Perpetual License Model
Traditional software licensing model by which users purchase a software license upfront and have access to that software indefinitely. Under that model, users typically have the option to pay for implementation services, as well as an annual support contract for the software. Popularity of the perpetual license model has waned significantly in the past several years – swayed by the growth of cloud computing and SaaS – as more users opt for software subscription plans. Under a subscription, users don’t actually purchase the software; rather, they “lease” it, typically paying a monthly fee to use it. Subscription payments generally include license fees, support services, and software updates. Whereas software is a capital expense under a perpetual license model, it becomes an operating expense under a subscription plan.