Pay-as-you-use versus Lease/Subscription
Leading technology companies are always driving to be more flexible – in terms of mobility, agility, platform integrations and deployment. Companies are also offering flexible payment terms including leases and subscriptions. However, some are positioning these consistent payments as consumption-based pricing and that is not the case.
Subscription and leases are consistent prices. If you use less storage, less processing power, or don’t deploy all your software licenses – your price stays exactly the same. Your bill is not adjusted down when using less. However, if you need more processing power, more storage, more software licenses – your bill will most certainly go up. This isn’t paying for what you use. Organizations are trying to position leases and subscriptions and other creative payment plans as paying for what you use. This is especially true of vendors still pedaling legacy infrastructure as they hope a new payment structure will make it seem innovative, new and flexible.
True “Pay-as-you-use” pricing increases and decreases with what resources IT is consuming – if you have more VMs running, the bill goes up. If you have fewer VMs running, the bill goes down. Additionally, if additional resources are needed, they are immediately available to meet changing business requirements and accelerated timelines.
Be sure to ask the vendor if the bill goes down if less storage is used, fewer licenses, less processing power or less of anything. If the answer is not yes, then you do not have a consumption-based pricing model.
Don’t confuse leasing and subscriptions with pay-as-you-use.