AVA’s offer to its customers includes two equally important parts:
The AVA software itself
The package of continuous development updates and unlimited technical support and consultancy which is the reason that most of our customers give for staying with us.
The PURCHASE option
Under the traditional purchase option, the customer purchases a perpetual (single user) license to use the version of the software initially supplied (element A above) enabled by a standard USB dongle or key. As part of the initial package, the AVA Development Plan (element B above) is usually supplied free of charge for the first year. At the end of the first year, customers are offered the opportunity to renew the Development Plan at a cost of 15% of the list price of the software purchased. If a purchase customer does not wish to renew the Development Plan, he is free to continue using the latest version of the software supplied (without support from AVA) for as long as it lasts. Given the pace of surrounding technology change (to computer processors, operating systems, printer interfaces etc), combined with the large number of user requested features added to the software each year, however, it is perhaps not surprising that, over the past 10 years, more than 97% of AVA’s customers have chosen to maintain Development Plan cover each year. Realistically, the alternative is to use an old version software for as long as it will run on the machine on which it was originally installed. Since most successful modern businesses depreciate and renew computers after a maximum useful productive life of three years, at the end of which they will replace it with an much faster, up to date machine, treating your AVA software in the same way would result in an effective cost of ownership of 33% per annum (far higher than the cost of ownership under the AVA Development Plan).
The LEASE option
The rapid development of the internet over the last few years has enabled AVA to offer an alternative to the traditional purchase option described above. Elements A and B above are combined in the AVA lease. Effectively the customer rents the software on an annual basis and enjoys full support and upgrades during the rental period. At the end of each year, the customer decides whether to renew the lease or cease using the AVA software. Leased AVA keys require access (not necessarily continuous) to an internet connection. The advantages of this option over outright purchase include ;
- Lower initial capital outlay
- Greater business flexibility (easier to increase/decrease capacity by changing the number of keys leased according to need)
- Favourable tax treatment in many countries (lease expenses are usually fully chargeable against annual profit as opposed to capital purchases which are subject to allowances)
- Built in insurance against loss of, or damage to, the USB software key supplied by AVA. AVA will replace leased keys for a small charge to cover the cost of the hardware and admin. Purchased USB dongles, by contrast, need to be fully covered on the customer’s business contents insurance policy the full purchase price is payable for replacements.
Sample comparison
The example below shows that, in a typical case (where 100 is the list price of the purchased AVA software), the leasing option works out cheaper for most businesses:
| Year |
1 |
2 |
3 |
4 |
5 |
| Purchase |
100 |
15 |
15 |
15 |
15 |
| Lease |
30 |
30 |
30 |
30 |
30 |
|
|
|
|
|
|
| Cumulative cost |
|
|
|
|
|
| Purchase |
100 |
115 |
130 |
145 |
160 |
| Lease |
30 |
60 |
90 |
120 |
150 |
|
|
|
|
|
|
Having said that, however, we still have many customers who prefer the traditional purchase option. Reasons for this may include;
- Availability of capital grants or other incentives
- Non availability of internet connection
- Prefer feeling of security in ‘absolute ownership’ of the software
- Intention to run the AVA software, without support or upgrades, ‘until it breaks’
Whilst the first two of these reasons are very reasonable and legitimate, it is suggested that the last, in particular, is not easy to reconcile with the practice of successful businesses since it effectively means that your software will effectively run slower (due to improvements in software, operating systems and computer processors) and less productively (due to feature additions) than that in use by the majority of your competitors. Businesses with this philosophy would probably be better off getting by as best as they can with cheaper generic software.
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