We juggle with the word ‘subscription’ a lot, but do we fully understand what it stands for and how it differentiates from other forms of software purchase? In general terms, subscriptions are a way of paying for the right to use an asset whether it's Software, services, or a physical device such as a laptop. This is as opposed to what is usually described as perpetual or one-time purchases, where the payment is typically made fully upfront. Subscriptions, in their turn, are based on terms and billing cycles.

Additionally with subscriptions, you pay only for what you use, and as long as you use it. On the contrary, if you own an instance of a software asset that you no longer need, you have to write off its residual value of it. Subscriptions are tied to price or rate plans that define how much you pay based on different parameters, for instance, billing cycles, number of users, volume of usage, or commitment length.