Is the Perpetual Licence Dead?

Is the perpetual licence dead? Anyone who currently has a significant portion of your business wrapped up in perpetual licences and is relying on an annual maintenance renewal is probably thinking this already. In my opinion perpetual licences are a dying breed and in today’s market environment they seem to be being phased out at an ever increasing pace.

Largely driven by market demand, customers are finding an OPEX IT monthly cost far more palatable than investing in a licence for long-term use as well as having a product which is updated regularly with enhanced features and benefits. Think about if your company is using a software product that’s 3 years old that has never been updated, it’s likely that either the business process or the technology has changed so much that perhaps the original purpose for which it was intended is no longer required.

So what should you do about it?

While it’s all well and good to say that you should change your pricing model to offer a subscription based pricing to be in line with the market demands, this shift presents significant challenges when it comes to transitioning it through your own organization let alone your network of channel partners. Some of these internal challenges have been highlighted in a previous post “Subscription pricing - are you ready for it?”. The question is how you can optimize your internal organizational processes to manage these challenges and help bring your channel partners along the “transitional journey”.

Here are my top three considerations for deploying subscription pricing models to your channel partners:

Increase the visibility of your renewal process and end user data

The ability to be transparent with your channel partners by providing visibility to the entire renewal process as well as the data behind it (ie the end user installed base) creates an increased level of accountability. Once channel members are aware of the opportunities and tasks they are more likely to be completed.

Educate and engage your partners

Communication is essential: educate your channel partners on why switching to this model is going to be better in the long-run. The value to the channel of continuing stream of revenue is greater in a monthly renewal, but there also needs to be a system to support the process.

Reframe what success looks like

Metrics that you’ve previously clung onto such as renewal bookings may no longer be relevant. You may need to consider some of the customer health statistics, such as usage and churn to measure success in the future.

At iasset.com, we have experience helping major clients transition their pricing models with channel partners to achieve maximum growth for new line product lines. If you’re going down this path, contact us to find out how you can capitalize and maximize the opportunity!