Perpetual Software License


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Understanding a Perpetual License Against Other Types of Licensing

As a software vendor or software developer, finding the best software license model for your software product has never been more important. Selecting the right software licensing is crucial to software revenue, your business model and software license management, as well as creating first impressions for how your customers will experience your software application.

There are multiple software licensing models to choose from. A common and sometimes preferred software license type is perpetual licensing.

What is a perpetual software license?

A perpetual software license is relatively simple to understand, compared to many others on the market. A perpetual license works by offering unlimited, all-time access for a single new upfront cost. By charging a one-time fee for your software, customers are essentially buying the software rights in perpetuity (perpetual software access) as opposed to renting it. Commonly, perpetual license customers can choose between a few add-on options for additional cost, such as an annual services subscription fee to enable maintenance, updates to the software and ongoing software technical support. Once the customer purchases software, the software is typically licensed to be hosted locally on the user's device or servers.

Advantages of a perpetual license against other types of software licensing

Perpetual licenses come with multiple advantages:

  • Software customers typically get access to the software forever, making it particularly attractive to a business where they know they will need the software long term
  • Costs are transparent, with no ambiguity about multiple software subscription models or subscription price tiers. Customers know how much the new software costs upfront, with some add-ons for ongoing software support via a maintenance fee
  • If the software is used for a long time, perpetual licenses reduce the costs per use compared to other software licensing models
  • Perpetual licenses allow the customer to own the software from the moment the customer pays. They can host the software however and wherever they like

Disadvantages of the perpetual license model for the customer

There are some disadvantages to perpetual licenses for software:

  • The high upfront costs may be a barrier to software users who haven't bought into the utility of the software or aren't sure how long they will need it. Many now prefer subscription models
  • Annual software maintenance or support costs can add up on top of the initial cost of the software, pricing some customers out of the market. Some customers will choose not to pay for ongoing software support, which may create security vulnerabilities

Perpetual licensing vs subscription management

When deciding on a licensing model for your software product, you may be wondering about the differences between the two most popular licensing solutions: the perpetual licensing model vs the software subscription model. The subscription license model has risen in popularity alongside SaaS recently, thanks to subscription software services like Netflix and Spotify. It's important to consider the benefits of each software licensing model and understand the differences.

With a perpetual license, a one-time payment is made for unlimited access to the software, with the option of annual software maintenance under a separate fee. With a subscription license, payments are recurring (usually annually or monthly as a subscription fee), with the customer only getting access to the software application for as long as they are a fee payer. Upfront costs for software subscriptions are therefore typically lower, but can add up to the same or more as a perpetual license with longer term software use.

With a perpetual license, customers usually host the software on their server or locally on their device. To do this, the customer may require a level of integration with their systems, partners, or the ability to customize the software itself to their needs. With a subscription model, the software remains on the vendor or host's servers, with less software customization available.

Under a perpetual license, the upfront cost of purchase usually includes maintenance and upgrades for a specific period of time. Customers can then pay a fee or other costs for further support after the initial period has ended. In a subscription license model, support and updates are included as part of the subscription.

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