Microsoft Licenses – Subscriptions or perpetual usufruct? Which option is better for your business?

Available licensing models

Perpetual Licensing or On-premises.

We offer perpetual licenses. The cost includes the license price multiplied by the number of users, the cost of dedicated modules, and an annual subscription of 18% of the license value, known as the Enhancement Plan. The customer has the option of using its own infrastructure or an additional paid cloud computing service.
Subscription Licensing

The offer is based on recurring fees depending on the number of users, quickly allowing you to adjust the number of users according to your needs. The infrastructure can be based on customer or cloud resources, with the environment managed by a partner. For example, the Business Central system distinguishes between users: total users and team members, offering free licenses for the system administrator and an external accountant.

Read a comparison of the advantages and disadvantages of the available licensing models-shortcut

ADVANTAGES of using subscription licensing- details

The choice of subscription licensing presents itself as significantly more advantageous for several vital reasons that make this model attractive to modern enterprises. Below are the arguments for choosing a subscription:

Flexibility and scalability: Subscription licensing allows companies to easily adjust the number of licenses to meet current needs. By arbitrarily increasing or decreasing the number of users each month, companies can effectively manage costs to suit the current situation and project requirements.
No significant initial investment: Unlike perpetual licenses, the subscription model does not require a substantial initial investment. Smaller, regular monthly fees are more affordable for a company's budget, making the technology more accessible, especially for smaller companies.
Constant updates and innovation: Subscriptions guarantee access to the latest software versions and updates, which is crucial in a rapidly changing technology environment. Companies using the subscription model are assured that their software is always up to date, which helps maintain high operational efficiency and data security.
Access to support and service: Subscribers are often provided with technical support and access to additional resources and tools that can help maximize software performance. Regular technical support and consultation can significantly reduce the risk of downtime and other operational problems.
Cost predictability: Regular monthly payments make budgeting and controlling expenses easier. Companies can forecast future IT costs more accurately, making it easier to manage finances and avoid unexpected expenses.
Response to changing business needs: The subscription model allows rapid adaptation to changing business and technology requirements. Companies can quickly introduce new technologies and services, promoting innovation and market competitiveness.

In an era of digital transformation, where technology is evolving rapidly, and flexibility and adaptation to change are becoming critical to business success, subscription licensing offers companies significant advantages. Subscriptions are a forward-thinking and strategic investment for any business, providing ease of customization, reduced upfront costs, and ongoing access to the latest technology and support.

DISADVANTAGES of using perpetual licensing- details

While perpetual licensing may seem like an attractive option due to its one-time payment and permanent right to use the software, several disadvantages can make this model less beneficial for today’s businesses:

High upfront costs: perpetual licensing requires a significant one-time investment, which can burden the budget, especially for small and medium-sized enterprises. Significant upfront expenses can limit a company's liquidity in the short term.
Lack of flexibility: This model needs to make adjusting the number of licenses easier to meet changing business needs. Reducing the number of users does not translate into lower costs, making the model less flexible than subscriptions.
Additional maintenance costs: To benefit from software updates and technical support, companies often must pay for additional plans, such as the annual Enhancement Plan, which generates further costs.
Risk of technological obsolescence: software purchased on a perpetual license basis can quickly become obsolete if a company does not continue to buy upgrades. This means that the investment may lose value, and the company may find it challenging to remain competitive.
Complexity of license management: Managing perpetual licenses, especially in large organizations with diverse software, can be complicated and time-consuming. Companies must keep track of which software versions are being used and their support and upgrade dates.
Lack of access to the latest technology: without continuous updates, perpetual license users may not have access to the latest features, tools, and security enhancements, which is standard with the subscription model.
Difficult to budget for the long term: while a one-time cost may seem beneficial in the short term, long-term maintenance, upgrade, and support costs can be challenging to predict and can significantly increase the total cost of software ownership.

These limitations can make perpetual licensing less attractive to companies seeking solutions that enable them to adapt and innovate quickly, given rapid technological change and a dynamic business environment.

Further doubts? See which industries are successfully using the subscription model.

The modern business world is leaning toward payment models based on regular monthly fees. Such a payment model has many benefits, such as continuous product improvements, regular updates, and the ability to customize the product based on customer feedback and experience.

Product subscriptions: Examples include subscriptions for cosmetics (e.g., Birchbox) or food (e.g., HelloFresh), which deliver monthly packages of products directly to the customer.
Amazon Prime: A subscription model that offers faster delivery and access to streaming services.
Allegro Smart!: A subscription service offering free delivery and other benefits to users.
Hebe Drugstore: Subscriptions for packages of cosmetics.

The subscription model provides numerous benefits, including flexibility, scalability, lower upfront costs, predictable monthly payments, constant access to the latest updates, improved customer service, better cash flow management, access to a broader range of features, the ability to cancel or adjust the service at any time, and easy integration with other services.

Our experts will answer all your questions.