Weighing the pros and cons of software subscription and perpetual license models
With a big name, traditionally boxed products like Microsoft Office 365 being offered via new subscription licensing models and online subscription platforms like G Suite we, as IT pros, have decided to consider the subscription model and determine if and when it is right for businesses. Many of our clients rely on software platforms to get work done and have been asking us questions about subscription vs. purchase options.
In some cases, like with Microsoft Office, businesses have the choice to buy boxed products, volume license deals, or subscription licenses. This is very flexible and allows us a variety of alternative options. G Suite, however, doesn’t offer the physical purchase version – online subscription licensing is the only option. As the business environment continues to evolve, subscription models of all kinds will be a growing trend – something that the tech industry must face and understand.
Why Subscribe? The Top Reasons Software Subscription Licensing is Becoming More Popular
First, let’s outline some of the basic pros and cons of the subscription and purchase models. Many people, especially in IT, assume that subscriptions are designed to extract higher fees from customers. However, at its core, subscription pricing is simply a licensing approach and it doesn’t necessarily mean an increase in cost. In fact, in some cases, subscription models may result in a cost decrease.
- Finance Benefits: Budget-Friendly with Big Value
Very simply, a move to subscription licensing means businesses are able to move from capital expenses to operational expenses which are generally regarded as a smart business move. However, the subscription model offers far more value than that. Subscription pricing gives businesses huge control when it comes to cost predictability.
Using a subscription model for software needs allows businesses to more accurately predict their costs over time, with very few unexpected surprises. In the traditional purchase approach, software updates are manual and often forgotten, meaning some users would require old platforms to be updated. This would then result in expensive renewal invoices with seemingly no warning. Even worse, these costs are often followed by a spike in training costs, to help users quickly adapt to big gaps in software versions.
Subscription pricing is more budget-friendly because costs normally fluctuate fluidly with employee count. This provides optimal scalability potential. As new employees are hired, businesses can predict exactly how much they will cost. Furthermore, when employees leave, subscriptions can be discontinued and cost can be reduced. The only software that is truly used is purchased. The need to overbuy in the name of predicted growth is no longer an issue with the subscription model. Subscription licensing also provides huge flexibility and supports business growth by allowing businesses to pay only for what they use, as they use it.
- IT Benefits: How the Subscription Model Helps Tech Departments Work Smarter Not Harder
Now that we know it makes financial sense, let’s take a look at the IT benefits gained by adopting the subscription model pricing. First and foremost, IT efforts are streamlined because relationships with finance and human resources are optimized using the subscription model. This eliminates redundancies and helps make all components of business work in support of one another. But the subscription model offers far more IT benefits than that.
Let’s outline some of the specific ways that the subscription model optimizes business IT:
- Best Practices and Automatic Updates
Business IT is enriched thanks to the effective enforcement of best practices through the subscription licensing model. Businesses are often on the fence when it comes to investing in new software versions, which often results in support issues, unnecessary complexity, and frustrated users. With subscription pricing, IT is constantly supplied with the latest updates for users, which strongly enriches functionality and user experience. Simply put, the subscription model makes software optimization relatively automatic.
- Optimized License Management
Speaking of automatic, the subscription model also enriches overall IT efforts by optimizing licensing management. The subscription model makes it far easier to determine license availability and need. Internal audits are unnecessary because the licensing process is generally handled via an authentication mechanism with the vendor. This means unless some drastic and specific effort is taken to violate licensing protocols – like cracking software or some other extreme measure – licensing accidents are very rare and easy to mediate.
- Customization and User Control
The subscription model also offers a huge boost when it comes to customization and user controls. Some employees require a more dynamic feature set than others. In the traditional, license purchase model, complex processes would be required to designate user permissions and customize account controls. With the subscription model, licenses can be purchased at the minimum level and upgraded as needed. The model offers the ability to easily customize per user, over time, based on a variety of different needs. This makes it easier than ever for administrators to customize access and optimize user experience
Okay, The Subscription Model is Great – But Should You Go Microsoft or Google?
Understanding the benefits of the subscription model is just the first part. While there are many providers on the market, the clear leaders are Microsoft’s Office 365 and Google’s G Suite. While both models offer their service through a subscription pricing model, there are some key things to consider when choosing a provider to subscribe to. When it comes down to it, we’re team Microsoft. To understand why let’s break down the benefits and limitations of each platform:
Microsoft Office 365
Office 365 is the market champion when it comes to business software. It’s familiar, integrated and has a legacy all its own. Under the subscription model, users can subscribe to on-server versions, Cloud versions or both – making anytime work a constant possibility. Additionally, since Microsoft has been on the market so long, they’ve worked out bugs and created a truly optimized package of integrated apps.
Customization and user control runs at optimal levels in Office 365. Licenses can be customized to set user permissions and integration with other apps. Microsoft’s feature-rich and comprehensive approach makes Office 365 a value-packed platform, that can be scaled to meet changing business demands over time.
The subscription pricing model for Microsoft has a variety of different tiers for business, depending on the extent of services required:
- Enterprise 1
- $9.70 per user, per month.
- Enterprise 3
- $25.30 per user, per month.
- Enterprise 5
- $44.20 per user, per month.
While most of Microsoft’s subscription price-points are slightly higher than those for G Suite, the value offered in Microsoft software packages outweighs those in the G Suite package. Further, since Microsoft still has its non-subscription version on the market, subscription customers can keep tabs on purchase price options to ensure software pricing isn’t being arbitrarily increased.
Google G Suite
G Suite is a great Cloud platform that offers a very similar set of applications to mirror Office 365. However, the suite is much more basic that Microsoft’s well-honed platform. G Suite offers a sleek interface and applications to match Microsoft favorites like Word, Excel, and PowerPoint.
However, when it comes to overall operational power, G Suite doesn’t have the same powerhouse status that Microsoft has earned thanks to years on the market. Furthermore, since Google doesn’t have native versions of their web-based apps, the ability to work offline is far from optimized.
Certain G Suite packages allow for some customization and integration with other business apps – including Office 365. Furthermore, G Suite does offer a variety of customization features when it comes to user control and experience, but these features simply don’t live up to the customizing power offered by Office 365. G Suite is better suited for businesses who need relatively simple access to a basic platform.
G Suite subscription pricing is very affordable for businesses looking for a basic and relatively easy to use the platform. The pricing tiers for business – based on different levels of service – are outlined as follows:
G Suite: $5 per user, per month.
G Suite Business: $10 per user, per month
G Suite Enterprise: $25 per user, per month.
While at face value the G Suite pricing plan may look more appealing thanks to lower price tags, there must be a consideration made for value. G Suite doesn’t offer the same amount of power or customization capabilities that Office 365 does.
Finally, since Google doesn’t have a purchase licensing option, customers have no way to compare prices or hold Google accountable for pricing decisions or increases.
Making Informed Decisions: Balancing Needs with Strategy
When it comes to business operations, software isn’t something that needs to be owned. The reality is, software is just another tool for getting work done more efficiently and it should be implemented in a way that makes operational and financial sense. That’s why the subscription model is likely to become the new normal.
Overall, we’re all for the subscription model. They help business owners make more informed technology decisions and they make it easier for elements of the business to flow more naturally as business needs change. However, we also understand that making the switch to a new pricing model after using the traditional one for years isn’t easy.
Furthermore, it’s even more difficult to try and decide between different vendors.