Software suppliers and software developers UK
Is software leasing a better option than a SaaS model?
Software suppliers – offering a leasing option and a SaaS option
WestWon work with a software supplier who runs a SaaS model. Most of the smaller clients they bring on board they will sell them a monthly subscription. However, they do pick and choose, especially when it comes to the larger deals. They noted, “Every now and then it is great to get a big cash injection into the company, leasing our software does achieve this.”
How does a software company work out what money they will get upfont?
All we need to know is how much will your client be paying per month and over what period of time.
Say you have quoted £10.00 per week and there are five users, the subscription period being for three years.
5 users x £10 per week = £50.00 x 52 weeks x 3 years = £7,800.00
Your client will sign a lease where their total repayments over three years will be £7,800.00.
This works back to be £6,565.00 in today’s value.
What is more profitable in the long run, SaaS or software leasing?
It is a difficult question to answer because it will depend on the size of the deals and type of business you sell into. Selling into the construction space where historically there has been a higher level of default compared to other markets might make the leasing option better. For other generic software solutions such as CRM systems, where all the competition are just selling in a subscription basis, would suggest that SaaS is a better option.
Can you include installation, training and maintenance in a software lease?
Yes, we often bundle this up into a software leasing.
Upgrading a customer from SaaS to software leasing
We have one software author who has many hundreds of clients in a niche sector. He has historically been signing up companies using a subscription-based model. They decided to change their pricing back to leasing and upfront invoicing, mainly because they had to fund a revamp of their software. Their alternative choice was to obtain third party investment in the form of new shareholders or take out a bank loan.
The solution for them was much easier. As and when every client got to the end of their subscription period, we signed these customers up on a three year lease. The client was happy – their monthly fee was exactly the same and they like the fact there was no price increases for the next three years. The supplier was happy also, they were able to invoice three years subscriptions up front, hence getting the money in they needed to fund product development.
So if you are a software author, manufacture or supplier, you can still make the change back from SaaS to leasing in the future if needed.
Types of software leasing we have done in the past
The list is long:
• Leasing Microsoft licences
• Leasing for SAP software
• We have done a lot of leasing for construction software
• Leasing of CAD software such as AutoCAD has been a very big business, especially into architects
• Leasing CRM systems
• Leasing software into the professions – accountancy software leasing, leasing software to solicitors, doctors, dentists and vets
• There is then many specialist areas we have worked in. Presently we are working with a major software supplier into garden centres and one that has developed a club membership system. We have financed software systems for library’s, worked with double glazing companies, ERP solutions.
If you are a supplier of software in the UK and are looking for a leasing partner, please call Steve Holdstock on 0116 243 8822. Alternatively, email firstname.lastname@example.org.