Perpetual license or subscription: which one should I choose?

At Hackolade, we try to make it easy and convenient to do business with us and respond to customer needs.  This includes a flexible pricing plan.  But so many options may make decisions more difficult.  Here a a few things to consider when making your choice:

1) Accounting

Capex vs Opex: some finance departments wish to capitalize software licenses and amortize then over several years.  They may prefer to purchase a perpetual license.  Others prefer to expense as fast as possible and will opt for a subscription.

2) Cash flow and Total Cost of Ownership

For one license, it is easy to create a spreadsheet and visualize the tipping point between a perpetual license with annual maintenance and a subscription.  Assuming maintenance renewal annually for a perpetual license, it is in year 3 that a perpetual license becomes advantageous for the user, over a subscription.

3) Protection against price increases

Prices are subject to change without notice.  Price increases affect perpetual licenses and their annual maintenance, and also subscriptions.  Some customers purchasing perpetual licenses, also prepay annual maintenance and support for several years in advance.  Others prepay several years of subscriptions.

4) Major upgrades and support

Customers are entitled to free major and minor upgrades plus support for a perpetual license, as long as they have paid for the renewal (first year is mandatory and included in the original purchase.)  If the license key is purchased via our e-commerce platform, the renewal is announced via email a couple of weeks prior to the transaction, and it is charged to the credit card on file.  If renewal fails or has been cancelled, the user retains the right to use the software perpetually, but will no longer be entitled to upgrades or support.

Subscriptions include minor and major upgrades plus support for as long as the subscription is valid.  If the subscription is cancelled or not renewed, the user will no longer have access to the software.

5) Concurrent licenses

Each individual license or subscription is attached to a single "Operating System Installation" per actual user.  It means that the license is not attached to a named user, but to a PC (Windows, Mac, Linux, or Virtual Machine.)  If you have 2 PCs you need either 2 licenses, or a license for 2 seats.  If you have 1 machine with multiple users, you will need one license per user.  

Some large companies prefer the flexibility of concurrent (a.k.a. floating) licenses.  In this case, you may install the software on many PCs, but only the licensed number of simultaneous users are allowed to use the application.  If the maximum number of seats has been reached, the next user will be denied access to the application until another user exits the application.  This scheme does not require a special server on-premises.

The concurrent approach is possible for either perpetual licenses or subscriptions.  Concurrent licenses are not available for purchase with a credit card.  They are 4 times more expensive per seat than an individual license.

Note: individual licenses, concurrent licenses, and subscriptions are all controlled by our license server in the cloud.

Note 2: the above also applies to installations using only the Command-Line Interface in automated mode.  A CLI process requires a licensed installation, just as any desktop user.  If a CLI process is run from a user's workstation, it uses the same license as the GUI application.

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