Everywhere you turn, there is a new subscription offering for something. Coffee, wine, makeup, razors, diapers, cleaning supplies, the list goes on and on. “Subscribe and Save” is offered on more and more items on Amazon every day. Subscription software is no different.

For years now, we’ve been talking about SaaS or “Software as a Service”. At first, the idea of subscribing or “renting” software was foreign to end users and frankly, they just didn’t get it. Why would I pay monthly for software when I can purchase it? Business Applications partners were having a hard time explaining it as well, because for years we had always sold perpetual licensing.

Today, cloud software is king. Customers rarely want software that requires them to install it locally. Installing software locally means maintaining a server, upgrading that software, supporting the users, and so on. The cloud gives customers the ability to easily deploy software, get automatic upgrades, and often takes a lot of end user support off of their plate. Yet, we still see a lot of partners selling perpetual licensing. It’s the way they have always done it and a lot of their customers are still using a system that is sold “perpetually”. As a partner, there are so many reasons you should be selling subscription software.

Why You Should Sell Subscription Software

1. All Applications Will Be Subscription

We are moving away from an environment where software applications will be purchased perpetually. No software providers are putting out new applications that are sold perpetually and installed locally. It’s just not happening. Even if you aren’t selling it, your customers are already using subscription services. Aligning with the way your customers are already purchasing software will allow your customer to streamline their technology environments.

2. Customers Like it!

Cloud software offers a low cost of entry that customers love. For example, SmartConnect pricing starts at $250.00/month on a subscription. This is a pretty easy pill for your customers to swallow. They get full-featured software to do what they need to do without having to put out a ton of money up front. Let’s be honest, putting out $7,000+ for software is a tough sell internally, for a lot of organizations. Starting a simple subscription on a monthly schedule is a much easier way to start out.

Cloud software also gives customers new feature updates and automatic updates on a regular basis. Rather than only getting new features every three years when they upgrade, customers get updates all throughout the year, even monthly! This drives value through technology that we haven’t seen in perpetual software sales.

Subscription software also moves from a capital expense to an operating expense. This can make it easier for end customers to budget for and get approved. In turn, it makes it an easier sell for a partner.

3. Recurring Revenue

Money coming in every month, (almost) guaranteed… who doesn’t like that?! There is a reason Microsoft (a traditional “perpetual” software company) has moved their business towards a recurring revenue model. Having a steady revenue stream you can rely on allows you to continue to regularly invest in your own development, hire more people, and be more profitable. Recurring revenue means at the start of your fiscal year, you aren’t starting a 0. You already have a clear picture of the money you can count on throughout the year and you build from there.

4. Customer Retention

If you are a Dynamics partner, you probably dread having to have conversations with customers about “Annual Enhancement Plans”. This annual renewal enables customers to get bug fixes, support, and access to upgrades. Many customers seem to “forget” about this every year, and every year it must be re-explained. Studies show that a customer that is billed for something every month is much more likely to pay for it, than if they are billed yearly. Like that gym membership you signed up for; pay for every month and always forget to go.

Also, if a customer is paying for a monthly subscription, they are going to call you if they are unhappy and want to cancel. This gives you the ability to talk with them and get them what they need before they abandon ship. We have all had to make a call about a renewal being late, only to hear that the customer has switched software, without you ever knowing something was wrong.

Migrating from a traditional software business to a SaaS business isn’t an easy feat. You must rethink the entire way you do business. Subscription software means you have to build out your monthly billing infrastructure, teach your salespeople how to approach selling cloud software, and consultants will have to take on learning how to support and deploy cloud software. While it’s a challenge, the benefits far out weight the initial work there will be up front. If you aren’t selling subscription yet, now is the time! Start small with the ISV tools you sell to customers (I guarantee most of them have a subscription offering) and build from there!

If you have any more questions about the subscription model or SmartConnect in general, feel free to email us at sales@eonesolutions.com