Companies have many ways they can license their computer software to customers. These permanent and subscription-based methods have their benefits, depending on the customer’s or client company’s intended use. Understanding the differences and benefits of these licenses can help you determine whether software as a subscription is appropriate for your applications.
In this article, we define what software as a subscription is, list the different forms of subscriptions and mention the benefits of offering your applications through a subscription model.
What is software as a subscription?
Software as a subscription relates to a licensing model that allows users to pay regularly for a computer program. Customers gain access to the program after their first payment and can continue to use the software for as long as they pay. Subscribers typically have a payment plan that occurs monthly or annually. Depending on the offering company, these subscription programs can have additional benefits, including free updates and maintenance.
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Types of software subscriptions
Here are some different types of software subscriptions and how they apply to the use of the programs:
1. Consumptive
A consumptive software subscription is a licensing model that allows an individual to pay for a certain amount of software usage. The usage definition depends on the company that supplies the software and it can define the usage using multiple methods. These can include the time an individual uses the product or other .css-1v152rs{border-radius:0;color:#2557a7;font-family:”Noto Sans”,”Helvetica Neue”,”Helvetica”,”Arial”,”Liberation Sans”,”Roboto”,”Noto”,sans-serif;-webkit-text-decoration:none;text-decoration:none;-webkit-transition:border-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),background-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),opacity 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-style 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-width 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-radius 200ms cubic-bezier(0.645, 0.045, 0.355, 1),box-shadow 200ms cubic-bezier(0.645, 0.045, 0.355, 1),color 200ms cubic-bezier(0.645, 0.045, 0.355, 1);transition:border-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),background-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),opacity 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-style 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-width 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-radius 200ms cubic-bezier(0.645, 0.045, 0.355, 1),box-shadow 200ms cubic-bezier(0.645, 0.045, 0.355, 1),color 200ms cubic-bezier(0.645, 0.045, 0.355, 1);border-bottom:1px solid;cursor:pointer;}.css-1v152rs:hover{color:#164081;}.css-1v152rs:active{color:#0d2d5e;}.css-1v152rs:focus{outline:none;border-bottom:1px solid;border-bottom-color:transparent;border-radius:4px;box-shadow:0 0 0 1px;}.css-1v152rs:focus:not([data-focus-visible-added]){box-shadow:none;border-bottom:1px solid;border-radius:0;}.css-1v152rs:hover,.css-1v152rs:active{color:#164081;}.css-1v152rs:visited{color:#2557a7;}@media (prefers-reduced-motion: reduce){.css-1v152rs{-webkit-transition:none;transition:none;}}.css-1v152rs:focus:active:not([data-focus-visible-added]){box-shadow:none;border-bottom:1px solid;border-radius:0;}software metrics.css-r5jz5s{width:1.5rem;height:1.5rem;color:inherit;display:-webkit-inline-box;display:-webkit-inline-flex;display:-ms-inline-flexbox;display:inline-flex;-webkit-flex:0 0 auto;-ms-flex:0 0 auto;flex:0 0 auto;height:1em;width:1em;margin:0 0 0.25rem 0.25rem;vertical-align:middle;}, like the number of times the user opens the program.
2. Metered
A metered software subscription is a licensing method where the software automatically records its usage through how many times a user runs a program or the time of its use. This method then allows an individual to pay a fee depending on the amount of registered use. Depending on the vendor company, there may be additional licensing limits, such as the number of concurrent users or use limit per period.
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3. Use-time
A use-time license gives a certain period for the user to download and use the program. A software vendor can meter the time to a pre-determined amount, after which the license is no longer valid, and the application cannot open. The user then obtains a prompt to purchase another use-time license or switch to a license with no time restraints, depending on the contract of the software vendor.
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4. Project-based
A project-based license allows a customer to purchase a primary license from the software vendor and then grant limited access to the program’s features to other people. This license model can allow a project manager to give entitlements to team members to access the application, even if they don’t own the main license. It can allow an entire team to complete a project with a unified tool set by using the same program.
5. Freemium
The .css-1v152rs{border-radius:0;color:#2557a7;font-family:”Noto Sans”,”Helvetica Neue”,”Helvetica”,”Arial”,”Liberation Sans”,”Roboto”,”Noto”,sans-serif;-webkit-text-decoration:none;text-decoration:none;-webkit-transition:border-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),background-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),opacity 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-style 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-width 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-radius 200ms cubic-bezier(0.645, 0.045, 0.355, 1),box-shadow 200ms cubic-bezier(0.645, 0.045, 0.355, 1),color 200ms cubic-bezier(0.645, 0.045, 0.355, 1);transition:border-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),background-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),opacity 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-style 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-width 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-radius 200ms cubic-bezier(0.645, 0.045, 0.355, 1),box-shadow 200ms cubic-bezier(0.645, 0.045, 0.355, 1),color 200ms cubic-bezier(0.645, 0.045, 0.355, 1);border-bottom:1px solid;cursor:pointer;}.css-1v152rs:hover{color:#164081;}.css-1v152rs:active{color:#0d2d5e;}.css-1v152rs:focus{outline:none;border-bottom:1px solid;border-bottom-color:transparent;border-radius:4px;box-shadow:0 0 0 1px;}.css-1v152rs:focus:not([data-focus-visible-added]){box-shadow:none;border-bottom:1px solid;border-radius:0;}.css-1v152rs:hover,.css-1v152rs:active{color:#164081;}.css-1v152rs:visited{color:#2557a7;}@media (prefers-reduced-motion: reduce){.css-1v152rs{-webkit-transition:none;transition:none;}}.css-1v152rs:focus:active:not([data-focus-visible-added]){box-shadow:none;border-bottom:1px solid;border-radius:0;}freemium subscription model.css-r5jz5s{width:1.5rem;height:1.5rem;color:inherit;display:-webkit-inline-box;display:-webkit-inline-flex;display:-ms-inline-flexbox;display:inline-flex;-webkit-flex:0 0 auto;-ms-flex:0 0 auto;flex:0 0 auto;height:1em;width:1em;margin:0 0 0.25rem 0.25rem;vertical-align:middle;} allows software providers to allow users limited content levels for free. They then can allow users to upgrade to gain unrestricted access to additional content or features. For example, some vendors offer their software for free with ads and then can allow users to subscribe to disable these ads.
Benefits of software as a subscription
Here are some benefits of software as a subscription for users and software vendors:
Provides easier automation
You can take advantage of automation methods to host your software and the intake of subscription payments. This process means users can start their subscription and gain immediate access to the software. It can create opportunities for convenience between you and your potential clients.
Is location independent
Location-independent software allows users to access the application from anywhere through any device. This process enables companies with remote employees to install it on their own devices. It also can allow in-office employees to install the software quickly to make urgent changes in a document without commuting.
Has lower barrier to entry
Perpetual and other nonsubscription licenses may have a higher upfront cost because of their permanence. Subscription services can have a price that can be more affordable, especially for beginner users. It can also allow companies to have a predictable recurring charge to their budget instead of budgeting for a significant investment. Some software vendors can also offer trial or freemium systems to encourage users more.
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Offers predictable revenue
With a subscription-based business model, you can encourage customers to make payments regularly. Because the date of recurring payment is predictable depending on the subscription type, this can allow you to .css-1v152rs{border-radius:0;color:#2557a7;font-family:”Noto Sans”,”Helvetica Neue”,”Helvetica”,”Arial”,”Liberation Sans”,”Roboto”,”Noto”,sans-serif;-webkit-text-decoration:none;text-decoration:none;-webkit-transition:border-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),background-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),opacity 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-style 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-width 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-radius 200ms cubic-bezier(0.645, 0.045, 0.355, 1),box-shadow 200ms cubic-bezier(0.645, 0.045, 0.355, 1),color 200ms cubic-bezier(0.645, 0.045, 0.355, 1);transition:border-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),background-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),opacity 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-style 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-width 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-radius 200ms cubic-bezier(0.645, 0.045, 0.355, 1),box-shadow 200ms cubic-bezier(0.645, 0.045, 0.355, 1),color 200ms cubic-bezier(0.645, 0.045, 0.355, 1);border-bottom:1px solid;cursor:pointer;}.css-1v152rs:hover{color:#164081;}.css-1v152rs:active{color:#0d2d5e;}.css-1v152rs:focus{outline:none;border-bottom:1px solid;border-bottom-color:transparent;border-radius:4px;box-shadow:0 0 0 1px;}.css-1v152rs:focus:not([data-focus-visible-added]){box-shadow:none;border-bottom:1px solid;border-radius:0;}.css-1v152rs:hover,.css-1v152rs:active{color:#164081;}.css-1v152rs:visited{color:#2557a7;}@media (prefers-reduced-motion: reduce){.css-1v152rs{-webkit-transition:none;transition:none;}}.css-1v152rs:focus:active:not([data-focus-visible-added]){box-shadow:none;border-bottom:1px solid;border-radius:0;}project your revenue.css-r5jz5s{width:1.5rem;height:1.5rem;color:inherit;display:-webkit-inline-box;display:-webkit-inline-flex;display:-ms-inline-flexbox;display:inline-flex;-webkit-flex:0 0 auto;-ms-flex:0 0 auto;flex:0 0 auto;height:1em;width:1em;margin:0 0 0.25rem 0.25rem;vertical-align:middle;} for each month. This process also can allow companies to better predict their budget for expansion or needed supplies.
Includes scalability
Scalability is the capacity for software to change in size or amount. Some subscription types, like project-based or metered, can allow a company to add more individuals to their license if they require it. This process can allow a company to make an application standard across the workforce, even when new employees start their transition into their position.
Has transparent pricing
Since some software vendors make their sales over their websites, it can be beneficial to list their upfront costs as part of their marketing. This process is when users can find out what version of a subscription a software vendor prefers and whether there are different tiers to their availability. It can allow users to understand which subscription system is best for them quickly.
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Provides incentive for upgrades
Subscription programs offer incentives to provide updates for software vendors and users. Predictably reliable revenue can lead to a contract format where users can gain access to updates the moment a software vendor makes it live. This system can also extend to reduced downtime for server outages or updates.
Grants cloud access
Because some software vendors use their websites for their subscription software, they can serve their software over their own servers. This process means users who use subscription software may not worry about losing access to the application. Some software vendors can even allow access to previous software versions for troubleshooting and compatibility.
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Other types of software licenses
Here are some other types of nonsubscription software licenses:
Perpetual
A perpetual software license authorizes an individual to use a program indefinitely after payment. It can allow users to use a specific software version continually for one fee. The vendor can sometimes provide a limited technical support period for the software that can last for a couple of years. With perpetual software licenses, users typically pay upfront before receiving the software.
Device
A device license allows the computer software to exist simultaneously between multiple devices. The software vendor decides how many installations the license allows by offering a specified number. After a user reaches the limit of installations, they can uninstall the software from a device to move it to another device.
Anchored
An anchored device is when a user as a program they can use independently, but only after the first installation. This license means a user can operate the program on only that one device. If the customer wants to use it on another device, they can purchase another license.
Academic
An academic license is when a software vendor offers the software to educational or training institutions. This licensing model provides access to an application for students and usually has different commercial terms, including lower cost. It can encourage the use of the application among students and allow them to learn tools they may use later in their careers.
Floating
A floating license can allow you to define a specific number of simultaneous users to an application that a group of people, such as a company’s workforce, share. For example, a computer vendor can offer a floating license of 20 to a group of 30 people. Once these 20 licenses have an assignment, the remaining 10 users can’t gain access until a license becomes free through uninstalling.
Public domain and open source
Public domain and .css-1v152rs{border-radius:0;color:#2557a7;font-family:”Noto Sans”,”Helvetica Neue”,”Helvetica”,”Arial”,”Liberation Sans”,”Roboto”,”Noto”,sans-serif;-webkit-text-decoration:none;text-decoration:none;-webkit-transition:border-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),background-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),opacity 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-style 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-width 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-radius 200ms cubic-bezier(0.645, 0.045, 0.355, 1),box-shadow 200ms cubic-bezier(0.645, 0.045, 0.355, 1),color 200ms cubic-bezier(0.645, 0.045, 0.355, 1);transition:border-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),background-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),opacity 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-color 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-style 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-bottom-width 200ms cubic-bezier(0.645, 0.045, 0.355, 1),border-radius 200ms cubic-bezier(0.645, 0.045, 0.355, 1),box-shadow 200ms cubic-bezier(0.645, 0.045, 0.355, 1),color 200ms cubic-bezier(0.645, 0.045, 0.355, 1);border-bottom:1px solid;cursor:pointer;}.css-1v152rs:hover{color:#164081;}.css-1v152rs:active{color:#0d2d5e;}.css-1v152rs:focus{outline:none;border-bottom:1px solid;border-bottom-color:transparent;border-radius:4px;box-shadow:0 0 0 1px;}.css-1v152rs:focus:not([data-focus-visible-added]){box-shadow:none;border-bottom:1px solid;border-radius:0;}.css-1v152rs:hover,.css-1v152rs:active{color:#164081;}.css-1v152rs:visited{color:#2557a7;}@media (prefers-reduced-motion: reduce){.css-1v152rs{-webkit-transition:none;transition:none;}}.css-1v152rs:focus:active:not([data-focus-visible-added]){box-shadow:none;border-bottom:1px solid;border-radius:0;}open-source software.css-r5jz5s{width:1.5rem;height:1.5rem;color:inherit;display:-webkit-inline-box;display:-webkit-inline-flex;display:-ms-inline-flexbox;display:inline-flex;-webkit-flex:0 0 auto;-ms-flex:0 0 auto;flex:0 0 auto;height:1em;width:1em;margin:0 0 0.25rem 0.25rem;vertical-align:middle;} licenses have similar uses, but open-source still gets its copyright from its creator. Public domain licenses have no copyright or one that’s expired. These forms of software usually allow an individual to download the software or the base code for the ability to create direct modifications.
Trial
A trial software license means a user can use the software with vendor restrictions. These restrictions can mean using the software for a limited time or amount of uses or limiting specific features critical to the product, such as file saving. This license type can allow a user to evaluate the use of the software before deciding on payment.
Proprietary
Proprietary software legally belongs to the organization, group or individual that creates the software. This license form allows the creator to create the licensing rights to use, modify or share the modifications or software. It can allow for exclusive rights for copyright.