Subscription Software: A Good Financial Choice

By Thursday Bram on 16 July 2010 (Updated 31 December 2010) 0 comments
Photo: Trout55

Subscription software offers some cost-saving opportunities for the typical small business. Where more traditional software limits the number of computers it can be used on — requiring a separate license for your home computer and for your office computer — many subscription software options simply require that you have enough user names for each employee that will be using the software. More often than not, subscription software is web-based, allowing you access to the tools you and your business need from any computer with an internet connection.

The reduction in cost goes beyond just the number of licenses. If you have an ongoing subscription to a certain piece of software, you won't need to buy an upgraded version of the software every time a programmer makes some changes. Instead, the changes are simply available to you as a part of your subscription. If you are using a web-based tool, you may have access to an upgraded version before you even know that changes are in the works.

The Downside to Subscription Software

On the surface, subscription software seems like an easy solution to many technology concerns that small businesses face. It certainly cuts down on certain types of costs. However, because the subscription software model relies on charging users a reoccurring fee, typically monthly, there's no guarantee that you'll come out ahead financially.

Most online tools come with significantly lower price tags than their one-purchase counterparts. In many cases, the monthly fee is less than if the creator had divided the full cost by twelve, spreading the cost over a year. Salesforce, for instance, offers its most basic plan for $5 a month. Other customer relationship management software are available for a flat, one-time price — but that price is usually closer to $100. That's not the whole story, of course. That is only the most basic plan Salesforce offers, after all. The software provider has plans ranging in price up to $250 per month and you have to pay to add each additional user you want to have access to your account.

Those numbers can add up quickly, especially since subscription software providers work hard to make sure that your business sticks with the service as long as possible. The financial decisions can be easy to make when you're thinking of using a particular tool for a year, but when you start thinking in terms of two years or more, those same decisions can be a lot easier to make. It's tough to determine just how soon you'll need to upgrade, as well as other factors that determine the long-term cost of the software your company needs.

An Easy Entry Point

One of the factors that can make subscription software a better choice for new businesses is that it offers easy options for getting your systems set up and working quickly. It's rare that a small business has a full-time IT staff that can get software up and running for you. But relying on a web-based subscription software can eliminate concerns about how well certain programs will work together and even about getting support. Subscription software providers have more incentive to provide you with great customer support because they need to make sure you won't cancel your service.

It's also easy to grow with subscription software. When you hire a new team member who needs access to your tools, it's often just a question of clicking a few buttons to add a new user to a piece of subscription software. You may need to upgrade your plan and pay a little more per month, but the actual work necessary is minimal. If you're in an industry where time is at a premium, the amount of time such software can save you can be more than worth any price difference you may be worried about.

Overall, subscription software can provide a simpler approach than trying to manage a variety of hardware and software options — a juggling act necessary if you buy most software outright. Whether or not that simplicity is enough to make subscriptions more cost-effective in the long run for your company is something that can vary from company to company.

The Viability of Subscription Software

There is one key concern that should not be ignored as you look at subscription software options: whether that particular piece of software will still be around a few years from now. Right now, there are many new tools available online, on a subscription basis. However, it's not unheard of for a popular piece of subscription software to disappear almost as quickly as it was created. Not all new software companies are able to provide their clients with a guarantee of viability.

Switching between certain subscription software sites can be a difficult process, making it necessary to take concerns into account from the start. No business owner wants to be in the position where he has to move data from one piece of software to another by hand, retyping or copying and pasting each section. To avoid such a situation, it's important to rely on software options that include the ability to export information, preferably into a format such as a spreadsheet or a text file. It's even better if you can find an option that allows you to share information between different applications.

There is one group attempting to make sure that small businesses have a variety of subscription software options, with an emphasis on providing tools that can communicate between themselves. The Small Business Web includes a variety of companies, all of whom make web-based applications that are becoming more integrated. For instance, if you use CRM software created by a member of the group, you can use the data already stored in that application to send out newsletters through newsletter software developed by another member of the organization.

With new tools being developed every day, having different software packages that work well together can make an important difference in how quickly your business can accomplish many tasks.

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