ASP vs. License

I have to say that I’ve always been a fan of subscription business models (the ASP approach) and dislike lumpy revenue streams (the license approach). But my favor for the ASP approach is tempered somewhat by the difficulty that all of us in the venture business have had making the ASP model work. And there’s a lot of money that’s been made over the year’s with the license approach. The ASP is not easy to execute and takes more capital to get to breakeven. There are trade-offs and the best may be a hybrid model where you give the customer whichever flavor they want.

Ross Mayfield (yes, i am linking to Ross two posts in a row) has some good stuff from the Enterprise Software Summit on this issue. The churn issue in particular is one that I haven’t heard enough about.