Greg Reinacker has a comprehensive post up about why NewsGator has shifted to subscription pricing for all of their products (except the soon to be released NewsGator Enterprise Server.)  If you are a software entrepreneur thinking about “subscription” vs. “perpetual” pricing, it’s worth reading this post.  I’ve watched a number of my companies work through this – most end up either with subscription (e.g. Commerce5, Oxlo, Quova, Rally) or perpetual (Klocwork, Newmerix) but some end up with both (StillSecure).

Make sure you separate concept of the way you sell your software (subscription vs. perpetual) from the way you deliver your software (ASP / hosted vs. “shrink wrap” – remember when Apple II and TRS-80 software came in ziplock bags).  I find that – even today – lots of folks that I talk to get tangled up in the difference between these two constructs.