Unwieldy CAD software costs: is token-based licensing the answer?
Token-based software license models are currently seeing a big uptick in popularity. By offering a flexible software license model that can expand and shrink as you need, they offer a uniquely flexible way of consuming software.
However, most companies that use CAD, BIM and other ‘heavy’ design software today are usually stuck with big, unwieldy perpetual licenses for the software they use. They tend to buy and install the licenses once, then upgrade them every few years.
Could token models be a better option? And if so, how would it work?
What is a token-based license model?
Remember going to fairgrounds when you were a kid? To go on rides like the bumper cart, the Ferris wheel or the roller coaster, you had to hand over cash to buy tokens that you could use on the ride of your choice. Some rides were more exciting, so they cost more tokens. Others were pretty tame, so they cost less.
In the software world, tokens work in a very similar manner.
As a customer, you buy tokens in bulk from the software vendor, typically for a year in advance (a token gives one user access to the software for one day). Through negotiations with the software vendor, you agree what each “ride” will cost you. If the software vendor has several different pieces of software (bumper cart software, rollercoaster software and Ferris wheel software), this may look as follows:
- Bumper Carts software: one token
- Ferris Wheel software: two tokens
- Roller Coaster software: three tokens
Tokens vs. other software license models.
How does a token-based license model compare with the more common subscription-based (SaaS) or perpetual license models?
By analogy with the theme park, a regular subscription model would be like a one-year membership to the theme park, that gives one user unlimited access to all three rides to use as much or as little as they want for 12 months. Meanwhile, a perpetual license for software you install locally on your desktop is like a lifetime pass to the theme park with an annual maintenance fee.
Which model is better?
To compare tokens and subscription-based license models, let’s stretch the theme park analogy a little further!
Imagine that your job title is Global Corporate Manager for Amusement Park Access. Your favourite theme park offers three pricing options: a token model, an unlimited pass for one year, and a lifetime membership.
Pricing is as follows (per user)
Tokens:
- 1 token for one day of Bumper Carts.
- 2 tokens for one day of Ferris Wheel.
- 3 tokens for Roller Coaster
One year subscription: One year of named-user unlimited access for Bumper carts, Ferris Wheel and Roller Coaster software (costs the equivalent of 1000 tokens)
Lifetime: Unlimited rides in year 1 (costing the equivalent of 2000 tokens when you sign up), then 400 tokens maintenance per year
If your company policy is to send the same people to the amusement park every day, then the lifetime pass clearly is the best option after 3 years. The most expensive option is always the tokens (assuming 220 “working” days per year, and 6 tokens every day).
But people don’t always use their software every single day. Imagine you only used your access to the theme park for events (sales kick off, 5-year anniversary, completion of an important milestone, employee recognition events, vendor day, customer conference, etc.).
Picture a company with 500 employees that organises the following events at the theme park:
|
Time |
Event |
Participants |
Number of days |
|
Month 1 |
Annual Sales Kick Off |
75 |
5 |
|
Month 2 |
Investors Day |
150 |
2 |
|
Month 3 |
Go Live celebration major project |
75 |
2 |
|
Month 4 |
All Hands Meeting |
300 |
6 |
|
Month 5 |
Spring Break |
0 |
|
|
Month 6 |
Customer Shindig |
500 |
8 |
|
Month 7 |
Summer Break |
0 |
|
|
Month 8 |
Family Day |
400 |
1 |
|
Month 9 |
Go Live celebration major project |
125 |
3 |
|
Month 10 |
Top Management Off Site |
55 |
10 |
|
Month 11 |
Companywide Training Event |
95 |
15 |
|
Month 12 |
Winter Break |
0 |
|
What is the best option - between subscription and tokens - under this scenario?
Tokens
The number of tokens for this scenario is calculated with the assumption that one day will consume 6 tokens. The following table shows that the company needs 56,250 tokens. This is 11% of the tokens needed for the subscription model. Clearly, in companies that only need to use their software some of the time, the ‘pay-for-what-you-use’ tokens model is more logical.
|
Time |
Event |
Participants |
Number of days |
Total |
|
Month 1 |
Annual Sales Kick Off |
75 |
5 |
2250 |
|
Month 2 |
Investors Day |
150 |
2 |
1800 |
|
Month 3 |
Go Live celebration major project |
75 |
2 |
900 |
|
Month 4 |
All Hands Meeting |
300 |
6 |
10800 |
|
Month 5 |
Spring Break |
0 |
|
0 |
|
Month 6 |
Customer Shindig |
500 |
8 |
24000 |
|
Month 7 |
Summer Break |
0 |
|
0 |
|
Month 8 |
Family Day |
400 |
1 |
2400 |
|
Month 9 |
Go Live celebration major project |
125 |
3 |
2250 |
|
Month 10 |
Top Management Off Site |
55 |
10 |
3300 |
|
Month 11 |
Companywide Training Event |
95 |
15 |
8550 |
|
Month 12 |
Winter Break |
0 |
|
0 |
|
Total Tokens |
56250 |
Subscription
A subscription would come at a cost of 500 x 1000 tokens (i.e. 500,000). If you don’t want to disappoint anyone at the Customer Shindig in month 6, you will need to buy 500 subscriptions. This means that you will have enough subscriptions for all the other events (assuming that the model is not a named-user model) - even though a lot of them won’t get used most of the time.
Under this scenario, a token-based license model is clearly preferable, even when you negotiate a 50% discount on your subscriptions.
Token licensing – a good option for architecture, engineering and construction?
Let’s now consider how token licensing relates to the sort of software used in architecture, engineering or construction businesses.
If you need a constant number of software licenses, you’re clearly better off with a subscription or a perpetual license model. An example could be an in-house design and engineering department in discrete manufacturing. These departments are stable and have a predictable need for CAD licenses. They don’t use outside engineering services much, and don’t allow their customers or suppliers to work directly in their CAD environment. Remote or part-time working is discouraged.
On the other hand, imagine you head up a department in a project-based business with peaks and valleys. You regularly collaborate with outside engineering service providers to get you through the peaks or to provide you with specialist expertise, and direct collaboration with suppliers and customers in your BIM system is expected. This project-based model is typical for the building and construction world, from small architecture firms through to engineer and design departments working on multi-billion infrastructure projects. In this world, a token-based model will almost always be the best option.
The barrier to using token license models at design firms
Unfortunately, there’s a big inhibitor to reaping the full benefits of the token license model for flexible business - especially when the user numbers vary over the course of the year.
CAD and BIM software typically runs on special workstations that cost an order of magnitude more than the average worker’s desktop. The more variance you have in your need for software (and the more you will benefit from the token license model), the more difficult it is to manage the purchasing, provisioning, installation, management, and maintenance of these workstations. It takes typically 6 -12 weeks between raising a purchase order and when the end user receives the completely installed and configured workstation. And that’s saying nothing about the cost - a new $5000 workstation represents a huge investment.
But what if you work in the cloud?
At Designair, we believe that this problem can be solved with specialized virtual desktops for CAD and BIM applications – as tried and tested by our customers. Take UNISON, a Berlin-based design engineering firm. By accessing our cloud-based CAD environment using a token-based licensing model, they can easily assign (or remove) fully installed and configured, secure virtual desktops with powerful GPU’s and ample RAM available at a moment’s notice to anyone with an internet connection.
Markus Raue, Project Engineer and Head of Administration at the Engineering Design department of UNISON says:
“We've been really impressed by Designair's responsiveness. There have been times we’ve needed to add new users, and the team from designairspace was able to get accounts up and running, so that the new users were completely ready to work in less than 24 hours”.
As UNISON’s experience shows, firms that use CAD and BIM software can fully benefit from the flexibility of token license models when installed on cloud-based virtual workstations. This approach also reduces the need for people to be at the office to work.
Want to learn more? Request a free trial, or schedule an appointment with Don to see how you can make your CAD Software costs more....wieldy.