Subscribe or own? Do you know how much money your software is burning?

Rising subscription prices are turning software into a growing financial risk. This article shows how to regain budget control by measuring real TCO, segmenting users, and choosing the right mix of subscription, perpetual, and hybrid licensing – plus the often-overlooked potential of secondary software. Reduce lock-in, cut waste, and keep flexibility without losing key cloud tools.

If, a few years ago, your company switched to Microsoft 365 or other cloud-based subscription services and you believed that this had solved the “core software” question once and for all, we have some unpleasant news. In 2026, the dilemma of whether to use subscriptions or rely on software ownership is returning to companies with renewed force. But while years ago this was primarily a strategic IT decision, today it is, first and foremost, a question for CFOs – because they need to prepare for rising prices.

It would be hard to find a company, a public institution, or any other organization that does not use some kind of office software suite – typically represented by tools such as Word, Excel, or PowerPoint. And when, roughly ten to fifteen years ago, cloud services began their mass adoption – along with products like Microsoft 365 or Google Workspace – users started to discover the appeal of subscription services. Higher one – time investments for purchasing software and installing it on computers were replaced by lower recurring payments for “renting” software hosted in the virtual world of the internet. Users also gained additional benefits, for example the ability to work with shared documents.

Alongside this, however, the way software is used has quietly changed. With the original one – time purchase, the customer became the owner. Under the new model, that owner has turned into a recurring subscriber – along with a dependency on the supplier’s future decisions. And if that supplier decides to change the service (for example, expand or limit its functionality) or raise prices, the customer is, to a large extent, at their mercy.

Price uncertainty

In the Czech Republic, hundreds of thousands of companies rely on Microsoft products in their day-to-day operations – and that also means that changes in this software manufacturer’s (i.e., the vendor’s) pricing policy and licensing terms have a direct impact on millions of users and on hundreds of thousands of corporate budgets.

The reason the question of which strategy to choose when implementing office software (and other products as well) is returning to companies now is precisely the rise in prices. Microsoft, as a key player, began phasing out volume discounts (so – called tier pricing – an incremental system where larger customers receive better prices based on purchase volume) in its licensing programs as early as the end of last year. While it used to be true that the more licenses a company bought, the lower the per-unit price, this advantage is now disappearing. In practice, this means an increase in costs of 6 to 12 percent over the next few years – on top of other price hikes. Companies that once expected discounts when renewing (extending) agreements are finding that their negotiating position is weakening and are calculating how much extra they will have to pay.

But the price increases do not end there. From July 2026, the prices of Microsoft 365 licenses (bundles that include online office applications and cloud services) will rise by an average of more than 16 percent. The official justification is that higher prices must reflect the integration of artificial intelligence tools. Even if many companies do not use them for various reasons, they still have to pay for them. As a result, budget certainty is disappearing, because no one can say with confidence what a license will cost in three or five years.

For a Chief Financial Officer (CFO), an internal IT strategy is also a fundamental question of financing approach. Moving from software ownership toward subscriptions means shifting from CAPEX (capital expenditures for one-time acquisition, which are then depreciated) to OPEX (operating expenses in the form of recurring monthly or annual payments) with an uncertain price trajectory. Along with this, the risk grows that IT costs will increase faster than revenues or the approved corporate budget. Software licensing therefore is not merely an operational purchase – it directly affects financial stability, security, and long – term planning.

The math of savings: Where the money goes

The key question for every CFO is: what are the true costs of ownership – i.e., TCO (Total Cost of Ownership, the sum of all costs over the entire period of use, including licenses, administration, training, and support) – over a three – to five-year horizon? Here, you need to consider not only the price of the license itself, but also price increases, actual feature utilization, the costs of a potential migration to another solution, and the risks associated with contract renewal.

Let’s look at a specific model scenario for a mid-sized organization with 500 users over a three-year horizon. A full Office 365 E3 subscription, at roughly €300 per user per year, comes to a total of €450,000. However, if you switch to a hybrid model (explained below) combining Office LTSC Professional Plus (a perpetual license for office applications) with Office 365 E1 (basic cloud services for email and file sharing), that total drops by almost 38 percent – saving you more than €170,000. And you do so without losing key cloud tools such as Exchange Online (company email), OneDrive (cloud storage), or Teams (a communication platform).

Why is the difference so significant? Because companies are paying for AI tools and other advanced features embedded in the price – even though only a small fraction of the team actually uses them. Meanwhile, most employees can do their day – to-day work with tools like Word, Excel, PowerPoint, and email – often in their simplest form.

And the same logic applies to server products (software running on company servers) such as Windows Server or SQL Server (database software for storing and managing data): in stable environments with clear requirements, a perpetual license is significantly cheaper than a recurring annual subscription.

Secondary software as another path to savings

One alternative that many financial managers overlook – and often don’t even know exists – is the option of secondary (second-hand) software: the legal purchase of used perpetual licenses from other companies that no longer need them. This is software that was properly purchased by the first organization and is now being resold, much like a used car. If several conditions are met, this approach is fully compliant with European law.

It is absolutely worth working with a verified partner who guarantees full legal certainty. The key requirement is that, together with the software, you also receive documentation confirming that the legal conditions for the secondary market are fulfilled. As a best practice, this includes information about the license history, proof of origin, and a declaration from the first owner confirming the software was uninstalled and that rights have been transferred. A product key alone – without proper documentation – won’t protect you during an audit and can lead to legal and financial issues. And in fact, you can easily come across offers that sell “product keys only.”

While the secondary software market is mature in Western Europe, it is now gaining strong momentum in Central and Eastern Europe, currently growing at a rate of over 20 percent per year.

You can also look at secondary software from the opposite angle. A frequently overlooked strategy is monetizing unused licenses. If a company is moving to cloud services or reducing headcount, it can legally sell surplus perpetual licenses and recover part of the investment. More commonly, however, the reality is that no one takes responsibility for what happens to software that is no longer needed.

Watch out for strategic risk

Beyond finances, software management is also about negotiating power and strategic independence. A perpetual license, unlike a subscription, gives companies the freedom to modernize at their own pace. If your IT runs on stable infrastructure, but the business also depends on older applications (which may not even be replaceable because they control a production line or are embedded in critical processes) or operates under budget constraints, you don’t have to rush into a new version just because the vendor has changed the licensing model. This is particularly important for public institutions, healthcare, or manufacturing companies with long planning horizons.

Opposing this freedom is so – called vendor lock-in. This is the situation where, as subscription services expand, reliance on a single supplier grows, and the use of specific services deepens, it becomes increasingly difficult – technically and financially – to leave that solution behind. The more data you store in specific formats, the more systems communicate in proprietary ways (closed interfaces available only to a given vendor), and the more employees are trained on particular tools, the more expensive it becomes to change strategy later. And software vendors are well aware of this weakness – and of your dependence on their services.

How to decide?

There is no universal answer to whether ownership or subscription services are the better choice. It always depends on your specific situation. If you want to choose the right solution, start with an inventory. Don’t just list what you’re paying for – most importantly, find out which features your employees actually use. You may be surprised to discover that you are paying for tools that the vast majority of people never open and objectively do not need for their work.

Segment your users. This is where you will most clearly identify advanced users with above-standard needs (typically company leadership, project teams, sales departments) who genuinely require the most advanced features – and separate them from everyone else with lower requirements (typically administration, support functions, production). Segment also by workload and working style. For example, for typical office work (documents, spreadsheets, presentations), a perpetual license is often the ideal choice, while activities requiring collaboration and intensive communication tend to favor cloud solutions.

Next, build TCO scenarios – i.e., calculate all costs over the entire period of software use. Don’t forget to include not only the purchase price or license fees, but also administration costs, all training, and ongoing support. Model different variants over 3 to 5 years, and make sure to reflect realistic price growth based on current trends (at least 10 – 15% per year for cloud services).

What leadership should ask for

Software licenses are not items a company can purchase and then tick off as “done” once and for all. They are a dynamic part of the corporate budget that requires systematic oversight and active strategic decision – making. Board members and senior executives who want real control over this area should demand clear answers from their CIOs and CFOs to several fundamental questions raised here: Does the company know its true software costs? Is it using effectively what it is paying for? And is it becoming a hostage to those who supply and control its software requirements?

These questions should be raised regularly at the leadership level – at least once a year, and ideally whenever major changes occur. For example, when a software vendor announces a significant price increase, when contractual terms change, or when the company undergoes organizational restructuring. Organizations that approach licensing proactively rather than reactively not only achieve savings on the order of tens of percent of their IT budget, but also gain the ability to predict costs, maintain negotiating power with vendors, and preserve the freedom to make decisions based on their own priorities – rather than being driven by contract renewal calendars.

Three paths to software

Subscription (subscription model)

Works much like Netflix or Spotify: the customer pays regularly (monthly or annually) for the right to use the online version of the software and the associated cloud services. Once you stop paying, access ends. A typical example is Microsoft 365 – a comprehensive suite that includes office applications, cloud services for email and communication, security tools, and device management. Within this model there are different variants: Office 365 E3 (or the expanded Microsoft 365 E3) is a more expensive premium bundle for larger companies, while Business Standard is a package for small and mid-sized businesses with simpler administration and a lower price.

Ownership (perpetual license)

Means a one-time purchase with unlimited duration of use. You can use the software for as long as it suits you, without further payments. Security updates (patches against hackers and malware) are typically provided for a defined support period (for example, 5 to 10 years). The programs are usually installed directly on a specific computer and work offline as well – without an internet connection.

The hybrid model

Combines the best of both worlds. It provides a perpetual license for core products (e.g., Word, Excel, PowerPoint) and a basic cloud subscription (for example, only services such as email, OneDrive storage, or communication through Teams). This approach is a compromise that helps control costs while preserving flexibility where online collaboration (document sharing and real-time communication) brings real value.

Sustainability as a side effect

While metrics such as how much water and energy a company has saved, how much recycled material it has used in production, and by what percentage it has reduced its carbon footprint have already become an integral part of annual reports and the basis of mandatory ESG reporting, thinking about software – and the entire IT domain – from an environmental perspective has so far remained largely outside the spotlight. And yet the ability and willingness to keep previously purchased software running through perpetual licenses, or even to acquire it as secondary (second-hand) software, supports the circular economy, reduces electronic waste, and limits the environmental impact of IT operations. Constantly upgrading software that ultimately serves the same needs also creates continuous pressure for newer, more powerful hardware.

Responsible use of only the software that is truly necessary can therefore be seen not only as a source of financial savings, but also as a meaningful contribution to sustainability. And sustainability strategies are increasingly in the focus of investors, customers, and regulators.