3ds Max new licensing model

[Tommy L]

Hello all,

Im wondering if anyone has an opinion on Max going from a subscription/upgrade model to whatever their new on is? Im assuming its like the Adobe business model, but I havent really done any reading (hence the question).

I have both full license and rental. I cant really see any other option than to keep on subscription for the full license and renew the rental rather than buy another license and add subscription, only to have a diminished return on the new license when the rental model becomes the norm. Does that make sense?

Anyway, not a huge quandary, but a quandary none-the-less. Any input appreciated.

Tom.

[Justin Hunt]

The rental model is just going to add more to the monthly business costs and affect cash flow for the small studios/users. What I am interested in is if it is possible to offset the software rental costs as an expense for tax purposes.

 

I am by now means a tax expert so it will be a question I ask my accountant when I do my next tax return.

[Corey Beaulieu]

I have read much negative energy about this change. I must admit, I work in a studio where the issue will fall on the shoulders of our founders. BUT, I do freelance and I do have a recreational use for Max beyond our studio. My opinion of the switch is that, while yes, it will change every companies bottom line on a monthly basis, it will actually make it more accessible to a person like me. I can rent the license should I have a viable use for it and if need be and the project is worth taking, I can relay that cost to the client. I figure studios who face this issue negatively will be doing that anyway.

 

But more off the hip... I think this will actually free up a lot of cash in the long run. Cash that is normally attributed to "do we upgrade our max license or do we upgrade our machines?" will suddenly be a non-decision. Max would be an ongoing cost that can be priced into a project and a machine can be an annual upgrade. I am by no means an accounting mind, but it feels like there are more ways to solve a monthly expense in business than ways to solve annual one time hits when both effect the businesses bottom line.

 

The big fear is that every software company goes this route and suddenly we all owe a monthly payment of several thousand just to keep things running. This would really effect the way we all get by. I think pirating would skyrocket and some balance would be met, but all the same this scenario feels bad for all parties involved.

 

I don't know much on the business side, just that if the ins equal more than the outs, it's a good thing, but for Autodesk making the switch, I think that knee-jerk negativity should be more thoroughly considered. I guess worse case.... We all use 2015 for the rest of our lives. Upgrades lately haven't been that noteworthy anyhow.

[Justin Hunt]

Its just that, once all or most software becomes rental only, the on going cost per month becomes ridiculous , whilst each seems responsibly priced it is a different matter when you lump them all together. Even for the occasional project where 1/2 your costs will be just to rent the software to do a project, it becomes very difficult to justify the cost offset to clients. More than occasional users can spread that cost over several clients.

 

The ROI becomes a bit more complicated.

[Scott Schroeder]

I thought this was a well written article on the subject.

http://www.fxguide.com/featured/autodesk-going-subscription-only-heres-how-they-can-help-the-industry/

[Ernest Burden III]

Its just that, once all or most software becomes rental only, the on going cost per month becomes ridiculous , whilst each seems responsibly priced it is a different matter when you lump them all together...

 

As I'd pointed out at the time, when Adobe turned the Master Suite from a multi-thousand dollar purchase to a $30/month on-going cost, I couldn't believe my luck. It was either come up with about $2000 cash for a needed upgrade from CS3 to the current CS6, or $30. This was in the middle of the worst economy since the US Great Depression. The cost of a monthly fee would never catch up with an upgrade (even if only every-other version). At my current $50/month or so for one Master Suite, it would take about two years to equal that I-already-own-it upgrade cost, and by then, I would need to upgrade again. In the meantime, I always have the most current tools.

 

I do not use Max or anything Autodesk. I don't like them and they are too expensive for my small business. But I would jump at the chance to rent Max if I needed it, and that gives ADSK a chance to get me hooked.

 

Like eveybody else I do not like the threat of losing my key tools over a never-ending payment schedule, but it's worth the risk for me. Larger studios have many licenses, but the amounts scale. How much fun is paying to upgrade a dozen seats of AutoCAD or Max all at once (so all staff are on the same version?

 

There's an old saying that the only person making money in a gold rush is the guy selling shovels.

Edited February 17, 2015 by Ernest Burden

[Justin Hunt]

rental model like what Corona is proposing , pay when you need it and dont pay when you dont need it, then yes rental makes sense.

 

Basically for me it comes down to either pick up more work to justify the monthly costs or stop doing sideline work altogether.

[CliveG]

What I am interested in is if it is possible to offset the software rental costs as an expense for tax purposes.

 

I am by no means a tax expert either, (my wife is) but it's pretty simple Justin - ANYTHING and EVERYTHING you spend money on as a legitimate part of earning an income, even if it's supplementary income, should be offset against your tax! If you are a 3D visualiser there is just about nothing more important to your business than the software, so you should have been offsetting your "one-off" software costs as a percentage write-down anyway (PC hardware too)- same as you should now for any "rental" software expenditure. The only difference is it'll probably move from a capital expenditure to regular expenditure.

 

I work from home and legitimately offset a portion of the house mortgage as rental for my office, a portion of the phone / power for my energy needs and a portion of my tea / coffee / biscuits for keeping my eyes open when pushing against lack of sleep.... a percentage of your car expenses even entertainment for taking potential clients to lunch. For me as some of my clients are in Europe, I can offset a proportion of airfare and hire-car etc. when I go on holiday - as long as I make the effort to actually go and meet those clients. As long as you are honest about the proportions of private use / business use, as I say you should claim anything and everything spent in the course of producing income.

 

You need to sack your accountant if you're not getting a suitable allowance for your expenditure!

[Justin Hunt]

I am doing all that, and its the saving grace. As you said the software used to be considered as a capital expenditure, but I havn't had a chance to investigate if the tax office has caught up with the relatively new rental model so is it considered a regular expenditure and what % can be written off each year.

[CliveG]

Obviously don't take my word for it, seek the advice of a qualified blah blah etc.....

 

But if 100% of your rental expenditure is business related then claim 100%!

 

As it's changed from a capital expenditure where you give say a $10k investment a 4 year lifespan and write it down 25% each year until it's effectively valueless to your business, this is a regular expense, so if your paying out $1k each year and using it exclusively for generating declared income, then you claim the full $1k.

 

Should be far simpler in tax terms than the previous one off payment model.

[Justin Hunt]

which makes the rental model a bit more appealing, effectively nullifying the cost of the software.

[CliveG]

Yes indeed (but the previous investment was eventually nullified too!)

 

But to be honest, the problem was that the tax system hadn't got their head around the old one off payment system in that it effectively treated the money we invested in software as an asset. Whereas we all know that it's virtually impossible to actually sell-on an AutoDesk licence, even via the liquidator of a bankrupt business. Therefore it isn't really an asset and shouldn't be considered a capital expenditure to be written down over a period. It was effectively a single payment rental anyway (in tax terms).

 

The tax office will be able to understand the newer model much easier and more fairly. (As can I)

[Justin Hunt]

which is basically where my question comes from, whether or not the tax office caught up with the times?

[Ernest Burden III]

for me it comes down to either pick up more work to justify the monthly costs or stop doing sideline work altogether.

 

Add what you paid originally for your Autodesk software and what you have paid for upgrades, divide by the number of months you have had the software. Now you have your monthly cost with the old model. What would be the cost of going 'rental' per month? Which one is less?

[Justin Hunt]

it basically comes down to cash flow, now I save up to upgrade and its not every year. I do sporadic jobs there are long periods where I dont take on work and therefore dont have cash coming in, as such I would have to dip into my personal cash to keep the rentals going. My wife would be happy with that

 

Suppose its a good incentive to push the sideline work

[Brian Cassil]

Spoken like a true San Franciscan Ernest!

[Mario De Achadinha]

Interesting Topic guys, think it will come down to how much work you will be doing to justify the rental. As Clive suggested that if its an offset for tax and easier for tax offices to understand, then the model probably works for small business. I think this new trend that all software companies are going for is all about securing cash flow for sales projections, easier distribution through cloud & making prices more appealing to hopefully secure customer loyalty, but maybe in a few years they drop the model?

[CliveG]

Yeah but....

 

Justin's situation probably reflects many. I'm not doing any visualising work at all now so would / should I keep paying rental for a suite of software I'm not using at all?

 

There may however be a call to make a change to a previous job at short notice, where I'd just want to fire up MAX / PS etc and punch out a quick change, half a days work or so. I'm not so keen about the prospect of messing about reloading / re-enlivening software and all of the plugins etc. at short notice for half a days work, I'll just want to click on the icon and get on with the job at hand.

 

Frankly (very frankly - because it'll create the usual storm of self-righteous hyperventilating we always get on the subject here...) This'll probably push me to maintaining a pirate version on my system full time.

 

Perhaps then when I eventually finish building our house and want to work designing / visualising full time again I might go back to paying rental or by then.... who knows, I may be more comfortable using dodgy software?

 

Queue - the flurry of self-righteous criticism

[Mario De Achadinha]

Lol Clive, lets await the comments. I think there is no simple answer, just depends on the situation of user, all I know is our software is expensive to run and maintain, especially when you introduce plugins into the mix

 

 

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[Justin Hunt]

Funny because I just finished listening to an Allen McKays interview with Eddie Perlberg, right near the end I mentions that Max is the second most pirated ADSK software after AutoCAD. Its an interesting podcast, like two friends chatting about the development of Max and the industry.

 

Eddie kind of hints at a few possible developments in the future, obviously e cant be specific.

 

http://www.allanmckay.com/23/

[Mario De Achadinha]

Awesome share Justin!! Thanks

 

 

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