An on-premise license deal that is valued at $1M, will bring monthly subscription of $50K.
Now lets compare the revenue stream of both options.
License will bring $1M in revenues in the quarter the deal was booked and 18% maintenance fees every year after given the customer is using the software.
Year 1: On-Premise 1,000K, Cloud 600K (12 months x $50K)
Year 2: On-Premise 180K, Cloud 600K
Year 3: On-Premise 180K, Cloud 600K
Year 4: On-Premise 180K, Cloud 600K
Year 5: On-Premise 180K , Cloud 600K
So after 5 years, On-Premise total revenues will be $1.9M vs. Cloud total revenues of $3M....
After 10 year, On-premise total revenues will be $2.62M vs. Cloud total revenues of $6M.....
Short term pain, long term gain !!
Few other unrelated comments:
The AutoGlass deal that was announced has 1200 technicians. Based on Click's pricing of approximately $100 per technician, will bring in $1.2M in license revenue if its on-premise deal.
The huge OI deal ($10M) from Q3 last year, should bring in close to $2M in maintenance revenues in Q3 this year.