Subscription or One-Time Licence: How Indian SMEs Should Pay for Software

With a subscription, you pay every month or year for the right to use the software. With a one-time licence, you pay once and can use that version for as long as you like, usually on your own computer or server.

There is also a third path that many growing companies consider. You can get software built just for you and own it. You pay for the build and then for maintenance and hosting. This is closer to a one-time licence, but you own much more than a licence. Our page on custom software solutions explains how that works.

A subscription wins on start cost, speed and updates. A one-time licence or owned software wins on long-term control and on not paying forever. The table below shows the main points.

It depends on the number of users, how long you keep the software and the extra costs around it. A subscription often looks cheaper in year one and can cost more by year four or five, especially when users grow.

We do not give rupee figures here, because every product and plan is different. Instead, list these cost factors for each option and add them up over five years.

Cost factors for a subscription

• Plan fee per user, per branch or per company, monthly or yearly.
• Add-ons such as SMS, WhatsApp messages, extra storage or e-invoice modules.
• Yearly price revisions by the vendor.
• Setup, data import and training, if the vendor charges for them.

Cost factors for a one-time licence

• The licence price, often per computer or per user.
• Yearly support or upgrade plan, if you want new versions.
• Computer or server hardware to run it, and its upkeep.
• Backup system, antivirus and power backup.

Cost factors for owned custom software

• Build cost, which depends on modules, screens, integrations and mobile apps.
• Cloud hosting and domain.
• Yearly maintenance and small changes. See our software maintenance and support page.
• No per-user fee in most cases, so adding staff costs very little.

Subscriptions include updates and usually basic support in the fee. One-time licences often need a separate yearly plan for updates and support. With owned software, updates happen when you ask for them.

But automatic updates also have a downside. A screen your staff knows well can change overnight. A feature you use can be moved to a higher plan. You cannot say "no" to an update.

With a one-time licence, the version you bought stays the same. This is stable, but it can fall behind. If the vendor stops support for an old version, you may have to buy the new one.

With owned custom software, you control the change list. You also need a partner who can make changes quickly. That is why a clear support agreement matters.

• Ask if old features can be moved to a higher plan.
• Ask for support hours, channels (phone, email, WhatsApp) and response times in writing.
• For licences, ask how long each version gets security fixes.
• For custom software, agree on a monthly or yearly maintenance scope.

Your business data should always belong to you, but where it lives and how easily you can take it out is different in each model. Check this before you sign, not when you want to leave.

With a subscription, your data sits on the vendor's servers. Most good vendors let you export it, but the format matters. A full export of customers, invoices, stock and history in Excel or CSV is useful. A PDF report is not.

With a one-time licence, data is on your own computer or server. You hold it, but it may be stored in a format that only that software can read. Backups are your job.

With owned custom software, the database is yours. You can also hold the source code, cloud accounts and domain in your own name. We explain this on our cloud solutions page.

Questions to ask about data

1. Can I export all my data at any time, without extra charges?
2. In which formats can I export: Excel, CSV, or a full database backup?
3. Where are the servers located, and who can access my data?
4. How often are backups taken, and can I get a copy?

In all three cases, ask for a proper GST tax invoice in your company name with your GSTIN, so your accountant can check if input tax credit is available. The difference is in how often the bills come and how they are booked.

A subscription gives you a bill every month or every year. That is many small bills to track. Some foreign vendors bill in dollars, which adds currency changes and may need extra checks by your CA.

How each of these is shown in your books, as an expense or as an asset, is a question for your CA. Ask them before you choose, because it can affect how the cost looks in your accounts.

Vendor lock-in means it becomes very hard or costly to move away from a product. Plan your exit on day one, so you can switch later if prices rise, service drops or your needs change.

If you are already stuck in an old system, moving out is possible. It needs careful planning. Our data migration services page shows the usual steps, and legacy software modernization covers replacing old desktop tools.

Owned software makes sense when your process is a key part of how you win business, when you have many users, or when you are paying for several subscriptions that do not talk to each other.

• Your staff keep side sheets because the software cannot handle your rules.
• You pay for three or more tools that do parts of one job.
• The per-user fee keeps rising as your team grows.
• You need special pricing, approvals or reports that no plan offers.
• You want dealers, field staff or customers to log in to your own portal.
• You plan to use the system for many years.

If several of these are true, a custom system such as an ERP for small business or a custom CRM can be a better long-term fit. It can still connect to the subscriptions you like, such as accounting or email tools, through API integration.

On the other hand, do not build what you can rent cheaply. Email, office tools and standard accounting are usually better on a subscription. Build only the part that is special to your business.

Start from your needs and a five-year view, not from the price of the first month. Then compare two or three options on the same points.

1. 1

   Write down your needs

   List the work the software must do, the number of users today and in three years, and the must-have features. Our software requirements checklist can help.

2. 2

   Shortlist options

   Pick one or two subscription products, a licence product if one exists, and get a rough plan for custom software if your needs are special.

3. 3

   Work out five-year cost

   Use the cost factors above. Include users growth, add-ons, hardware, support and staff time.

4. 4

   Check data and exit

   Confirm full data export, backup copies and contract terms for leaving.

5. 5

   Check GST and contracts

   Make sure bills will be proper GST invoices and ask your CA how to book the cost.

6. 6

   Run a trial

   Use a free trial or a demo with your real data and real staff. Watch where people get stuck.

7. 7

   Decide and review yearly

   Pick one, then review cost and fit once a year. Switch early if it stops working.

If you are not sure, a short talk with an independent adviser can help. Our technology consulting team can compare options with you. Powered by Shivah Web Tech, with 11+ years of work and 500+ projects, we build custom software and also help clients choose ready-made tools when they fit better. You get a clear quote after a free call.

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