trakti

A software subscription agreement is a contract that exists between the manufacturer of the software (the licensor) and the company that purchases it (the licensee). Such agreements exist to protect the purchaser against negligence or fraud on the part of the manufacturer. However, it also serves to protect the manufacturer, as well, as the software subscription agreement may include stipulations as to how the product may be used, authorized users. While it used to be customary for software companies to sell their product with a perpetual license, meaning that the customer pays for the software upfront and perhaps only pay additionally for updates for technical support, it is becoming increasingly common to find subscription agreements. There are a few reasons for this, the primary one being financial, as it creates a regular flow of income with customers paying regular monthly or annual subscription costs.

In this agreement, the developer agrees to create certain software for the client and to transfer the intellectual property rights in that software to him. One important aspect to include in this agreement is to agree regular milestones, which breaks down the project into discrete deliverables. At the end of each milestone, the developer should have reached an agreed stage of the work. Assuming this is done, the work is signed off and a specified amount of funding is released to the developer to progress to the next milestone. This makes it easier for both sides to monitor the progress of the project.