Software Subscriptions: Nice Convenience or Nasty Swindle?

This curated blog post was inspired by, “The Worst-Kept Secret About QuickBooks Online” by Gene Marks, from Forbes ‘Quicker Better Tech’.

How we purchase and use  software has completely changed since the days of going out and purchasing a shrink-wrapped box with a DVD in it. Most of us can’t even remember doing that! Now we simply order and download our software online, directly from the company. But wait, enter the latest in software application convenience – monthly subscription services.

Enter the latest in software application convenience: monthly subscription services.

As small businesses move more and more to Cloud-based services, software companies are catching on quickly and offering their “software solutions” to any number of business needs, not as downloads, but as monthly subscriptions. For a reasonable monthly fee you are provided with the software from any device, security over your data, all the necessary updates completed automatically, and basic support. Sounds perfect, doesn’t it?! Well…

“There are certainly sound reasons why so many small businesses can benefit from the cloud. It relieves us of the burden of maintaining a network or an IT guy, we’re told. Cloud applications allow us to access our data now from anywhere, using just about any mobile device. Cloud applications are easier to setup and get operational. Support for the software can be offered more economically because everything’s being maintained by the manufacturer. Security is better. Integration with other cloud-based applications is easier. And, we’re told, monthly software payments help us with our cash flow.”

While it might seem more cost effective to sign on for a $26.95 monthly subscription fee than fork over $300 right this minute, when you run the numbers, you might be surprised. Software companies know that small businesses run on small cash flows, so appealing to our tightly-run budgets by offering small, monthly fees instead of asking for a large investment seems like a nice option! Of course, in actuality, software companies are really in it for themselves and their huge profit margins. They make way more money when you subscribe to their online products. In the long term, most cloud applications are significantly more expensive than purchasing an application outright. So paying that $26.95 per month, instead of $300 outright for software, adds up to $323 in just one year! And you’ll pay that every year, as most commercial software lasts 2 -3 years before purchasing an entirely new update is necessary.

In the long term, most cloud applications are significantly more expensive than purchasing an application outright.

One of the biggest selling points to cloud-based software subscriptions is that it eliminates the need for “IT guys” like me. However, your business still has desktops, servers, printers, routers and networks, right? So this infrastructure needs to be maintained by someone. Even if your network is cloud-based, you will still require overall security and protocol maintenance, device maintenance, and break-fix support.

Bottom Line
Do your math and figure out if a monthly subscription is really a cost savings, or if you are being brought along in the small business swindle so many software providers are banking big bucks from.

This has been a curated blog post. Read more about this topic in the original article, “The Worst-Kept Secret About QuickBooks Online” by Gene Marks, from Forbes ‘Quicker Better Tech’.

Posted in Business IT, Cloud Services, IT Services

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