Buying or renting — that’s not just the big question when it comes to housing. With software, too, customers often have to decide whether they want to own or rent a program, i.e. take out a subscription. Both models have advantages and disadvantages that are worth knowing.
Some manufacturers no longer give you a choice. They only offer their products on a subscription basis or at least make the purchase versions as unattractive as possible for customers.
This is because a software subscription not only brings them higher profits compared to the sale of software, but also better customer loyalty.
Reasons for the development of software subscriptions
The prerequisite for the sale of software as a subscription download was the development of faster internet connections and the availability of cloud services. This gave manufacturers the opportunity to significantly reduce their distribution costs.
When a program is sold as a download, the manufacturer no longer has to produce DVDs, design a box, or provide a paper manual. With a single copy on a server, he can at least theoretically supply millions of customers.
What’s more, direct distribution via download bypasses retailers, some of whom charge hefty fees for shelf space in addition to the commission on sales.
Companies quickly realized that the possibility of downloading software also paved the way for software subscriptions. They brought them advantages on the revenue side, as they ensured regular and reasonably predictable incoming payments.
In addition, the subscriptions now also provided manufacturers with the names and addresses of their customers, who had previously remained largely anonymous. This paved the way for targeted campaigns to promote other in-house products.
Buy Microsoft Office Home and Business 2021 at a favorable price:
The benefits of software subscriptions for customers
Manufacturers have introduced software subscriptions primarily because they can save costs in this way. However, subscriptions also have some positive aspects for customers.
For example, many software packages install an automatically launched agent that checks the manufacturer’s servers regularly, sometimes even daily, to see if there is a new version or a patch.
These are often security updates that can be distributed quickly in this way. Or they fix minor and major bugs and add new functions.
Above all, it is important that you as the user of the software do not have to take action yourself. Instead, you simply agree to the download and installation of the update when you receive a corresponding notification.
The costs are also an argument in favor of a subscription for many users. Large software packages often cost several hundred dollars, which is a big investment for many users.
With a subscription instead, you usually only pay a double-digit or slightly higher amount per year. This is often easier to finance for small companies and private users.
What’s more, the minimum subscription period for larger software packages is usually one year, and you must cancel the subscription one month before it expires. Tools and smaller programs can often also be purchased on a monthly basis.
In both cases, a subscription that can be cancelled quickly is usually cheaper than buying the software.
This allows you to reduce the costs for time-limited projects, for example. For project work, it is also advantageous that the budget can be better planned due to the constant costs of a subscription. Subscription costs are also easier for companies to manage for tax purposes than the high one-off costs of purchasing software.
Finally, subscription versions are often characterized by the fact that they include extended functionality. For example, the classic purchase version of Microsoft Office Home and Student does not include Copilot. With programs from other manufacturers, the cloud storage in the purchased version is severely limited or missing altogether.
And finally: Unlike in the past, there are hardly any favorable update versions for purchased full versions. With every new version that comes onto the market, you have to pay the full price again.
The disadvantages of software subscriptions
The disadvantages of software subscriptions can be summarized under two headings: Cost and dependence on the manufacturer.
If you add up the subscription fees over several years and compare them with the purchase price for a single license, it often turns out that a purchase is cheaper than a subscription after just two to three years — see the box “Calculation example with Microsoft Office.”
Incidentally, offers make little difference to the cost calculation. There are offers for both the purchase versions and the subscription versions.
One thing to bear in mind, however, is that the subscription price is often advertised as reduced for the first year, but the recommended retail price is then due upon automatic renewal. This is often the case with antivirus programs, for example, which have only been available as a subscription for decades.
With a subscription, you become dependent on both the software and the manufacturer. If the program uses a proprietary file format, for example, you will no longer be able to access the data once the subscription expires. Exporting to other formats is also often blocked.
In addition, with a subscription model you have to accept all updates and new versions, even if you feel that the user interface has deteriorated or required functions are suddenly no longer available.
In short: With a classic purchase version, you have a permanent license to use the software. A subscription, on the other hand, makes you dependent on the provider.
Comment: ‘Pros and cons of software subscriptions’
It’s clear that software subscriptions primarily benefit the manufacturers. In this way, they reduce their distribution costs and benefit from regular and calculable cash flows.
And last but not least, they learn the names and addresses of their customers and can use this data for advertising purposes.
However, customers do not go away empty handed with this sales model. They receive new functions as soon as they are available and no longer have to check the manufacturer’s website every month for fresh updates and bug fixes.
I am also prepared to pay money for this increased convenience and security.
And as far as anonymity when buying software is concerned, this has always been limited. In many cases, manufacturer support was tied to registration, where you had to provide your personal details.
In the past, I had to pay dearly for the full version of software and then pay for the next update every one or two years. I prefer a subscription model.
In my opinion, the alternative to software subscriptions today is no longer the purchased versions, but programs from the freeware and open source scene.
Which applications are still available as purchased versions
In addition to Microsoft Office, the Corel Draw Graphics Suite must be mentioned in a list of purchased versions. The package currently costs $329, with an annual subscription costing $269.
For hobby graphic designers, Corel offers the slightly limited version Corel Draw Standard for $299. It is only available as a purchase version. With Corel Draw Essentials, the company also has a package for greeting cards and simple social media work in its program.
It consists of the slimmed-down versions Corel Draw Essentials and Corel Photo-Paint Essentials and has a retail price of $130.
Corel offers its Graphics Suite both as a purchase and a subscription version. Those who only need the program for one or two years are better off with the subscription.
Foundry
The other important programs, of which there are still purchase versions, are also mainly from the graphics and video corner. Magix Video Deluxe costs around $30 as a new purchase, the annual subscription is around $36.
Cyberlink Director Suite 365 for Windows costs $140, while Power Director 365 is available for $80 per year. Nero Video Studio is available as a purchase version for $50, but Nero does not offer a subscription.
The video editor Video Deluxe from Magix costs around $30 a new purchase. The annual subscription is around $36. In any case, it is worth taking a look at the price comparison, where you can often find bargains.
Foundry
Adobe, probably the most important manufacturer of graphics, video, and DTP programs, completely removed the purchase versions from its program years ago.
Since then, Photoshop, Indesign, and others have only been available from Adobe on a subscription basis. Only the slimmed-down Photoshop Elements is still sold with a three-year license.
Affinity Photo is available as an almost fully fledged alternative to Photoshop at a price of around $85.
For around 10 years now, Adobe has only been selling the popular graphics program Photoshop as a subscription, either as a stand-alone program or as part of the Graphics Suite, which is significantly more expensive.
Foundry
An ever-increasing number of office programs, tools, and even complex image, audio, and video editing programs are no longer offered as a purchase and/or subscription version, but are instead made available online for free download as freeware or open source.
However, this often only applies to private use; for professional use, the software must be licensed and paid for. However, the office package Libre Office, the image editor Gimp, and the audio editor Audacity are free for every user, even if the software is used for business purposes.
A slightly limited version of the professional video editor Davinci Resolve is available for free download.
The office package Libre Office is sold with the Mozilla Public License 2.0. Among other things, this license states that the software may be used freely for both private and business purposes.
Foundry
Calculation example with Microsoft Office
The Microsoft Office package is still available in a paid version. There is also a subscription version called Microsoft 365, which is clearly favored by the company’s marketing. This makes a direct comparison of the two versions all the more interesting.
- View Microsoft Office Home 2024 on Amazon
- View Microsoft Office 2024 Home and Business on Amazon
- View Microsoft 365 Personal on Amazon
The purchase version is called Microsoft Office Home 2024. It contains Word, Excel, PowerPoint, and Onenote and includes 1TB of free online storage at OneDrive. The recommended retail price is $149.
If you also want Outlook, you will need to purchase Office Home & Business 2024. This version is also suitable for professional use and costs $250.
The subscription version Microsoft 365 Personal for one user used to cost $69. Microsoft has now increased the price to $99 per year. This version also includes Outlook and Copilot. From now on, you will pay a subscription fee of $198 over two years, whereas you only have to pay $149 for the license of the purchase version.
However, it should be noted that the purchase versions do not receive any free feature updates. Instead, a new, revised version is released every two to three years, most recently in 2024, 2021, 2019, and 2016.
So if you always want to be up to date, just like with Microsoft 365, the calculation opposite is based on the sales and subscription prices in the individual years. We have used the recommended retail prices in the years of publication as a basis.
| Year | Microsoft Office Home 2024 (cumulative) | Microsoft 365 Personal (cumulative) |
|---|---|---|
| 2016 | 149 dollars (for Office 2016) | 69 dollars |
| 2017 | 149 dollars | 138 dollars |
| 2018 | 149 dollars | 207 dollars |
| 2019 | 298 dollars (new version) | 276 dollars |
| 2020 | 298 dollars | 345 dollars |
| 2021 | 447 dollars (new version) | 414 dollars |
| 2022 | 447 dollars | 483 dollars |
| 2023 | 447 dollars | 552 dollars |
| 2024 | 596 dollars (new version) | 621 dollars |
| 2025 | 596 dollars | 720 dollars |
As you can see, the Microsoft Office subscription is significantly more expensive over the years than the purchased version.
However, you have to bear in mind that the subscription version is continually being updated with new features, while the purchased Office only receives security updates. Microsoft provides these security updates until the end of the support period of the Office package. As a rule, this is five years from the year in which the software was sold.
It should also be noted that many retailers offer Office packages at significantly lower prices.
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