Are in Perpetuity licenses dying?
Software! A computer wouldn’t be much good without it. We all use various kinds of software every day, from the computers on our desks to the smart phones in our pockets, software is all around us making our lives easier. But I’ve noticed in recent years that most companies are moving away from the individual software licenses that you purchase once and keep the software forever, to monthly or annual subscriptions.
Welcome to the world of SaaS or Software as a Service! This model isn’t anything new, but it may be new to you. Now I get it, many of us are simply just used to paying for a software product once and using it forever, or for as long as we want, because we purchased it. So, why this focus now to eliminate this kind of a model, why make us not only pay a small amount of money once, but multiple times, over and over and over for as long as we want to use something? Well, I’m sure a lot of you are thinking ‘Greed’ (and don’t get me wrong, the bottom line or profitability for these companies is definitely a motivation for them), but there are some other compelling reason where, while the annual subscription may be unpleasant, this kind of model is a GOOD thing.
Technology really isn’t a static thing. Over the years, as technology has advanced there has been a cost to research and develop those new gadgets and gizmo’s that we as consumers know and love. But, at some point, that smart phone you can’t live without, things like ChatGPT and AI tools that didn’t previously exist, and the incredibly powerful software and other applications that we use were either much simpler or nothing more than an idea in someone’s head. It’s money that’s helped drive innovation, advanced technology and given us the modern world that we’re all used too and enjoy today.
There’s also a downside to our modern world, usually that’s that unsavory element that’s either trying to cheat, rob or steal from users as well. As advanced as these systems have become it has also caused hackers and others to adjust and use those very same tools against us to try and burn the whole thing down.
So, why have I mentioned both the good and the bad? Because as the new and the good has been developed and come out, at the same time effort has to be put into combating the bad at the same time.
There’s a cost not only in developing the applications that we all use, but in maintaining and supporting them when problems, bugs and vulnerabilities are discovered and need to be fixed after the software is released. Think of a recall on that new car you have. You spent a lot of money to purchase the vehicle and expect it to be reliable and safe, and when a vulnerability or problem is discovered that isn’t the consumers fault (say a design flaw that was discovered potentially years later), the auto maker has to absorb the cost of correcting that issue with a recall. Software is no different, but the big difference is how is this potentially continual remediation paid for?
Now if every company attempted to pad their licensing costs to account for all possible contingencies, problems, bug fixes, and more, it would very quickly drive up the cost of software to where either users wouldn’t be willing to pay that price or become so expensive that the average user couldn’t afford the software.
But, problems ARE going to be discovered and vulnerabilities ARE going to be found. So, how do you address these? Either the software becomes a kind of pyramid scheme where new sales pay for the fixes, patches, updates of older software and versions, or “baked” into the ongoing monthly or annual cost, the subscription pays for not only continual development and improvement in the software, but also pays for the maintenance and fixes to existing software!
I know monthly or annual subscriptions for the software and tools you use is an unpleasant thought because previous models didn’t incorporate this, but think of it this way… Would you rather fork out say $500 or more for a Microsoft Office (or think of your product of choice that currently costs $199 or so) license to cover future costs, or would you rather pay that $5 per month for that very same software?
Think about it… At $5 per month, that’s 40 months before you match that $199 you would have originally spent… That’s three and a half to four years… And in todays technology life cycle, most people are looking to replace their machines in that time frame. So, after almost four years, you would purchase a new machine with a new license and start that all over again…
That $5 a month doesn’t sound all that expensive now does it?