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The financial software company is taking criticism for forcing SMEs to move to a subscription-based pricing plan.

The Financial Times reports that small businesses in the UK are up in arms over being forced to migrate their perpetual Sage 50 software licenses to a monthly subscription plan. Sage, the UK’s largest listed tech firm, is being accused of using “strong-arm tactics” on its customers, according to the Financial Times.

The move allegedly hurts the small- to medium-sized enterprises (SMEs) that rely on Sage 50 for bookkeeping, sending invoices, processing orders and helping with tax payments.

“Sage has pushed customers who had been sold single-payment, long-term licences to the software on to monthly subscriptions that work out to be more expensive over the long run”, the Financial Times reported.

Moreover, Sage supposedly tells customers that their licenses will be turned off on security grounds if they deny the new terms. According to the Financial Times, the threat is being delivered “despite having no specific grounds to do so in their terms and conditions”.

Shifting to SaaS

The push towards subscription-based revenue comes at the direction of Sage CEO Steve Hare. His focus on subscription software forms part of a plan to achieve more regular recurring revenues. The Financial Times report says that the move would make the company less vulnerable to income shocks that can occur from overreliance on new customers making one-off purchases.

In a press release announcing the new model, Sage argued that they were simply joining the dominant trend in the software industry. “Many software companies such as SAP, Adobe and Microsoft have already implemented subscription models with more customers showing a preference to ‘renting’ software as opposed to purchasing a perpetual license”, the company said.

Perpetual licences last for fifteen years, as stipulated by Sage’s terms and conditions. Sage, however, said it would switch off access to its software by 30 September, prompting many customers to upgrade to monthly subscriptions to avoid losing access to their data.