Licensing Curiosity

Discussion in 'Feedback/Feature Requests' started by MikeDVB, Jul 23, 2009.

  1. MikeDVB

    MikeDVB New Member

    I hope this is in the right place and I'm not going to make any body mad but I was doing the math on the licensing structure (we'll go with the 1-CPU Enterprise license as this example).

    I will start by saying that I realize it is in LST's best interests for you to lease your license from them as this gives them the most profit/income etc... where as an Owned license is generally seen as a larger up-front investment to reduce long-term costs.

    I am also aware that I am comparing monthly lease to a yearly ownership as I am wanting to compare the extremes (smallest up-front investment vs the largest).

    The problem that I see is that the Owned licensing doesn't really reduce long-term costs by enough - the argument could be seen either way that either the leasing prices need increased (sorry, have to share both view points) or that the owned licensing needs to be reduced either the initial purchase or the support renewal costs.

    The price of a 1-CPU Enterprise Leased license is $32/month or $384 paid monthly for a year.

    The price of a 1-CPU Enterprise Owned license is $41.58/month or $499 paid for the first year.

    At these prices you could have a Leased license for 15.6 Months for the price of an Owned license for one year - which makes sense if you think about it.

    At the end of the first year if you want to continue support and upgrades for your owned license you then have to pay $99 for a support renewal. You do not have to pay any such renewal fee for Leased license.

    The price of a 1-CPU Enterprise Owned license for two years is $598 which would get you 18.69 months of Leased licensing - so after you have your owned license for over 18 and a half months you've broken even on your investment of an owned license. While a year and a half is not a tremendous amount of time - it is asking for a huge investment of your money up front. To make the Owned license an option you have to be willing to invest over a year and a half into LiteSpeed before you even break even.

    After 18.69 months of being on an Owned license and having paid the $99 support fee after a year you will be at approximately $8.25/month for each owned license which isn't terribly bad (a savings over leased of $23.75/month), but keep in mind it took over a year and a half to get to this point which leads me to my next concern.

    The next major concern in my eyes with the current structure is that for the Owned license to "pay for itself" which is one of the primary reasons I look at owned licenses over leased - it will take an additional 21 months before going Owned has "paid for itself" if you don't include the support Renewals (the first renewal, and the second renewal because by this point you're already at 39 months before going Owned has paid for itself to where you can actually start to see long-term cost savings by going Owned.

    Is it really intentional on the part of LiteSpeedTech to make an Owned license holder have to wait 39 months before they can start to see a return on their investment of going Owned?

    What are your thoughts?
  2. mistwang

    mistwang LiteSpeed Staff

    I do not know how you came up with that conclusion, let's put it simple.
    Total cost of 1-CPU for two years:
    Owned license: $499+$99 = $598
    Yearly license: $349 + $349 = $698
    Monthly license: $32 * 24 = $768

    Conclusion:
    Owned license save your money if you use it for more than two years.
  3. MikeDVB

    MikeDVB New Member

    Ok.

    Sure...

    So after 18.6 months of going Leased at $32/month you have paid the same amount as an owned license for two years - which I have admitted is not too bad.

    The problem that I see is that after you "break even" it takes an additional 21 months before the Owned license has paid for itself - and that is just for the original $499 not including any support extensions.

    Owned licenses actually save you money if you use it for more than 18.6 months at the monthly rates and even sooner at the yearly rates. I personally look at an owned license from the perspective of how quickly can this investment pay for itself or "pay me back" which means to where I have saved enough to cover the initial cost of the license - this is where I am seeing the issue.

    Owned licenses are an investment into LiteSpeed WS/Tech and I always look at investments based upon how well they will return and how long until they return. A 39 month wait until the investment begins to return is a tad too long in my opinion but others may see it differently.

    The easiest way to make it pay for itself faster would be to either reduce the initial cost of the license, to reduce the renewal, or to increase the monthly subscriptions. Of course this is just how I look at things and I am more looking for the input of other users of LiteSpeed than the staff at LiteSpeed while making my perspective and opinions known.

    Don't take me as "attacking" your licensing, but just analyzing it and requesting the input of others. I could go much more in depth and compare all licenses and payment terms and such which I may do - but not right now :)
    Last edited: Jul 23, 2009
  4. anewday

    anewday Moderator

    Shouldn't the latter take longer? 20.6 months at the yearly rates.

    Personally, I don't think about how long it takes to cover the initial cost of the owned license.
    Last edited: Jul 23, 2009
  5. MikeDVB

    MikeDVB New Member

    Yes, sorry :) My logic was a bit backwards on that point.

    Then you don't look at the owned license as an investment. As a business owner and entrepreneur I see any money spent on licensing as an investment - especially if I am purchasing an owned copy of said piece of software.

    As such I look at the rate of return and how long it takes to see said return. The return rate of Owned over Leased would be $23.75/month and it would take 39 months of ownership for the investment to mature (to begin to return) if you don't include the support renewals into the initial cost.

    Of course you may simply see being able to use the software as a return on your investment as well - but the fact is that your ability to use the software is the same no matter whether you are leasing or owning - so it's a moot point to discuss as far as the topic of this thread imho.
    Last edited: Jul 23, 2009
  6. anewday

    anewday Moderator

    There's no way you can recover all the costs. :p
    Last edited: Jul 24, 2009
  7. MikeDVB

    MikeDVB New Member

    No offense but I don't think you quite get what I am saying - I don't ever expect LiteSpeed Technologies to pay me to use their software - I don't ever expect to see it free.

    I am not including the support renewals into the cost because that's not actually licensing but more of an add-on to an owned license.

    You don't *have* to pay the $99/year to use the software after you buy an owned license - you just have to pay it if you want support from LiteSpeed Technologies or the ability to upgrade the software. I was hoping for a little more of an open-ended discussion on the topic but it doesn't look like that's going to happen unless somebody new chimes in :)

    At any rate I do appreciate you all taking the time to read my thoughts.
  8. anewday

    anewday Moderator

    Don't get me wrong, I didn't mean that you want to use the software for free. I also know you were referring to the $499 initial cost to own the license minus the yearly license costs.

    Anyway, I don't have much more to say on this so let's hope someone else chimes in. :)
  9. robfrew

    robfrew New Member

    We've been using the leased license from day one and plan on continuing to use it. The amount we pay per month is just a small part of our overhead compared to most of our other costs. Sure, we could save that much a month in the long term if we paid up front, but we were able to put that money elsewhere which increased our incoming revenue (such as chat applications, etc...).

    The way we look at it is we will continue using LSWS and any updates they provide for a long time in the forseeable future so paying a continuous fee is ok with us. In the big picture, it's not that much of a savings to us but at least we know we will have continuous support and updates as needed.
  10. MikeDVB

    MikeDVB New Member

    Yeah, I think the goal is to push the leased license.
  11. raphidae

    raphidae New Member

    You would also have to take into account the inflation of the dollar (quite large recently) over the two year period you need to the break-even point, as well as the interrest you could have gotten on the money if you would have put it into a savings account instead of invested it into an owned license.

    That should at least add a month if not more.

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