Software Licensing: Subscription, Perpetual and Open Source
Software is acquired under licence rather than bought outright, and the licence model has consequences beyond price — particularly for what you retain if the relationship ends.
Subscription
Continuous payment for continuous access, including updates and support. Now the dominant model.
Advantages: lower initial cost, current versions, predictable operating expense, and support included.
The consequence is that access ends when payment ends. For software holding your data, establish before committing what happens to that data on cancellation — export formats, retention period, and whether files remain readable in anything else.
Watch renewal pricing. Introductory rates frequently rise substantially at renewal, and multi-year commitments should have an uplift cap negotiated in.
Perpetual licences
A one-off payment for indefinite use of a specific version. Increasingly rare and still available for some professional software.
You retain the right to use that version indefinitely, which is genuinely valuable for stability-critical work.
Updates and support are typically a separate annual maintenance fee, and letting it lapse means no security patches and no compatibility updates for new operating systems.
Total cost over a long period frequently favours perpetual licensing where the software does not need to change.
Open source
No licence fee, with the licence terms determining what you may do — particularly around redistribution and modification.
Cost is not zero: implementation, configuration, support and internal expertise all have real cost, and commercial support contracts exist for most significant projects.
Suits organisations with technical capability, and suits situations where avoiding vendor lock-in matters.
Check the specific licence. Terms differ substantially, and some impose obligations if you distribute software incorporating the component.
Compliance
Licence terms specify permitted use: number of users, installations, whether commercial use is included, and whether it may be used by contractors.
Using consumer or education licences commercially is a common and genuine breach.
Vendors do audit, particularly larger ones, and shortfalls are settled at list price with penalties. Maintaining a simple register of what is licensed to whom prevents most of this.
Practical management
Keep a register of software, licence type, renewal date, cost and the person responsible.
Review annually and remove what is unused. Subscription creep — paying for tools nobody opens — is a persistent drain in small businesses.
Before adopting anything, ask what the exit looks like: how data is exported, in what format, and whether it is usable elsewhere.
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