Software leasing and the mobile payment model

You can do far more with your annual budget than you think – if you know where to look.

By Tristan Watkins, CEO, BNP Paribas Leasing Solutions UK

Mobile phone networks tend to have excellent rates of customer retention: at EE, the average is over four years, at Vodafone, the average is over six. These carriers aren’t necessarily successful due to superior service; they’re successful simply because they understand not only what their customers want to purchase, but how they want to purchase it. By offering monthly plans, customers get the handsets they want at prices they can afford.  

Similarly, every company wants to acquire the technology it needs without putting undue pressure on its budget. Given the mobile model’s success, it’s surprising that it’s not more widespread elsewhere; in many respects, it’s an ideal way to pay for business software.

Here are four reasons why.

1. 1. Greater value for money

Buying a smartphone with a contract offers superior value for money. For example, individually, the more expensive iPhones cost around £700; for that princely sum, the customer gets a handset, a one-year warranty, and nothing more – no data, no calls, no text messages. They’ll need to either opt for “pay as you go” (PAYG) or add the costs of an additional contract on top of the purchase price.

When the same phone is leased for, say, £49.99 a month on a 24 month contract, the customer gets a lot more bang for their buck. Not only will they get a top-of-the-range handset, they’ll also get calls, texts, and an allowance of mobile data.

So why don’t more businesses obtain their software in a similar manner?

If your company is particularly budget-conscious – and most mid-market companies aren’t cash-rich – a large, one-off transaction can be unjustifiably expensive.

By paying predictable fees over the course of an agreed period (usually three to five years), you can do more with your annual budget, and get more for your money. For example; on a monthly lease you get the software your business needs, and you can also get training and set-up fees included for a manageable monthly cost.

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   2. Regular upgrades

When discussing cost, it’s also important to discuss value; when you purchase software, not only are you spending a lot of money, you’re spending it on something with built-in obsolescence. A 2011 iPhone 4S – £500 on release – will only fetch £51 today. Because nobody likes sinking a lot of money into something that will quickly become out-dated, mobile networks allow for upgrades after a certain period of time. As they aren’t saddled with an obsolete device, their customers are more inclined to renew their contracts.

Why shouldn’t it also be possible to tether upgrades and updates to software renewals?

When you buy an application, you buy a specific version of that application: you could pay up to £600 for a 2016 edition of some all-in-one accounting software, but that’s the one you may be stuck with when they roll out later editions. If you acquire licences in the way you lease your phone, you’ll always be able to use the latest – and best – products on the market.

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   3. Accommodating your needs

Some customers with mobile phone contracts habitually run out of data. Maybe they check emails too frequently, maybe they overindulged their Netflix addiction on the commute (it adds up!); whatever the reason, it’s easy for them use up an allowance long before the end of the month – and if they still need the internet, it’s a particular hassle.

In these circumstances, there are two options:

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