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What’s Better… Subscriptions or Perpetual Licenses?

what's better subscriptions or perpetual licenses

People have very strong opinions on certain topics, for example: Does pineapple belong on pizza? Which way is the “right way” to hang the toilet paper roll? Mac or Windows?

While perpetual licenses are the way it has been since computer software was born, the subscription model is becoming more and more popular. Companies are dropping perpetual licensing models for subscriptions. Lets dive into why companies are doing this and how this affects the end user.

So let’s do a little poll here before I dive in.

Types of Licenses

Learn about the terminology of licensing such as Perpetual licenses, Annual Subscription, Floating Licenses, Render Only licenses… What do these terms mean?

Perpetual License

This model has been the standard for years. A Perpetual License means that you can run the software for as long as your computer can run it. This license can be upgraded to the next major versions for a price but you can also keep running the version of the software you purchased for as long as you like. Normally small point updates are included, just not major version updates.

Subscription License

With an annual subscription, users can use the software for one year. If there’s a major update during that time, you can download and use it during that year. If your subscription expires, you can no longer use the software, unless you renew the license.

Monthly subscriptions are available for some products, such as Chaos V-Ray.

The product is the same with a perpetual and a subscription. It’s just a difference in how it’s licensed.

Below, read a cost analysis and other pros and cons of each licensing model.

Some Cost Comparisons

A Comparison with Maxon

Cinema 4D is a product that is brought up quite a bit, so let’s break it down. Note: these prices are accurate as of August 2022 and are subject to change.

Cost of Perpetual license: $3,495 (upgrade from $999)
Cost of Annual Subscription: $719
Years to break even: 4.8 (without upgrading)

Notable differences:

  • The perpetual is currently at R25 and does not include Cineversity, the Cinema 4D online training.
  • The annual subscription is at S26 and does include Cineversity.

Upgrading every 2 years?

  • New license + 2 upgrades over 5 years: $5,497
  • 5 years of subscription: $3,595
  • Upgrading an older perpetual license 2 times during a 5 year period: $1,998

Other scenarios:

  • Upgrading an older perpetual license every year for 5 years: $4,995

A Comparison of Boris Continuum

Note: these prices are accurate as of August 2022 and are subject to change.

Cost of Perpetual license: $695, includes one year of Upgrades & Support (upgrades from $195)
Cost of Annual Subscription: $195
Years to break even: 3.5 (without upgrading or the upgrade and support plan)

Upgrade and Support Plan: For $295 (node-locked) or $495 (floating), you get upgrades to the latest version of Continuum and receive 1-Year of Upgrades and Support.

Pros and Cons for Users

Below, we’ve broken down the pros and cons for both the end user and the company that creates the software.

The Cost

Perpetual

Pro

Paid upfront in one large lump sum. This can be a pro or a con, depending on how you manage your money.

Costs less over time if you only upgrade every 3-4 major releases. The breakeven point is usually about 4-5 years without a support and maintenance contract.

Con

Paid upfront in one large lump sum (again, this may be a pro for you).

Often more expensive when upgrade costs and support contracts are figured in.

Subscription

Pro

Convenient. Paid on a yearly (or monthly) schedule

Lowers the barrier to start using the software

Easier to predict costs for your budget.

Costs less over time, no upgrades or maintenance contracts.

Unsubscribe at any time.

Con

Another monthly or yearly bill.

Support & Upgrades

Perpetual

Pro

The license is yours forever (or at least until obsolescence).

You can keep your perpetual license current with upgrades and support plans.

Con

If you are not under a support and maintenance contract, you may not be able to get support for an older product.

In most cases, point updates are included but no major upgrades without a support contract, which sometimes costs more than a subscription.

Upgrades often cost incrementally more as the version you license gets older and older. If licenses are too many versions back, you may no longer be able to upgrade them and you’ll be forced to buy a new license.

Obsolescence. Inevitably, after a while, your computer or OS will no longer support your old perpetual licensed software version if you do not keep it up to date. Or if you buy a new computer, it may not be able to run your old license, a common problem with we’ve seen with people moving to M1 Macs.

Subscription

Pro

Always up to date with the current version (upgrades included).

Ongoing support for products that are under active subscription.

Con

The license will stop working if you do not renew your subscription.

Pros and Cons for the Software Developers

Sure, money is definitely a reason but there are other reasons that companies prefer one licensing model over the other.

Perpetual

Pros

Substantial upfront revenue

Users buy upgrades and support and maintenance packages.

Some companies only support only current versions, so less support is needed.

Cons

The burden of innovation. People won’t upgrade without big improvements.

Some users will never upgrade.

Subscription

Pros

Predictable, steady source of revenue

Larger market since the initial cost is less for the user.

More room to experiment with new features.

Cons

Churn. Customers can stop using the product if they no longer need it.

Closing Thoughts

Subscriptions are hitting all aspects of our lives from our streaming entertainment, our fitness routines, our groceries, and even our medications. Subscriptions are here to stay and in the long run, are better for customers and companies. The fact is that a lot of software companies have already ditched the traditional perpetual licenses model for a subscription model and have no plans of going back.

A lot of customers do not like the trend. However, it opens the door for a lot of new users who can’t afford the initial cost of perpetual licenses. Users also stay up to date for less money with a subscription. It also allows companies to have more consistent revenue so that they can experiment more with new features.

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Posted by Michele Yamazaki