Subscription Software Is Death By A Thousand Cuts

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Over the last decade, the software business has undergone a revolution. In the past, companies like Microsoft and Adobe would charge hundreds or thousands of dollars for their software. Add every two or three years, the software would be updated and we'd fork out hundreds more to upgrade. Now, we pay a few dollars - perhaps the cost of a two or three decent coffees made by the local hipster barista - for access to software each month. But are we better off?

I received an email earlier today from Microsoft telling me the annual subscription fee for Office 365 was going up by $10 a year from 12 October 2017 - the first price increase since the launch in 2013. And that made me think - what am I paying in annual and monthly subscriptions.

Here's what I've got (all the numbers are annual although some are billed monthly):

  • Office 365: $129
  • Google Apps: $66
  • Adobe Creative Cloud (I only need InDesign): $343 (ouch!)
  • Netflix: $168
  • Accounts system: $440
  • Spotify: $120

That's over $1200 per year. And that's after cancelling Stan, WWE and a couple of others.

Over the last few years, I've heard a number of small business owners lament the shift away from perpetual licenses to subscriptions. In the past, they could buy a computer and pre-order it with a perpetual version of the current release of Microsoft Office. But now, they are being slowly pushed towards Office 365.

And while the upfront cost was high, they could write it off with the computer purchase all at once. Now, they have another transaction to reconcile each month.

Curated app stores like the Windows Store or the macOS App Store offer the best of both worlds most of the time. There's a one-off purchase of the licence with automatic software updates rolled into the package.

Not all software vendors embrace this model, preferring the regular cashflow that comes from subscribers, over the lumpier revenue that comes from major releases.

With SaaS and other cloud services becoming more prevalent and the ease with which we can sign on, it's easy to start adding costs to your bottom line - especially when each app or "only" costs a cup of coffee or two each week.

How can you avoid subscription software?

With Microsoft announcing a new perpetual release of Office - Office 2019 will be out in the second half of next year - there is a way to avoid some of the subscription pain. And, while many popular apps have gone down the subscription path, there are perpetual alternatives.

For example, rather than add Photoshop to my Adobe Creative Cloud account, I've purchased Pixelmator for use on my Mac and iPad. And I get by with GIMP on my Windows machines. Office 365 is tough for me to move from, particularly as many of the people I work with use it and dealing with compatibility differences on some documents would add pain I don't want to deal with.

But, Open Office and Apple's iWork apps (Pages, Numbers and Keynote) are more than good enough for most people.

In most cases, there are options if you're prepared to look away from the larger software makers.

When do subscription software and services make sense?

There are cases where I think SaaS makes good sense.

File synching and accounting software are great use cases for SMBs to look at SaaS. While it's possible to create your own file sync solution using a NAS like the Synology DS1517+ but, for many, it makes better sense to use an online service.

Accounting software is another category I think is a good candidate for a SaaS subscription. Being able to access your accounts solution from anywhere and automatically receiving updates pertaining to legislative changes makes is useful - at least in my case.

Are you finding subscription software and services are eating into your budget? Have you been ruthless and ditched seldom used services? Have you let free trials linger on?


    Quick tip for cheaper office 365, if you went to university or a higher education institution and still have an active email account with them. See if you can use that to purchase an academic office 365 license. The academic license is the same cost as a one year license but for 4 years instead of one.

    But Anthony, this is what we want isn't it? Just turn it on and off like a tap. Just so easy, right?
    There won't be a choice soon enough. It's nothing to do with cashflow, it locks you in, just like you said with Ohh365...

    My accounting software and OneSaas work well online as subscription services. They're expensive but worth it. However I'd much rather just buy the software that's installed on my computer. I can decide when/if I want to upgrade to the next version of those myself. I find myself using free alternatives for pretty much anything I can and it's working surprisingly well.

    I'd suggest another advantage to SaaS is versioning.

    One of my employers follows the standard bulk volume licensing model. Their machines are on Win7 with 2010 Office products. Many external facing services (e.g. Exchange servers) are 2007/8 generation too and showing their age.

    My other employer is on a 365/Azure enterprise package. All machines run Win10 and all desktop/server apps are current build.

    I'm sure you can guess whose stuff is easier to interface/work with.

      I'm guessing the older version is easier to work with - the features haven't changed or moved, everyone has had time to get used to them.
      The main "feature" of newer versions is that the bugs and cracks aren't known and documented yet. This gives you the illusion of having a more secure setup when you update.

      Oh, and I use Photoshop CS6 [the last version before subscriptions] and I'm looking very hard at Paintshop Pro.

    I have been using LibreOffice on my PC (win10) since I built it, has been more than sufficient. I will move to FreeCAD when my Solidworks subscription runs out.

    Hopefully Steam gets more games available on linux and then my next build will be all linux all the time.

    For me, the biggest issue with SaaS is the price increase you essentially have to accept. Take Adobe CS for example - they jack up prices, and I can do one of three things - stop using an industry standard piece of software and endure the pain of finding lower cost alternatives, pay their asking price each year, or pirate software. Rock, meet hard place.

    As a side note, Adobe can eat one of these: 8====D

    Anthony I think you need to do somewhat more research.

    There is a reason public SaaS is a many hundreds of billions of $ market at present, forecasted to grow to $1 trillion by 2020 (Gartner).

    There is a reason Microsoft have just announced their own reseller focused marketplace to connect resellers to ISVs.

    There is a reason Apple have their Mobility Partner Program, with their Business Transformation Series of SaaS applications targeting key verticals (Field Service, Restaurants etc).

    There is a reason SAP have released their SAP AppCenter.

    The list goes on.

    Go to any large global Telco and check our their SaaS marketplaces (powered by AppDirect, ODIN, BCSG etc) such as the Telstra Apps Marketplace or Vodafone ReadyApps marketplace.
    They sell SaaS solutions to customers (usually bundled with a core service) consisting of an office / productivity suite (O365, GSuite) "anchor" application tied with a security offering (Symantec, McAfee) and a line of business app (eg Legal vertical -> DocuSign). Add support (and one throat to choke), a single bill, SSO and it makes total sense.

    The SMB and consumer market for SaaS is burgeoning and will easily surpass IaaS soon (if not already done so).

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