How Will You Buy CAD Software in 2016?9 Feb, 2015 By: Robert Green
Autodesk and other software developers are moving toward subscription-only access to software. The time to plan for the transition is now!
Last week, Autodesk shook things up by announcing that it is moving toward a subscription-only business model and will no longer sell perpetual software licenses for standalone desktop software products. While the policy shift has been rumored for awhile, it's now official, and companies that are not already on and Autodesk subscription plan or cloud service will need to evaluate how they want to manage their software moving forward. And, of course, it goes without saying that CAD managers must be involved in planning for this new software landscape.
It's important to note that this change will affect only those customers who already own perpetual licenses of standalone desktop software; it does not affect customers using Autodesk product suites or those already on a desktop subscription plan or using cloud services. For details about the announcement, see "Autodesk Announces Subscription-Only Access for Standalone Desktop Software" on the Cadalyst web site and two online FAQs from Autodesk, Perpetual Licensing Changes and Autodesk Standalone Perpetual License Discontinuation Public FAQ (PDF).
More and more software developers are moving away from perpetual license sales and toward subscription, or rental, as their only means of distributing their wares. So examining the trend is worthwhile, no matter which brands of software you use. In this edition of the CAD Manager's Newsletter, we will examine some cost and licensing scenarios that you may have to consider as you plan for next year and beyond. Here goes.
Defining License Terms and Costs
Of course, not everyone uses Autodesk software, but I'll go ahead and use the company's terminology here along with AutoCAD suggested retail pricing as I build some example scenarios. Most software companies these days have essentially the same types of licensing, so all you have to do is plug in the appropriate numbers for your software to follow along.
Perpetual License: A software license you own that runs with no time limits. A perpetual license for one seat of standalone AutoCAD 2015 is $4,195.
Maintenance Subscription: An annual maintenance contract that you can purchase with a perpetual license to keep the software up to date. Maintenance Subscription for AutoCAD is $545 per year.
Desktop Subscription: An annual or monthly rental contract that entitles you to run the latest version of the software. At the end of the rental period, if you don't renew, the software stops working. Desktop Subscription for AutoCAD is $1,680 per year or $210 per month.
Now let's compare the total cost of ownership over three years for these three plans:
Perpetual Becomes Legacy
A quick glance at the table above shows that the best value is derived when you continue maintaining existing licenses under existing Maintenance Subscription agreements. In fact, this deal is so much better than moving to Desktop Subscription that it would be crazy to do anything else — assuming you already have perpetual licenses in place and don't foresee the need to upgrade your software. Maintaining a legacy license will cost $545 per year, about one-third the cost of Desktop Subscription. According to Autodesk, perpetual licenses can remain on Maintenance Subscription indefinitely, as long as the subscription is not allowed to expire.
An interesting twist of pricing — which I suspect is not an accident — shows that acquiring a new perpetual license makes less financial sense over a three-year timeframe than does Desktop Subscription.
Of course, if we expand the timeline to more than three years, the math starts to tilt in favor of perpetual licenses. Consider the following scenario, where you purchase a perpetual license and use the software for five years before upgrading:
Reading between the lines, it doesn't take much to understand why Autodesk is abandoning the perpetual license. Over time, Autodesk will make more money via its Desktop Subscription (rental) plan than it would selling a perpetual license and allowing customers to keep it on a low-cost Maintenance Subscription program.