Test the revenue timing and contribution effect of moving entered software license groups from perpetual licensing and maintenance to recurring subscription.
About this analysis
Enter perpetual license pricing, maintenance, subscription pricing, support and delivery cost, conversion credit, and evaluation term for each license group. The calculation compares cumulative revenue and contribution, solves crossover timing, calculates break-even annual subscription price, and tests a partial conversion sensitivity. No external renewal, conversion, churn, discount, or pricing assumption is inserted into the calculation. For more information, visit our software pricing consultants page.
License groups
Perpetual revenue includes the initial license plus annual maintenance. Subscription revenue includes recurring subscription less the one-time conversion credit. Contribution subtracts entered annual support or delivery cost.
Conversion sensitivity
The entered conversion share applies proportionally across all license groups. Remaining licenses stay on their entered perpetual economics.
Cumulative economics
Each year compares cumulative perpetual and subscription economics. License-group calculations stop accruing after their entered evaluation term.
Group economics
License groups are ranked by absolute contribution change so the largest economic effects appear first.
| License group | Licenses | Perpetual revenue | Subscription revenue | Revenue change | Perpetual contribution | Subscription contribution | Contribution change |
|---|---|---|---|---|---|---|---|
| Professional Edition | 900 | $1.31M | $1.52M | +$216K | $1.04M | $1.18M | +$148.5K |
Conversion concentration
Concentration uses absolute contribution change so positive and negative license-group effects do not cancel each other.
Break-even subscription price
Break-even price is the annual subscription price that produces the same entered-term contribution as the perpetual structure. It is not a market or recommended price.
| License group | Current annual subscription | Break-even annual subscription | Difference | Term contribution change |
|---|---|---|---|---|
| Professional Edition | $350.00 | $317.00 | +$33.00 | +$148.5K |
Conversion sensitivity
Converted licenses use subscription economics. Remaining licenses stay on perpetual economics for the entered evaluation term.
What the interactive shows
Full conversion reduces entered year-one revenue by $1,959,500, while entered-term subscription revenue exceeds perpetual revenue by $778,500.
Cumulative subscription revenue crosses the perpetual structure in year 4 and contribution crosses in year 5. At the 60% conversion sensitivity, blended term contribution increases by $285,000 while year-one revenue declines by $1,175,700.
LICENSE CONVERSION ECONOMICS TEST: ILLUSTRATIVE DEFAULT RECORD LICENSE GROUPS Enterprise Edition | Licenses: 500 | Perpetual license: $1,200.00 | Annual maintenance: $240.00 | Annual subscription: $560.00 | Annual perpetual support cost: $80.00 | Annual subscription delivery cost: $110.00 | Conversion credit per license: $100.00 | Evaluation term: 5 years Professional Edition | Licenses: 900 | Perpetual license: $700.00 | Annual maintenance: $150.00 | Annual subscription: $350.00 | Annual perpetual support cost: $60.00 | Annual subscription delivery cost: $75.00 | Conversion credit per license: $60.00 | Evaluation term: 5 years Analytics Module | Licenses: 700 | Perpetual license: $450.00 | Annual maintenance: $90.00 | Annual subscription: $220.00 | Annual perpetual support cost: $40.00 | Annual subscription delivery cost: $50.00 | Conversion credit per license: $40.00 | Evaluation term: 5 years Operations Module | Licenses: 1,100 | Perpetual license: $320.00 | Annual maintenance: $70.00 | Annual subscription: $175.00 | Annual perpetual support cost: $30.00 | Annual subscription delivery cost: $42.00 | Conversion credit per license: $30.00 | Evaluation term: 5 years Platform Access | Licenses: 300 | Perpetual license: $1,800.00 | Annual maintenance: $360.00 | Annual subscription: $820.00 | Annual perpetual support cost: $120.00 | Annual subscription delivery cost: $160.00 | Conversion credit per license: $140.00 | Evaluation term: 5 years FULL-CONVERSION POSITION Total licenses: 3,500 Perpetual term revenue: $4,952,000 Subscription term revenue: $5,730,500 Term revenue change: +$778,500 Perpetual term contribution: $3,997,000 Subscription term contribution: $4,472,000 Term contribution change: +$475,000 Perpetual year-one revenue: $2,940,000 Subscription year-one revenue: $980,500 Year-one revenue change: −$1,959,500 Revenue crossover: Year 4 Contribution crossover: Year 5 CUMULATIVE ECONOMICS Year 1 | Perpetual revenue: $2,940,000 | Subscription revenue: $980,500 | Revenue change: −$1,959,500 | Perpetual contribution: $2,749,000 | Subscription contribution: $728,800 | Contribution change: −$2,020,200 Year 2 | Perpetual revenue: $3,443,000 | Subscription revenue: $2,168,000 | Revenue change: −$1,275,000 | Perpetual contribution: $3,061,000 | Subscription contribution: $1,664,600 | Contribution change: −$1,396,400 Year 3 | Perpetual revenue: $3,946,000 | Subscription revenue: $3,355,500 | Revenue change: −$590,500 | Perpetual contribution: $3,373,000 | Subscription contribution: $2,600,400 | Contribution change: −$772,600 Year 4 | Perpetual revenue: $4,449,000 | Subscription revenue: $4,543,000 | Revenue change: +$94,000 | Perpetual contribution: $3,685,000 | Subscription contribution: $3,536,200 | Contribution change: −$148,800 Year 5 | Perpetual revenue: $4,952,000 | Subscription revenue: $5,730,500 | Revenue change: +$778,500 | Perpetual contribution: $3,997,000 | Subscription contribution: $4,472,000 | Contribution change: +$475,000 GROUP ECONOMICS Professional Edition | Perpetual revenue: $1,305,000 | Subscription revenue: $1,521,000 | Revenue change: +$216,000 | Perpetual contribution: $1,035,000 | Subscription contribution: $1,183,500 | Contribution change: +$148,500 | Break-even annual subscription: $317.00 Operations Module | Perpetual revenue: $737,000 | Subscription revenue: $929,500 | Revenue change: +$192,500 | Perpetual contribution: $572,000 | Subscription contribution: $698,500 | Contribution change: +$126,500 | Break-even annual subscription: $152.00 Analytics Module | Perpetual revenue: $630,000 | Subscription revenue: $742,000 | Revenue change: +$112,000 | Perpetual contribution: $490,000 | Subscription contribution: $567,000 | Contribution change: +$77,000 | Break-even annual subscription: $198.00 Enterprise Edition | Perpetual revenue: $1,200,000 | Subscription revenue: $1,350,000 | Revenue change: +$150,000 | Perpetual contribution: $1,000,000 | Subscription contribution: $1,075,000 | Contribution change: +$75,000 | Break-even annual subscription: $530.00 Platform Access | Perpetual revenue: $1,080,000 | Subscription revenue: $1,188,000 | Revenue change: +$108,000 | Perpetual contribution: $900,000 | Subscription contribution: $948,000 | Contribution change: +$48,000 | Break-even annual subscription: $788.00 CONVERSION CONCENTRATION Total absolute contribution effect: $475,000 Largest group effect share: 31.3% Top three effect share: 74.1% Groups driving at least 80% of absolute effect: 4 CONVERSION SENSITIVITY Licenses converted: 60.0% Equivalent converted licenses: 2,100 Blended year-one revenue: $1,764,300 Blended year-one revenue change: −$1,175,700 Blended term revenue: $5,419,100 Blended term revenue change: +$467,100 Blended term contribution: $4,282,000 Blended term contribution change: +$285,000 FINDING Full conversion reduces entered year-one revenue by $1,959,500, while entered-term subscription revenue exceeds perpetual revenue by $778,500. Cumulative subscription revenue crosses the perpetual structure in year 4 and contribution crosses in year 5. At the 60% conversion sensitivity, blended term contribution increases by $285,000 while year-one revenue declines by $1,175,700. METHOD STATUS Perpetual term revenue equals licenses multiplied by perpetual license price plus annual maintenance multiplied by the entered term. Perpetual contribution equals perpetual term revenue less annual perpetual support cost multiplied by licenses and term. Subscription term revenue equals annual subscription price multiplied by licenses and term less one-time conversion credit per license multiplied by licenses. Subscription contribution equals subscription term revenue less annual subscription delivery cost multiplied by licenses and term. Year-one subscription revenue subtracts the conversion credit in year one. Cumulative revenue and contribution are calculated year by year through the longest entered evaluation term, with each license group capped at its own entered term. Revenue crossover is the first entered year cumulative subscription revenue meets or exceeds cumulative perpetual revenue. Contribution crossover uses the same rule for contribution. Break-even annual subscription price equals perpetual contribution plus conversion credit plus subscription delivery cost over the entered term, divided by license-years. Conversion concentration ranks groups by absolute contribution change. Partial-conversion sensitivity weights subscription economics by the entered conversion share and perpetual economics by the remaining share. No external renewal rate, conversion rate, churn rate, discount, growth rate, or recommended subscription price is inserted into the calculation.
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