Software Leasing Options

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Software Lease Financing

It is a well known fact that leasing equipment and the basic paraphernalia required to setup a new firm is a good idea; it allows the budding entrepreneur to manage with less capital while still getting the same amount of benefits. However, software lease is a relatively new concept. Until recently, hardware was leased while software was always bought outright. Software manufacturers are generally reluctant to get into a lease agreement and prefer to have outright cash for their products.

The third party equipment finance companies have now realized the potential market for leased software. They are now offering commercial lease software to industries, which can be leased by signing a lease contract thereby entering into a formal lease agreement.

Why Leasing Software is Better than Outright Purchase

software leasing optionsSoftware has become very expensive in the current market. The value often supersedes that of the hardware that the software would work on. These prohibitive costs are encouraging companies to treat software as any other financial commodity and lease it.

Software can be categorized broadly into two categories:

  • Vertical Software: This kind of software is specialized to a particular application. An example of this would be the software used by a restaurant to keep track of the various menu items, the inventory of the food articles bought etc. The software that is used would be highly specific to a restaurant’s need. Such software is generally tailor-made and not available off the shelf and this in itself makes the cost of this software extremely prohibitive thereby promoting the leasing of them.
  • Horizontal Software: This is generic software available in the market. They are not greatly utilized by companies which cater to a particular set of needs.Third party equipment finance firms have understood the value of vertical software and buy these outright from the vendors. Lease deals are then entered into by such firms with industries which might require that software.

Advantages of Leasing Software

The advantages offered to any industry that decides to lease software are numerous.

  • The lease prices offered are generally very attractive and much cheaper than buying the software outright.
  • The capital cost of setting up any new organization can be prohibitive; this can be brought to manageable proportions by leasing equipments including the software used.
  • A formal lease agreement ensures that there are no legal loopholes that might cause problems later.

With all these benefits software leasing is a concept that has come into the market to stay and can be extremely profitable helping companies cut costs and make bigger profits. To explore your options ask our leasing expert today!