Buying software requires a single payment, and the software is yours until it becomes obsolete. Software leasing lets you have use of the software while you’re leasing it, and you’ll get continuous updates as new versions of the software are released. There are plenty of pros and cons to each of these software solutions, and we wish to share them with you now.
Costs Less Upfront
Leasing your software requires frequent small payments. This is often less stressful than paying a large amount for your software in one go.
When leasing, you gain access to new versions of software as they’re released, and you often won’t pay extra for them. This ensures your software will never become obsolete.
Maintenance and technical support are often included in your lease agreement, and this is excellent, as using new software has a learning curve, and technology can be difficult to master.
You can fully deduct most leases from your taxes during the first year of the lease.
Cons of Leasing
When you sign a lease, you’re automatically bound by the terms and conditions in your contract. You have to keep paying for the software until the contract ends. This stands even if you stopped using the software before the end of the contract.
Leasing can sometimes cost more in the long run, and that can be a dealbreaker. However, there are exceptions to this. You need to factor in the cost of future upgrades, too. Let’s pretend your software costs $500 upfront to buy or $20 per month to lease. A new version of the software may be released a year after your initial purchase, and this could cost another $500. However, the cost of your leased software won’t change, and you’ll get the upgrades anyway.
With leasing, you’ll have paid $480 for your first two years of use. If you purchased the software and its new version, then you’ll have paid $1,000 to stay up-to-date.
Pros of Buying
Lower Cost Overall
Leasing requires ongoing payments that sometimes surpass the initial cost of buying the software. Buying software can sometimes work out cheaper in the long run.
All in One Payment
Some people dislike the stress of monthly or yearly payments. Paying outright will eliminate that.
You have full ownership of the software when you purchase it. You can use it indefinitely without the need to renew a contract.
You may be able to get a deduction when you buy outright if your business is having a good year.
Cons of Buying
Upfront costs are majorly stressful to some people, and some businesses don’t have enough cash set aside for business expenses to do this.
You have to buy every new version of the software that comes out. Your software will eventually go obsolete without purchasing an upgrade.
Tech Support Costs
If you own software, then you often have to pay for the tech support involved. This is an additional cost you need to factor into your budget.
Software Leasing vs Buying: Which Is Better?
Based on the pros and cons above, leasing software is the safest, smartest option for a lot of software. You need your software to stay up-to-date, have access to constant tech support, and avoid the expense of purchasing new versions of software all the time. So, lease yours with Noreast Capital Corp.
Do you need lease financing for software? Contact Noreast Capital today.