Subscription is when you agree to pay $X a month for as long as you use the software rather than buy. One clear advantage it has for the client is the initial ‘up-front’ cost is cheaper and from the supplier, it's often a much easier sale.
In our market space, several offer software subscription as an alternative to buying. Although generally subscription models have not been popular in our marketplace because from a strictly commercial view, overtime you will pay more. For example, doing a quick calculation, besides gaining a more stable cash flow. I determined that if we could turn everyone to a subscription model, that we would earn about 30% more revenue a year. This type of overpayment is the main reason why overwhelmingly most people in our market space prefer MYOB which they buy, over Xero which they need to subscribe as MYOB works out cheaper.
However, if someone wanted to take out a subscription with me, I am certainly not against it.
But of course that is not where the story ends, as its a very tricky question that depends on a client's particular needs and the terms and conditions of their software. Here are some examples.
) A person that intends to open a new shop for say three months and then close it down would probably find a subscription model attractive. The shop could have a computer system, as long as it is required at a reasonable price.
) If one needs an extra till over Christmas might find with his software if unlike our software, they require an additional licence, it would also be attractive for the two months to subscribe. Our users do not pay extra for more tills so this is not an issue to them, but it is to other software providers.
Some other problems would be.
) Cash flow, some of our clients have plenty of cash after Christmas but come say September, I have noticed they really need to budget to get them to Christmas. Here subscription is going to be a problem as the payments are constant all year round.
) The computer software today in our field is only a small part of the purchase price, there still are computers, printers, scanners, training, conversion costs, etc. to consider. Making it nonsense that it's a cheap trial as you will incur almost all the costs upfront anyway and if the subscription does not work you may be stuck with a pile of useless stuff and little legal recourse.
) The subscription model is an operating lease with instead of say NAB as a leasing agent, you are taking ABC Software as the leasing agent for the debt. I would prefer a reputable established company like NAB.
) You own nothing. If you stop paying, its terminates and you have nothing. It is similar to paying rent rather than buying a place. If you pay rent for 20 years, you have nothing on the 21st year.
) Under the law, you have fewer consumer rights to the software and your data.
) What happens if the software company goes out of business or gets brought out with a new policy.
No doubt others can add more to this list as there are issues to consider.
