“Subscription” is sometimes considered a bad word. I don’t blame print publications, either; I love my industry rags and Sunday morning newspapers. Perhaps the culprits are local phone and cable providers, with their less-than-reliable products and peculiar brands of “customer service.” Whatever it is, subscription and rental services aren’t all bad. In fact, they can be downright handy.
Consider the case with automobiles: In San Francisco, not owning a car is a lifestyle many prefer. It cuts down on expenses such insurance, parking fees (and tickets), maintenance, repairs, and gas. There are many cases, however, where someone may still want access to a car. And thanks to subscription services like City CarShare and Zipcar, getting a car when you need one is easy and cost effective.
But what about subscription, or “rental,” software? If you’re like me, you grew up buying “perpetual” software licenses, allowing you to use that software as long as you want. But ask yourself this: When’s the last time you purchased software that didn’t needed to be upgraded at some point? And how frequent were upgrades required to keep your software operational?
When it comes to small businesses, there are good reasons to consider owning rather than renting software. (Although technically speaking, you almost never own software—you just acquire a license to use it.) For example, if you find access to a particular software title an essential part of your business and have team members spending much of their day using it, perpetual licenses might make more sense for you.
On the other hand, if you’re finding your software needs fluctuating from project to project, or are concerned about the steeper upfront costs of perpetual software, renting software may be a better solution for you. Consider these five reasons why rental rather than perpetual software can make sense for small businesses:
- Lower Upfront Costs. Typically, perpetual software can require an upfront investment, which can be particularly challenging for cash-strapped small businesses. Renting software, on the other hand, allows immediate access to software for much less money compared to perpetual licenses.
- Flexible Payment Options. Small businesses are often project focused. Renting software provides more payment flexibility to access software solely for the duration of a project. In other words, you have the flexibility to pay for software when you need to use it and not pay for it when you don’t. Renting makes it easy to scale software access with the needs of your projects by allowing you to add or subtract licenses/seats on a temporary basis.
- Billing Back to Clients. Related to #2 above, renting software puts you in a much better position to pass on the cost of software access to clients by rolling it into your project estimate. In this way, you’d simply be treating software access as an operating expense rather than a capital expense.
- Upgrades Included. One of the benefits of renting software is that you typically get access to the latest versions without having to pay additional upgrade costs. Depending on the cost and frequency of upgrades, renting software could even represent longer-term savings for small businesses.
- Added Support and Services Usually Included. Software vendors often have basic support plans in place for perpetual-software purchasers. With rental plans, however, software providers tend to up the ante by including additional support and services not included with their perpetual title sales.