Software subscriptions are everywhere – but are they right for your shop?

Here are three reasons to consider a software subscription for your fab shop or manufacturing business.

By Tom Stillwell, CAM & Controls Marketing Project Manager
Posted on 08/10/2020 in SPARK the blog, Nesting software

Lately, it seems like every software product under the sun is offering some form of a subscription service. Office suites, databases, and communication tools can now be purchased with the click of a button and installed immediately. So it’s no surprise that subscriptions have made their way to the fabricating and manufacturing industries. Many commonly used software programs are now available on a subscription basis, including ERP, CAD, CAM, and even nesting software. 

Three reasons to consider a software subscription

In most cases, you can still get a perpetual (permanently owned) software license if you’d like one, but more software users are now choosing a subscription. Here's why:

1. Lower up-front cost

A perpetual license requires you to own the software outright. This can be a substantial upfront cost, especially for higher-end software packages, and it does not include maintenance fees for updates and technical support. On the other hand, with a subscription plan, the cost is spread out over time (pay as you go) and that has a positive impact on your company’s cash flow. Plus, updates and technical support are normally included in the price of subscription.

2. Less risk

Subscriptions are less risky. By design, subscriptions are easier to trial and evaluate, and most subscription costs are under a manager’s purchasing threshold, so the purchasing decision does not need to be made by committee. That makes it less complicated to acquire, payments are easy to plan for, and in most cases, you don’t have any commitment beyond your initial term, be it monthly, yearly, or longer depending on the provider. This means it's easier to upgrade or downgrade your plan whenever business conditions change and stop the service if the software product no longer matches your needs.

3. Potential tax benefit

Traditional software packages are often a capital expense, but with subscriptions, software can be accounted for under operating expenses. This change in designation could further benefit your business financially from a tax perspective. You can strategize with your accountant or tax advisor to determine the best approach.

Conclusion

Whatever you decide, outright ownership, or a subscription, the good news is you have more options than ever before when it comes to purchasing software.

Hypertherm offers perpetual licenses for all of its software products as well as subscription plans for ProNest® LT CAD/CAM nesting software and Design2Fab® sheet metal layout software. Feel free to contact us with any of your software questions.

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