Telecoms Equipment: Outright Purchase Vs Subscription Model?

In the continuously evolving world of telecommunications, the decision of whether to buy telecoms equipment outright or utilise a subscription model is on many businesses’ minds.

Here at Ignite, we know that this is a difficult decision that requires a balance between short-term convenience and long-term strategy.

In this blog, we’re going to weigh the pros and cons of the outright purchase and subscription model options for telecommunications equipment. Our aim is to assist you in identifying the most suitable solution for your business needs.

 

Advantages of Outright Purchase

 

Full ownership of a physical asset

One of the main advantages of purchasing telecommunications equipment outright is that it allows you to have full ownership and control over the assets. This means you can make decisions about maintenance, upgrades, and configurations without being dependent on a third party.

Here at Ignite, we offer a comprehensive selection of affordable devices and hardware backed by a combined 75 years of industry experience and unparalleled customer service.

 

More profitable in the long term

Although upfront costs are higher, outright purchase is generally the more profitable option in the long term. When you purchase telecom equipment outright, you avoid ongoing subscription fees which can add up to a significant amount over time. On average, a well-maintained phone system should give you 10+ years of service, which is a great investment for any business.

 

Freedom to choose your network provider/carrier

By purchasing telecommunications equipment outright, you are not bound by rental agreements that may obligate you to use a particular network provider or carrier. This enables you to select the provider that best suits your business. You also have the flexibility to change providers if your network equipment needs change or you find a better deal with another provider.

 

Disadvantages of Outright Purchase

 

Warranty

When you purchase telecoms equipment outright, you will be responsible for managing warranties yourself. This can add up to a significant expense over time, particularly if the equipment requires regular upgrades or maintenance.

 

Large Capital investment and ongoing costs

Purchasing telecom equipment outright typically requires a significant investment upfront and this can impact your business’s cash flow. High upfront costs can be particularly challenging for small businesses or those on a tight budget. You’ll also have to budget for ongoing costs to update firmware and security patches which can put your business under more financial strain.

 

Minimal flexibility & scalability

The telecom industry is evolving fast, and purchasing your telephone equipment outright makes it more difficult to keep up with the times and more expensive to upgrade for expansion. An outright purchase is also a long-term commitment that offers less flexibility to adapt to change.

 

Advantages of Subscription

 

Cost predictability

With a subscription model, you only have to pay a consistent monthly or annual fee. This predictable cost structure allows your business to budget effectively. You don’t need to worry about the upfront expenses of purchasing hardware or maintenance costs as everything is generally included within the subscription fee.

 

Flexibility

A subscription model offers more flexibility as it eliminates the long-term commitment of purchasing telecoms equipment outright. It allows businesses to scale up their telecom services when necessary without having to invest in new hardware right away. The ability of the technology to grow and scale with the times is one of the biggest reasons for the growing popularity of subscription-based solutions.

 

Regular software upgrades and patch updates

Telecom equipment leasing companies take responsibility for ensuring their systems are up-to-date through regular software upgrades and security patches. This means you’ll have access to the latest features and have the assurance that your business’ data is protected with minimal effort required on your end.

 

Hardware replacements

Hardware replacements are usually covered in your subscription fee, otherwise known as ‘’DaaS” Device as a Service. So you’ll be able to replace or upgrade your devices seamlessly when required. In contrast, purchasing your telephone equipment outright means you’ll have to pay for replacement hardware out of warranty unless your maintenance agreement has unique terms.

 

Disadvantages of Subscription

 

No asset ownership

One of the main disadvantages of the subscription model is that you don’t have ownership of the asset. This means that you’ll have limited control over the hardware and infrastructure. For businesses that are seeking full control over their infrastructure, this may present future challenges.

 

Tied to the provider

With a subscription model, you’re generally reliant on the provider for both the telecom equipment and ongoing support. This may limit your ability to negotiate terms or switch providers which can potentially lead to increased costs or service disruptions if there’s a change in the provider’s quality or pricing.

 

More expensive in the long run

Telecom equipment subscriptions also tend to be more expensive in the long run. Although they don’t require upfront costs like outright purchasing, the ongoing fees can significantly add up over time and potentially exceed upfront costs.

 

Outright Purchase or Subscription Model for Telecommunications Equipment?

Ultimately, both outright purchase and subscription options for telecommunications equipment have their pros and cons and there is no one-size-fits-all answer to which one you should choose.

While choosing to purchase outright grants complete ownership and potentially higher profitability over time, a subscription model provides improved cost predictability and greater flexibility.

If you’re looking for further advice on business telecom equipment, spark up a conversation with one of our friendly telecommunication specialists at Ignite. We’re here to help you make informed decisions.