Are we being nickled and dimed to death?
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If you compare against buying outright, it is just a different approach. Financial people often like it more.
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I agree. Try convincing someone to spend $2000 in a one-and-done vs paying $150/month, most will defer the big cost to a higher (sometimes) long-term cost. It's all about pricing, but I agree with Scott. Most would rather pay a little now and then over and over again than one big cost and be done.
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Don't know about most business but I know in the government world re occurring charges were frowned upon. The idea was they didn't know if the money would be there later but they had it now so even if it would cost $100,000 more to buy they'd rather spend than "lease" a service.
About the only think that was monthly I could ever get approved was a support contract for some MS Dynamics customizations. and of course the WAN fiber and leased LAN fiber lines.
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@thecreativeone91 said:
Don't know about most business but I know in the government world re occurring charges were frowned upon. The idea was they didn't know if the money would be there later but they had it now so even if it would cost $100,000 more to buy they'd rather spend than "lease" a service.
About the only think that was monthly I could ever get approved was a support contract for some MS Dynamics customizations. and of course the WAN fiber and leased LAN fiber lines.
Well whatever government likes would be the opposite of what sensible business people would like. Government practically exists to waste money and resources.
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My boss absolutely avoids reoccuring fees wherever possible as well. She just doesn't like them.. Doesn't like huge one time purchases either, but consider them less offensive I guess.
Perhaps my perspective is skewed by this job.
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I like them. It generally means I can ditch a product after a few months if it doesn't work out and replace it with something else. I don't like commitment and subscriptions generally allow me to be promiscuous.
The downside is administrating tons of monthly invoices. I have to logon to different Microsoft portals each month to download invoices as they won't even e-mail them to me. It's a complete pain and I hate it.
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True it makes many things much easier to handle. Temp employees or temp software needs. Plus planning and prediction.
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@Dashrender Lower prices attract people. Ask Wal-Mart. Sam Walton built a billion dollar retail empire on keeping costs low for the average consumer.
If only Azure could be that cheap, I would have already hosted my training lab for MCSA there!
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As a financial institution we prefer a bigger cost up front. Our CFO will always ask about the longevity of the product. As long as we can show a life of 3 years or so, he is happy. Generally after 3 years of ownership the cost is much cheaper than paying on a month to month basis.
AJ's example of $2000 vs $150 a month is a great example of how quickly paying up front can pay off. In a little over a year, you are in the black. I am sure something is going to be said about maintenance or having the equipment to run the software. If you already have the infrastructure in place to support additional VMs than why not save money. We still like pay for support for each product. So we do incur a minor yearly cost, but it still works out to be much cheaper.
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@IRJ said:
As a financial institution we prefer a bigger cost up front. Our CFO will always ask about the longevity of the product. As long as we can show a life of 3 years or so, he is happy. Generally after 3 years of ownership the cost is much cheaper than paying on a month to month basis.
AJ's example of $2000 vs $150 a month is a great example of how quickly paying up front can pay off. In a little over a year, you are in the black. I am sure something is going to be said about maintenance or having the equipment to run the software. If you already have the infrastructure in place to support additional VMs than why not save money. We still like pay for support for each product. So we do incur a minor yearly cost, but it still works out to be much cheaper.
You've touched on a really important point here. Support costs money. Low prices are meant to get you in the door shopping. The sole purpose is to create traffic for a product, but doesn't always ensure good development or longevity / security.
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I like to have a choice. Adobe's subscription only policy is a bit too fascist for my liking.
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@Carnival-Boy said:
I like to have a choice. Adobe's subscription only policy is a bit too fascist for my liking.
Agreed. I don't like how you can't own a product anymore, you only lease it.
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@ajstringham said:
@Carnival-Boy said:
I like to have a choice. Adobe's subscription only policy is a bit too fascist for my liking.
Agreed. I don't like how you can't own a product anymore, you only lease it.
You never really owned it. Not really. You just licensed it. And most products aged into worthlessness. So you were just paying up front was all.
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@Reid-Cooper said:
@ajstringham said:
@Carnival-Boy said:
I like to have a choice. Adobe's subscription only policy is a bit too fascist for my liking.
Agreed. I don't like how you can't own a product anymore, you only lease it.
You never really owned it. Not really. You just licensed it. And most products aged into worthlessness. So you were just paying up front was all.
Yes, but you can technically still use old versions well after support is removed. If you stopped paying monthly, your'e done
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@IRJ but you have to look at time value of money, lost opportunity, support, updates, fluctuations in workforce, etc. Buying up front does not pay off as much as people think.
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@Reid-Cooper said:
@IRJ but you have to look at time value of money, lost opportunity, support, updates, fluctuations in workforce, etc. Buying up front does not pay off as much as people think.
Subscription pays off for the companies selling the software. That is for sure. You could argue that they already have the data centers to support doing this and its not a big deal for them to do so. You could also argue that companies always do what is for THEIR best interests like keeping you on the hook for eternity.
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I think that it is mostly the pilot problem. All studies show that having a commercial pilot fly you is far safer than flying yourself. Yet people are afraid to fly but not afraid to do more dangerous things. Why?
Because they like the sense of control. It isn't good for them. It is not in their interest. But people like the sense it gives them.
I think buying vs leasing software is the same. People like the feeling of control.
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@Reid-Cooper said:
I think that it is mostly the pilot problem. All studies show that having a commercial pilot fly you is far safer than flying yourself. Yet people are afraid to fly but not afraid to do more dangerous things. Why?
Because they like the sense of control. It isn't good for them. It is not in their interest. But people like the sense it gives them.
I think buying vs leasing software is the same. People like the feeling of control.
Its all about cost. Its cheaper to get a pilot's license than to pay somebody to fly you around for years. Also if you have time invested in a plane and use it on a daily basis, you are stuck paying the pilot to fly you everywhere. You can either ditch the plane and start over which will cost alot, or you can keep paying the pilots salary
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@Reid-Cooper said:
Buying up front does not pay off as much as people think.
Depends. In a lot of cases, we end up using software and hardware way beyond our original estimates. If making a choice between rent or purchase, we'll typically assume a useful life of the product of between three and five years. That could be for a new printer, or Office licences, it doesn't really matter - we'll assume four years on average. In reality, we typically end up using those products way beyond four years. In the case of printers, it could be ten years! Our ERP system is about to replaced after 15 years of service. Our PBX was recently replaced after nearer 20 years of service.
Whether that's a good thing from a user perspective - we end up running out of date hardware and software, which effects productivity. But from a beancounters point of view, purchasing sometimes looks more attractive when taking account the actual life of the product. Users like the rental model because they get new stuff all the time.
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So many great points - but I'll go with Carnival Boy's last one - most everyone I know runs their equipment into the ground - heck look at the machine @scottalanmiller uses. It's 4+ years old, he simply upgrade to an SSD and some more RAM and he's still totally happy with it.
I just replaced 70% of our machines here - I fully expect most to make it at least 5 if not 7 years (just in time for Windows 7 to be retired from support). So paying up front in my case will almost certainly save us money in the long run.
I feel the same way with the rest of these new'ish services - they may be great services, but the prices, OUCH, they just really add up and affect the bottom line a lot!
As for the Adobe example from above, sure you can save time, manpower, etc with new versions, SOMETIMES, but it takes a savvy person to really take advantage of that from a business side, I'm guessing more often than not businesses would see little return on investment upgrading everytime a new version came out.
