# ERP Subscription vs Perpetual License Breakeven Calculator

> Source: https://netray.co/tools/erp-subscription-vs-perpetual-breakeven-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Find how many years it takes a perpetual ERP license, with annual maintenance and hosting, to beat a subscription on cumulative cost.

## Category

erp-migration

## Audience

- CIO
- CFO
- ERP project lead

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Perpetual license fee, one time

**Key:** lic

**Type:** number

**Default:** 600000

**Min:** 0

**Step:** 10000

**Unit:** one time

**Help:** License purchase for the same users and modules as the subscription option.

#### Annual maintenance and support

**Key:** maint

**Type:** number

**Default:** 20

**Min:** 0

**Max:** 40

**Step:** 0.5

**Unit:** % of license

**Help:** Charged each year on the license fee. Check whether it is on list or net price.

#### Annual hosting, DBA and infrastructure

**Key:** infra

**Type:** number

**Default:** 60000

**Min:** 0

**Step:** 5000

**Unit:** per year

**Help:** Servers or private cloud, database licenses, backup, patching labor and monitoring that a subscription would include.

#### Subscription fee

**Key:** sub_fee

**Type:** number

**Default:** 210000

**Min:** 0

**Step:** 5000

**Unit:** per year

**Help:** Average annual cost, including expected uplift if you want a conservative view.

#### Horizon

**Key:** horizon

**Type:** slider

**Default:** 8

**Min:** 1

**Max:** 15

**Step:** 1

**Unit:** years

**Outputs:**

#### Perpetual annual running cost

**Key:** perp_annual

**Expr:** lic * maint / 100 + infra

**Format:** currency

#### Annual advantage of perpetual after year 0

**Key:** annual_diff

**Expr:** sub_fee - perp_annual

**Format:** currency

**Description:** Positive means perpetual has lower yearly cost; negative means subscription is cheaper every year.

#### Breakeven point

**Key:** breakeven

**Expr:** if(gt(annual_diff, 0), lic / annual_diff, 0)

**Format:** years

**Primary:** true

**Description:** Years until cumulative perpetual cost falls below subscription. Zero means perpetual never breaks even.

#### Cumulative perpetual cost at horizon

**Key:** perp_total

**Expr:** lic + perp_annual * horizon

**Format:** currency

#### Cumulative subscription cost at horizon

**Key:** sub_total

**Expr:** sub_fee * horizon

**Format:** currency

#### Perpetual minus subscription at horizon

**Key:** diff

**Expr:** perp_total - sub_total

**Format:** currency

**Primary:** true

**Description:** Negative means perpetual is cheaper at the horizon.

**Chart:**

#### Cumulative cost, perpetual vs subscription

**Type:** line

**X:** horizon

**From:** 1

**To:** 15

**Steps:** 15

**Series:**

- perp_total
- sub_total

**Disclaimer:** Excludes implementation services, upgrade projects, discounting of future cash, subscription uplift and the cost of refreshing hardware. Use the NPV calculator for a time value view.

## Content

**Intro:** The perpetual versus subscription question comes up in nearly every ERP selection, and it is often argued by feel. The answer is a breakeven year. This calculator finds it from a few numbers and shows the cumulative cost lines crossing.

**Sections:**

#### How to use it

**Body:** Enter the perpetual license fee, the annual maintenance percentage, the yearly cost of hosting and database administration you would carry, and the subscription fee for the same scope. Pick the horizon you care about. The tool reports the breakeven year and the cumulative difference at the horizon. Use an average subscription fee that includes expected uplift for a fair comparison.

#### The formula

**Body:** Perpetual cumulative cost after n years is L + n x (L x m + I), where L is the license, m the maintenance rate and I the infrastructure cost. Subscription cumulative cost is n x S. Setting them equal gives n = L / (S - L x m - I), valid only when S exceeds the annual running cost of the perpetual option. If it does not, subscription is cheaper every year and there is no breakeven.

#### Reading the result

**Body:** With a 600,000 license, 20 percent maintenance, 60,000 of infrastructure and a 210,000 subscription, perpetual costs 180,000 a year to run, so the advantage is 30,000 a year and breakeven is 20 years. At eight years perpetual is still about 360,000 more expensive. A different input set, say 400,000 license and 150,000 subscription, crosses in a few years.

#### What the model leaves out

**Body:** The model ignores several things that can change the answer: the time value of money, hardware refresh cycles, upgrade projects, internal staff, security and disaster recovery, and the flexibility to scale users down. It also ignores that vendors increasingly stop investing in perpetual versions. Treat the breakeven as one input to the decision and complement it with the total cost and NPV calculators.

**Bullets:**

- Include upgrade and refresh costs for perpetual
- Include annual uplift on the subscription
- Compare the same user count and modules

**Cta:** If you want to test a cloud or on-prem scenario with your own staffing and infrastructure figures, our team can help. The calculator is free and complete without us.

**Faq:**

#### Why is the breakeven so long?

**Answer:** Because maintenance and hosting are an annual cost that eats most of the subscription difference. When those costs approach the subscription fee, the upfront license takes many years to recover.

#### Does maintenance apply to list or net price?

**Answer:** It depends on the contract. Many vendors charge on the list price even if you got a discount, which raises the running cost. Confirm the base in your paper before using the percentage here.

#### What if there is no breakeven?

**Answer:** A result of zero years means the perpetual annual cost is at or above the subscription fee, so perpetual never recovers its upfront cost. In that case the choice rests on other factors.

#### Should I discount the cash flows?

**Answer:** Yes, for a finance grade view. Upfront license spend is worth more than later subscription payments in net present value terms. This tool is a quick undiscounted comparison.

## Search terms

erp subscription vs perpetual license, perpetual license breakeven, erp saas vs on premise cost, erp license maintenance cost, cumulative cost saas vs perpetual, erp buy vs subscribe

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