Have you ever heard renting is like throwing your money away? What about the large sum of money you have to pay to own? In the case of a house, making a down payment, buying mortgage insurance, surveys, inspections, legal fees and interest payments can also feel like your money is disappearing into a hole. The benefit of renting is the flexibility, the low upfront cost, and having someone else responsible for updates and upgrades. The benefit of owning is being able to do whatever you want with the property, and a stable environment if you plan on having the same needs for a length of time.
The same arguments go on with software and hardware. You may decide to buy a perpetual license to your call center ACD system, or you may decide to go with the monthly licensing option. But what’s the right option for you?The case for monthly licensing:
- Tax efficiency. This doesn’t get discussed much, possibly because it’s very dependent on the jurisdiction you’re in and possibly company policies. The purchase price of a perpetual license may need to be amortized over several years. This may involve more accounting intensity than you want, especially if you’ll be paying for upgrades or professional services. The monthly license is an expense for the month it’s incurred in almost all cases. We are not accountants or tax lawyers, we’re just sayin’.
- Lower upfront costs. The upfront cost can be as low as zero. The upfront cost of a perpetual license is going to be a large percentage of the total, with the remainder of the payments due within a month or two.
- License costs are in line with revenues. If you’re using your software to generate revenues, then as you increase licenses you may be increasing revenues. It makes it lot easier to pay when you have a stream of money coming in as a result.
- Cost control for capacity swings. If you have a major difference between your peak and slow periods, you may only want to pay for the excess capacity when needed. When you buy a perpetual license, you’ll need to make sure you pay for all the capacity you’re going to need upfront, or you could be caught short.
Sounds great! So what advantages are there to getting a perpetual license?
The case for a perpetual license:
- Privacy. If you already own a perpetual license, then you don’t need to have audit capabilities, anyone checking usage, or a third party logging in to your system to adjust license levels. This can be necessary for deployments in cases with certain security policies. If your software isn’t allowed to interact with the Internet, this may be a must.
- Securing the resource. Once you pay for it, you have it. If money is flush now but may become scarce later on, it’s nice to have an asset you can use without a monthly bill coming in.
- Total cost. If you’ll be using the software for a long time, it may be cheaper in the long run to pay a larger cost upfront, then accumulate the savings month after month.
Only you can decide what is right for you. It’s nice to know that when buying contact center software, the choice is yours.