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Majority of software firms will switch to subscription model by 2023

software tools
(Image credit: Image source: Shutterstock/niroworld)

By the time we reach 2023, more than half of companies will have moved to a subscription-based model for their software products, a new report from Revenera claims.

The US IT company recently polled 374 decision-makers to learn about their software monetization models and strategies and found that, while the subscription model is on course to conquer the world, a one-size-fits-all approach won’t suffice.

Today, more than half (51 percent) of businesses use either subscription (36 percent) or perpetual licensing (24 percent). In the next 18 months, subscription and usage-based models will record the strongest growth, the report says. 

In the past two years, the main reason companies changed their software monetization model was to create a recurring revenue stream. Those that currently plan to change their models are driven by the promise of entering new markets, the report further states. By creating a subscription-based model, companies are able to offer a try-before-you-buy feature, and further improve their automated enforcement programs. In some cases, they will be able to add new pricing meters, as well.

However, they will need to be extra careful when deciding the price of a subscription. Right now, less than a third (30 percent) of respondents see pricing and value as “totally aligned”. The respondents seem to value models that track usage and engagement most, as these are generally perceived as better aligned. 

Among organizations that are good at harvesting usage data, almost two-thirds (61 percent) feel the pricing is properly aligned with value.

Sead Fadilpašić

Sead is a freelance journalist with more than 15 years of experience in writing various types of content, from blogs, whitepapers, and reviews to ebooks, and many more, across sites including Al Jazeera Balkans, TechRadar Pro, IT Pro Portal, and CryptoNews.