Is the cloud subscription model unsustainable?

Is the cloud subscription model unsustainable?

The concept of Software-as-a-Service (SaaS) rose to prominence at the same time that cloud computing was gaining in popularity and public perception a few years ago.

Although SaaS means software-as-a-service, for many cloud providers the second “S” in SaaS might as well mean ‘subscription’.

In the past few years the amount of software that is being offered on a subscription basis has absolutely exploded. Even companies that have always traditionally provided boxed software like Sage have made moves to enter the SaaS market and others like Adobe will soon no longer even sell a non-subscription version of their hugely popular Photoshop tool.

The reasons for this switch in business model are due to a number of factors. The rapid growth and acceptance of cloud computing among the general public have made it a lucrative market to get into. It also makes it easier for the vendor to deliver updates and at the same time gather an endless amount of data about the ways their users prefer to use their software – peak usage times, average usage times – and other valuable data like that which make their decision-making a lot more accurate when it comes to assigning money for things like development.

In theory, the decentralised nature of the Cloud and the easy way in which it is possible to deliver fresh updates should also make mean that software can be offered at a lower price to consumers. But judging by the prices set by many vendors, the switch to the Cloud has not meant any savings being passed to the customer with SaaS prices often being comparable to boxed software (or even more costly once multiple licenses are factored in).

But even despite this guarantee of fixed income from locked-in cloud customers, many of the top firms seem to be losing a lot of money, which leads me to wonder about the question in the article title: Is the cloud subscription model unsustainable?

I’m not sure that business owners who were happy with forking over money once every ten years for business software to manage their accounts are really going to be equally happy with signing up to pay a monthly fee for the next decade and ultimately probably end up paying 5-10 times the amount they would’ve paid in the past with boxed software.

That’s why, although my company WinWeb is still offering a subscription model on all of our apps for customers who prefer to pay monthly, for the last six months we’ve also been offering a “pay once, use forever” option on a number of our apps for business owners who cannot or do not want to pay monthly for software.

This option has been hugely popular because many of our customers that have small businesses can never be quite sure in the current economic climate whether or not they will be able to pay on a month-to-month basis.

We provide the exact same level of unlimited support to any of our customers that choose this option as well, so it is not like they are purchasing an inferior version of our products either.

What do you small business owners think? Do you find the thought of paying a monthly fee for software off-putting and impractical?

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