With the Onset of Subscription based pricing, is an equipment lease becoming unnecessary?
As the software market continues to change, more publishers are offering subscription based pricing to help customers with cash flow and keep clients s in perpetual support role. While the subscription covers the cost of the software, it does not include implementation, professional services, hardware or third party add- on software. The upfront cost still presents a major hurdle for small companies. There still remains a need to spread these costs over a period of time. So for now, a leasing option is still available and much needed for those small businesses opting for the subscription model.
So is subscription pricing a benefit to the customer or reseller?
Analysts and critics of the subscription model have noticed that customers who subscribe to software will see the most cost benefit in the first two to three years. If there is an option to pay for the software solution upfront, the customer will see the benefit after year three, at which point they will just pay the yearly support costs.
Which begs the question, how long are you going to use this software for your business?
Companies that see themselves selling their business in two to three years would see the benefit of going with the subscription model. Those that anticipate using the software for more than three years, need to consider the cost of ownership. A finance company can help offset this large investment and help companies conserve much needed capital.
Sage has accepted this model to compete with others. A perpetual monthly payment can be very lucrative for software publishers, especially after year three, but not so attractive to the customer, thus a proprietary system may still need to be an option. Like cable companies, or other service companies, the mindset of the customer is pay a monthly fee for service, having the most up to date technology, and never worrying about the system failing or antiquated technology
Something to consider when presenting to your customer. There’s a great guide to help you make the right decision about leasing your equipment. You can always contact your rep for more info.
Mark Grimes
Dimension Funding, LLC
Equipment/Software Financing
6 Hughes, Suite 220
Irvine, CA 92618
Direct: (949) 608-2249
Fax: (949) 250-8042
Email: mgrimes@dimensionfunding.com
www.dimensionfunding.com
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There is also an option for buy-back of equipment. Certain companies (like Baynetwork) have great buy-back programs that can not only help you in the procurement of new replacement equipment, but also apply a credit or pay cash for old equipment.