Subscriptions Move Beyond SaaS

While Software-as-a-Service (SaaS) and cloud computing are all the rage these days, one of basic tenets of SaaS – the pay-as-you-go, subscription-based pricing model – seems to be catching on in the traditional desktop software world.

Last week Adobe made waves by announcing $35/month subscription pricing for its flagship Photoshop product, which has traditionally retailed for over $1,000. Another giant in the traditional software market, Microsoft, has long offered subscription-based pricing for Microsoft Office, but is now also looking to bring Office to a hosted subscription-based offering via Office 365.

This shift isn’t entirely surprising – subscription-based pricing offers benefits to both consumers and vendors. Consumers benefit by having lower, month-to-month costs rather than large, up-front licensing costs. Subscription pricing also offers flexibility in that there is little to no “lock-in” to a product because of pricing: switching to a competing subscription-based product doesn’t mean abandoning a large software investment. Vendors tend to prefer subscription-based revenue because it offers a predictable, recurring revenue stream as opposed to the volatile revenue stream created by traditional software licensing models.

With major players like Adobe starting to offer subscription-based offerings to their software, when will we start to see major legal software vendors offer traditional desktop/server-based software via a subscription model?

Retweet information »

Comments

  1. Consumers benefit by having lower, month-to-month costs rather than large, up-front licensing costs. Subscription pricing also offers flexibility in that there is little to no “lock-in” to a product because of pricing: switching to a competing subscription-based product doesn’t mean abandoning a large software…..