a product and may not receive access to the newest upgrades. Even if they want to upgrade, they may have to pay additionally.
- Maintenance and support costs can be expensive: Vendors usually provide support only for a limited period, typically somewhere around 1 to 3 years. After that, the user has to pay extra to receive vendor support.
For example, the price of Oracle support is 22% of the license fees, increasing by 2-4% every year. - Limited adaptability: Since you purchase a specific version of a software, as your business changes, you may feel that the version you installed becomes outdated.
- Complex transfer process: Transferring perpetual licenses to different devices or users can sometimes be challenging, depending on the software vendor’s policies. Some vendors may require you to submit a request and provide proof of ownership before they authorize the transfer. Others may charge a fee for transferring licenses.
- Potential for legal action: Perpetual licenses come with specific terms and conditions. The software vendor may take legal action to protect their rights if these terms are violated, such as unauthorized distribution or use beyond the agreed-upon scope.
What is a subscription model?
A subscription model in the software industry refers to a pricing strategy where customers pay a recurring fee to access and use a software product or service.
Subscription–based apps are typically delivered via the Software as a Service (SaaS) model, in which the applications are hosted in the cloud, on the software provider’s network. Users pay a fee to access these applications for a defined period of time.
Pricing varies depending on the features you select, the subscription duration, and the number of licensed users. For example, you may get a product at a discounted rate if you opt for an annual pricing plan rather than a monthly one.
An example of subscription-based software is Adobe Creative Cloud, where users pay a monthly or annual fee for a suite of professional design tools such as Photoshop, Illustrator, and InDesign.
Industries that must rapidly adapt to changing market conditions can benefit from the flexibility of subscription licenses — for example, in SaaS, digital media, entertainment, marketing, and e-commerce.
Benefits of the subscription model
What are the advantages of a subscription-based license? Let’s take a look.
- Easy updates: With a subscription license model, the vendor typically handles updates and maintenance. This relieves the burden on users to update their software manually.
- Simplified budgeting: In this model, businesses can easily budget for their software expenses. The predictable recurring payments allow for better financial planning and forecasting, eliminating the need for significant upfront investments or unexpected costs.
- Enhanced support: Subscription models typically include ongoing support and maintenance services. Many vendors even offer 24/7 support. Users can rely on the vendor’s technical expertise to resolve issues promptly, minimizing downtime.
- Continuous access to new features: Subscribers often receive automatic updates and access to the latest features and improvements. This ensures they always have the most up-to-date software version, enhancing their productivity.
Limitations of the subscription model
You may run into these limitations if you opt for a subscription model:
- Vendor lock-in: Subscribers may be tied to a specific vendor due to the use of proprietary software or data formats. This can make it difficult to migrate to a new system. Plus, users often rely on the vendor for data migration support. This dependency can result in delays and complications.
- Data security concerns: Storing data in the cloud raises concerns about data breaches and unauthorized access. Subscribers must trust the SaaS provider to protect their sensitive information.
- Dependency on the vendor: Subscribers rely on the SaaS vendor for support and maintenance. If the vendor experiences financial difficulties or decides to discontinue the software, subscribers may have no alternatives for their specific business needs.
- Lack of control over updates: Subscribers have minimal control over when the vendor rolls out updates and upgrades. This lack of control can lead to workflow disruptions and require users to adapt to changes without adequate preparation.
Perpetual license vs. subscriptions: Which model is right for you?
When deciding between a perpetual license and a subscription model, there are a few key factors to consider.
Due to the expansion of the subscription economy, you’ll find that many products offer only recurring fee models. In many cases, you won’t even see the option for perpetual licensing.
However, if a product offers both options, you must gauge your finances. For example, if you can manage the one-time investment of a perpetual license, this option can give you a good return on investment.
However, if you can’t bear the large upfront costs and want to spread out your expenses because of a limited budget, then the subscription model may make more sense.
In addition, evaluate whether the features and functionality provided by each model align with your specific requirements and goals.
For example, determine how your needs may change over time. A subscription model allows for easy scaling and flexibility, as you can adjust the number of subscriptions. A perpetual model may be more suitable if you have predictable, long-term needs.
Technical support is also essential in whichever type of licensing model you choose. Perpetual license models offer free support for a limited time and then charge a fee. Subscription models may have limited customer support and may need more specialized support for specific needs.
Traditional support comes with disadvantages like limited assistance for interoperability and custom code, slow initial response times, and limited patch updates. For example, if you are an Oracle customer, you’ll be limited to pre-existing software updates, security alerts, and patch updates. In such cases, opting for third-party support can help.
With more efficient service and lower costs, third-party support (3PS) services from Spinnaker Support present an efficient alternative to vendor support. If you want to know how we manage to provide quality support at a lower cost, this video will help. By opting for 3PS services you can also anticipate benefits like dedicated support staff and personalized service components.
How Spinnaker Support can help
Spinnaker support provides third-party support for Oracle, SAP, JD Edwards, and Salesforce. We’ve served 1,300 customers in 100+ countries.
Our 3PS services are available at a fraction of the cost of vendor support. For example, if you’re an Oracle customer, our support is 50% of your current Oracle support spend. Our initial response time is eight minutes, and Oracle answers within an hour or one business day. After that, we respond within 15 minutes and, in many cases, within five minutes. Plus, our engineers have an experience of 10-20 years of handling support for Oracle and SAP products.
Spinnaker comes with an “Ultimate Support Guarantee.” This guarantee ensures you’ll receive 24/7 access to expert assistance, problem resolution, and ongoing maintenance. This guarantee extends to all aspects of your software, including installations, upgrades, patches, interoperability, and customizations.
With our seven-point security solution, we eliminate a lot of limitations that come with software publisher’s patching. For example, a software publisher may provide patches infrequently (months or years). And vendors may not customize these patches for your specific needs, and they won’t be suitable for older versions. In contrast, we enable near-immediate protection with virtual monitoring solutions. You receive tailored fixes, and patches are available for the full stack.
Our seven-point solution includes:
- Custom risk review with feedback on access management, configurations, and encryptions, along with best practices.
- Attack surface reduction, where we guide how to harden servers, applications, networks, operating systems, and databases.
- Audit support, where we ensure your audit controls comply with SOC 2, HIPAA, etc. regulations
- Vulnerability support for customers to raise a ticket for security issues.
- White papers on security-related topics to keep our customers informed.
- Wide range of security products to abide by our security policies.
- Timely newsletters with Common Vulnerabilities and Exposures (CVE) details and best recommendations.
Because of our services, we consistently get positive reviews:
Case study: Exela Technologies + Spinnaker Support
Exela Technologies offers business process automation capabilities. They use SAP Business Suite (ECC 6) to manage their sales, distribution, and manufacturing processes.
They were using 13 other SAP products, which they combined into one SAP instance. They didn’t want to upgrade their application, and the internal team wanted to reduce SAP support costs. They had also cut down their staff and were searching for a provider who could offer prompt customer service.
To resolve this, they vetted the best third-party support vendors and selected Spinnaker Support because of its competitive pricing and positive online reviews.
Because of Spinnaker, Exela achieved 60% hard cost savings from what they usually pay for SAP support. The internal SAP support team at Exela now has 24/7 support to troubleshoot any issues regarding the global SCC system and SAP applications.
Apart from this, Spinnaker also assisted Exela in resolving reporting and error tickets, configuration settings for moving hardware from Texas to Michigan, and moving the SAP ecosystem from a physical server to a virtual server.
“With SAP’s support, we never spoke with anyone. Now, with Spinnaker Support, it’s 3-4 times better than SAP was. We talk to a real person and have a real resolution. It’s like you found the switch to the light in a dark room.”
– Craig McBroom, Business Analyst
Were you able to choose a license model?
Perpetual license vs. subscription model — both have their pros and cons. The questions to ask before selecting the right one for you are:
- Do you want to make a one-time payment and retain full ownership of the software?
- Do you want to pay a recurring amount for continuous updates and flexibility?
Once your decision is clear, you can opt for a third-party support service provider like Spinnaker to help you optimize the performance of your Oracle, SAP, or JD Edwards applications.
To know more about our process and how it can work for you, you can fill out our interest form, and one of our experts will contact you.