The Business of Software

I have doubts about the pricing model to my first product. I think to offer leasing and purchasing. What is considered as good ratio for leasing? I found 35% (of the purchasing price), 40%, up to 70% for one year.

How many years should the leasing be charged? 3? 5?

If I include numbers, I'd like to charge for 1000$ of leasing for a year (a server license), including support and upgrades. I wonder what should be the price for purchasing, and should I ask for yearly 20% for support and upgrades?
Please share your opinion.

Thanks.

You should never offer Server/Site lic, think what if Big Corporate purchased your software you will be supporting 200 ~ 500 user... you better off with a base price and per users price.

you can offer discount of volume but never server/site lic.

I actually researched this at one point.
I think that the terms are "one time license" vs "annual license fee" or something along these lines. I don't think people use the term leasing for software (In the US)  though I might be wrong.
I'll use these terms for the answer though.

Assuming you're leasing the software for $1000/year, what should be the price for bought software?

Remember there should also be a fee for support and upgrade. We include that fee for the first year in the base price, and charge %20-%25 after the first year. So let's say that the buy price is $2000, your user will pay $500 a year after the first.

The break even between the two models would be 3 years. So I would say that the $2000 is the right ball park for buying the product.

One thing that makes the buy model more attractive to the user is that I can keep using the software even if I decide not to renew the support contract.

It's good to offer options, but try not to make things too complcated.

I'm not a tax expert, but I think that unlike hardware, software can be written off in the first year, so there are no tax incentives to lease instead of buy software.  As Dror says, "the terms are 'one time license' vs 'annual license fee' "

Another reason to lease hardware instead of buying it, is to budget for frequent upgrading.  In terms of software, if your software needs to be upgraded on a regular basis, roll that cost into annual support costs.  You will make the customer mad if you charge an annual license fee (why do I have to keep paying for the same software over and over?), but annual support fees make sense to most businesses.  It also allows for better budgeting and control of costs for your customers, and provides a steady cash flow for you.