The truth about long term rental vs old fashioned perpetual

[johnevans]

At first I thought moving over to rental licencing seemed like a good idea. That was until I did some rough calcs over the long term. I did a comparison of costs for rental vs traditional standalone perpetual licences, plus annual subscription, and calculated the TCO over 10 years of licence usage.

I did not allow for price increases or discounts or special deals to soften the blow. Neither did I factor in VAT.

Now, it is important to realise here that most organisations with either standalone or network pepetual licences are probably paying annual subscription as well for the obvious benefits that subscription brings. Free upgrades (well not exactly free because we have to pay the subscription fee) but Autodesk does the hard sell and makes us think upgrades are free. But I'll let that pass.

The point here is, if I am subscribing to a software product for the long term then rental looks like being a cash cow for Autodesk. Here are the rough figures for a one licence of BDSP. I haven't uploaded the individual costs per product just the totals below.

For Years 1-4 inclusive rental is cheaper, but from Year 5 onwards rental is more expensive and it gradually gets worse as time passes. So that at the end of 10 years on rental I would have paid over £7k extra than I would have for standalone capital cost plus annual subscription. Obviously I don't like this!

Example of cost comparison over 10 years on a single BDSP licence (no discounting, no price increases during that time)
Year	Rental	Standalone plus Subscription	Differential	Cheapest option
1	£2,200.00	£6,785.00	£4,585.00	Rental cheaper
2	£4,400.00	£7,670.00	£3,270.00	Rental cheaper
3	£6,600.00	£8,555.00	£1,955.00	Rental cheaper
4	£8,800.00	£9,440.00	£640.00	Rental cheaper
5	£11,000.00	£10,325.00	-£675.00	Standalone plus Subscription cheaper
6	£13,200.00	£11,210.00	-£1,990.00	Standalone plus Subscription cheaper
7	£15,400.00	£12,095.00	-£3,305.00	Standalone plus Subscription cheaper
8	£17,600.00	£12,980.00	-£4,620.00	Standalone plus Subscription cheaper
9	£19,800.00	£13,865.00	-£5,935.00	Standalone plus Subscription cheaper
10	£22,000.00	£14,750.00	-£7,250.00	Standalone plus Subscription cheaper
Note: Short term rental is cheaper (over first 4 years, long term rental is considerably more expensive and gets more expensive year on year.

I'd much perfer the following:

Year	Rental Year 1 Plus Subs as Rental years 2 - 10		Rental Years 1 to 3 Plus Subs as Rental years 4 - 10
1	£2,200.00	At £2,200	£2,200.00	At £2,200
2	£3,085.00	At £885	£4,400.00	At £2,200
3	£3,970.00	At £885	£6,600.00	At £2,200
4	£4,855.00	At £885	£7,485.00	At £885
5	£5,740.00	At £885	£8,370.00	At £885
6	£6,625.00	At £885	£9,255.00	At £885
7	£8,395.00	At £885	£10,140.00	At £885
8	£9,280.00	At £885	£11,025.00	At £885
9	£10,165.00	At £885	£11,910.00	At £885

Here I'd be paying off the capital cost over three years and then pay annual subscription thereafter. This is a much better rental model for me and would in fact save me money over the ten year example (right hand columns above).

I have asked our Autodesk vendor supplier about this but obviously they are a bit candid.

I believe Autodesk is going to make more money thier way over time. If you multiply this by the number of licences most comapnies have then the long-term additional cost expenditure of rental is just not sustainable for those of us who use software over the long term.

It would be no use Autodesk saying something like the cost spread would be applied by project, as most companies will be running multiple projects in parrallel so I will have to pay the extra amounts anyway long term. I'm not talking about short term, which is where rental is obviously more benificial in years 1 - 4 inclusive. However, some projects, particularly Healthcare, can last for 7 years or more, wherein rental starts to become less beneficial.

I fear such a pricing model will drive many SMEs out of business as they simply won't be able to absorb the ever increasing TCO.

I am open to be corrected. But I have checked my figures with our accountants and they agree I have my sums correct. Finiancially this is very worrying.

It is for this reason I will be maintaining our existing licences as standalone plus subscription for as long as I can. Unfortunately, though, from July 2016 I will have no option but to purchase BDSP on rental. Which means I may have to look for an alternative software solution that is more cost effective.

This is a shame as Revit is a very good application (apart from a few mission critical items regarding detailing that I have posted wish list items on AUGI about). But I digress...

[pendean]

>>>...I believe Autodesk is going to make more money thier way over time. ...<<<
That's what for-profit companies aim to do for their shareholders.

Sadly, the 'house' always wins, no way around it legally. And it seems other software vendors are headed towards this trend too 😞

[dgorsman]

So in short, those who upgrade every 3-4 years will benefit from the rental-model?

[spacefrog_]

---

@dgorsman wrote:

So in short, those who upgrade every 3-4 years will benefit from the rental-model?

---

---

Only if you neglect the fact, that after paying rental 3-4 yrs. you got NOTHING in your hands.

People who updated all 3-4 yrs at least had the right to use the latest version forever

And people on maintainance subscription were NOT the persons who updated only 3-4 yrs, they were those good customers who wanted to stay current. What would be the point of the maintainance subscription otherwise ?

And Autodesk cuts off exactly this option and those people ( though at least for the time being you can stay on an existing maintainance subscription contract). Autodesk will start to suffer soon enough from customer drain because of this. Lets see wether they can really compensate that with the "new and fresh meat" they expect paying their rental rates...

[spacefrog_]

---

@pendean wrote:
>>>...I believe Autodesk is going to make more money thier way over time. ...<<<
That's what for-profit companies aim to do for their shareholders.

Sadly, the 'house' always wins, no way around it legally. And it seems other software vendors are headed towards this trend too 😞

---

At least in my field ( M&E ) this is not really true. Sure - Adobe has this model... but most other companies like Side Effects ( Houdini ), Maxon ( Cinema 4D) or The Foundry/Luxology at least provide rent-to-own option, if not a perpetual license right from the beginning....

[evansdje.2012]

Me again, flying by the seat of my pants - been doing that for over 30 years in this industry, I should have had a VC or two by now! But gongs don’t pay the bills I suppose. Still the friction burns tend to heal between flights, because I’m a fighter ace!

Seriously though, I'm not against the fundamental idea of rental. In fact I really like the idea of being able to spread the software capital cost and the annual subscription cost over a long period in order to reduce the initial set up costs of purchasing what is exceedingly expensive software, especially when that software does not have much in the way of significant improvements between versions despite the capital price hikes. But for now I’ll keep away from finance plans whether via Autodesk or a third party finance company.

The original software is often wonderful until I get to know it well and have got through the avalanche of the marketing hype. Then I start moaning about what it can't do but should do OOTB, (especially when I’ve had a beating from my staff as they struggle to hit targets) let alone new things I hadn’t thought about, which latter is something Autodesk is particularly good at inventing, but particularly poor at the former when it comes to fixing things. Detailing in Revit, oh, woe is me, coming in for another crash landing after being shot down by user expectation!

For me though, I'm happy to go rental and even upgrade my standalone asset portfolio to rental, but only on the condition that the rental pricing model is ‘fair’ and it’s not just being used to rip off and piss off Autodesk's customer base. After I’m only as loyal to a software developer for as long as they provide me with a cost effective solution that is better than its competitors.

I’m old enough to have seen many software come and go, some of which was so far ahead of its time to make the likes of AutoCAD and Revit look like a dumb **** juveniles. But where are they now, dead and gone. So Autodesk is doing something right, great marketing teams in Autodesk BTW, respect man! They could sell coals to Newcastle (a well-known saying in the UK) about selling something for a profit back to the person who made it in the first place!

Aside from that, I used to be a dyed in the wool Bentley customer. Not any more, well not that is, provided Autodesk make rental pricing fair for long term customers and don’t start alienating existing customers through smash and grab price increases and extortionate rentals. I don’t give a **** about Autodesk’s shareholder’s profits and their off-shore accounts.

We still use Microstation on legacy projects and have tried the AECOsim version – no comment. We also use Nemetschek VectorWorks the latest versions of which could give Revit a good run for its money. Then I could always go for ArchiCAD, it’s been doing BIM since it first came out 30 odd years ago and there’s others, so nothing’s new.

As a highly experienced BIM Manager, I can’t help but think, as I’m trying to squeeze budgets, that we are, after all, still just emerging from one of the worst recessions in living memory, with the stock markets getting jittery over China’s apparent downturn even though they still have a faster growing economy than most of us, and we all have to watch the pennies. It doesn’t help our bottom line when we are faced with software vendors’ price hikes and unfair rental charges hitting our accounts. After all, as an SME, our core business is providing our clients great architecture, not a charity, funding software developers’ profits or their greedy shareholders vested interests. Sometimes people in IT and related big business forget that and that they started small a long, long time ago.

So to cut through all this verbiage. All I want is a fair rental price that works for the long term as well as the short term. Is that too much to ask? I think not… I might even purchase more licences or upgrade to BDSU from BDSP just for Navisworks Manage alone!

I’d also like to ‘pick-and-mix’ software portfolios and build my own suites that are more in tune with our business operations than the suites Autodesk ‘think’ we need. Wouldn’t it be great if I could go online through our subscription portal and add users to the portal then select a range of software applications (by check box) tailored to my individual user needs and build the rental cost per user that is charged to the company via a single monthly, quarterly or annual invoice? Now where have I seen that before – oh yes, Adobe, sort of…

[pendean]

I'd like the pick-and-mix suite bundling option too, very useful.

[AllenJessup]

---

@pendean wrote:

Sadly, the 'house' always wins,

---

Is that why they hold AU in Las Vegas?

[jaydemi]

why can't you pick what you want, we do

[johnevans]

Hello, me again, with another rant on this topic...

I am a great fan of the new AEC Collections and rental licencing. These will make managing portfolios easier and less time consuming, whilst providing access to the full range of software solutions available. This is wonderful and very cost effective!!

However, I have been informed that Autodesk will be increasing prices by another 9.6% in September 2016, ostensibly to align UK/EUR pricing models. Presumably the alignment has opted for the higher values in the differential?

After a 10% hike earlier in the year, a 9.6% hike in September is a diabolical liberty and highlights the negative impact of the monopolistic rental policy driving Autodesk, now and in the future. Now you have created a captive rental market (in itself a great idea - rental that is, not the captive market) you are now in the process of abusing and alienating your customer base by successive price rises we have no option but to accept.

This is not acceptable, especially for SME businesses struggling to compete in a BIM market.

How many more price hikes do we have to accept before we are driven out of business due to excessive software overheads!!!

Please sort yourselves out and stop hitting your customer base with 'out of the blue' additional price hiking overheads. It's not even as though you provide 10% worth of added value to your products each release, which might go some way to assuaging the additional costs we have to contend with.

Also, why is there such a high and disproportionate differential between standalone and network pool licencing of your products.

I was about to purchase a number of new AEC Collection licences on rental but my budgets will be heavily impacted by these price hikes, reducing the number of licences I will now purchase which will impact on our business' ability to deliver the increasing number of projects we are signed up to deliver. I thought (naively obviously) that Autodesk wanted to help its customer base succeed, not drive SMEs into the ground! But it's your loss as much as ours as I won't be purchasing as many licences as I had originally budgeted for. But I suppose you are too big to fail, eh, and don't give a hoot about SMEs anyway.

PS. Why is there no email address or web form so we customers can make complaints about the cost of your software? 

[pendean]

>>>PS. Why is there no email address or web form so we customers can make complaints about the cost of your software? ...<<<
Go through your reseller or hop on Twitter or Autodesk facebook page and leave comments.

FWIW There is no "your" around here: we are all customers just like you bud, no one here works for Autodesk.