Boxes, Subscriptions, And Beyond: The Evolution Of Softwa…
By Anders Bylund – May 13, 2026 at 7:01AM EST
Key Points
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Software used to come in a box with a one-time price tag; now most companies charge monthly or annual subscriptions.
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AI companies are already experimenting with new pricing approaches per-token and outcome-based billing.
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Pricing policy may not be glamorous, but it’s crucial for evaluating software stocks.
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NYSE: CRM
Salesforce
Today’s Change
(-3.54%) $-6.29
Current Price
$171.20
Key Data Points
Market Cap
$140B
Day’s Range
$170.58 – $177.57
52wk Range
$163.52 – $296.05
Volume
710
Avg Vol
14M
Gross Margin
75.28%
Dividend Yield
0.99%
Salesforce has an idea
In 1999, Salesforce (CRM 3.54%) proposed something different. What if you didn’t buy software at all? What if you just rented access to it? The programs could largely run in a web browser, and Salesforce got to bill its clients every month.
The enterprise software world was skeptical at first. Then it was intrigued by this easy-to-use model with its simpler upgrade paths. Then it grew alarmed at how fast Salesforce was growing.
Adobe rips off the bandage
The subscription model simmered for years in enterprise software, but consumer and creative software stayed boxed. That changed in 2013, when Adobe announced that the Creative Suite DVD was dead. Long live the new king, Creative Cloud! Subscribe or find another photo editor. The programs served the same purposes as always, just with a different access and payment format.
Photographers, video developers, and graphic designers reacted with the calm, measured response you’d expect. Comment sections caught fire. Petitions circulated. Then everyone subscribed anyway, because what were they going to do, learn GIMP or PaintShop Pro?
Adobe’s revenue got predictable. The stock soared. Adobe stock had a couple of turbulent years but ended up with triple the S&P 500‘s (^GSPC 0.16%) returns from the start of 2013 to the end of 2015. Every other software company took notes, and the whole industry started adopting software-as-a-service (SaaS) policies.
Image source: Getty Images.
The seat-counting years
Subscription pricing needed a unit. Most companies landed on “seats,” whereby payment was made per person using the software. Slack (now owned by Salesforce) charges per user. Zoom (ZM 3.88%) charges per host. Microsoft 365 charges per employee.
This system works reasonably well until your CFO discovers that 40% of the company’s Slack “seats” haven’t logged in for six months. Then you get an email about “license optimization,” and someone in procurement starts asking pointed questions.
Pay for what you use
Cloud computing introduced a different idea: metered billing. Amazon (AMZN 1.19%) Web Services, upon launching in 2006, charged for exactly the compute power and storage you consumed. Use more, pay more. Use less, pay less.
Twilio (TWLO 2.93%) applied this pricing model to communications. Snowflake (SNOW +0.38%) used it for data warehousing. The pitch was clean and clear: Your costs scale with your success.
The catch this time is that the finance team now has no idea what next month’s bill will look . In the “pay-to-use” world, budgeting becomes an exercise in educated guessing.
Meanwhile, in Open-Source Land
While all this commercial drama unfolded, a parallel universe existed where software was free. Not “free trial” free, actually free for any use. The Linux OS led the way. PostgreSQL and MySQL databases ed suit. The Kubernetes software shipping method is another example.
Red Hat figured out how to make money here. Give away the software, charge for professional support. When your production database crashes at 2 a.m., you want someone to call. That service costs money.
IBM (IBM 1.94%) bought Red Hat for $34 billion in 2019, which suggests the model works. Or at least that IBM really wanted to be in the Linux business. IBM’s business philosophy has absorbed a lot of Red Hat’s DNA. Big Blue is essentially Big Purple nowadays.
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NYSE: IBM
International Business Machines
Today’s Change
(-1.94%) $-4.33
Current Price
$219.22
Key Data Points
Market Cap
$206B
Day’s Range
$219.22 – $224.43
52wk Range
$219.22 – $324.90
Volume
19K
Avg Vol
6.2M
Gross Margin
57.80%
Dividend Yield
3.07%
The 2026 situation
Software billing in 2026 is a mix of everything. Base subscriptions. Per-seat fees. Usage charges. Platform fees. Some artificial intelligence (AI) tools are experimenting with charging based on outcomes, though defining “outcome” turns out to be complicated. You can hardly throw a rock in Silicon Valley without hitting a company in the midst of a pricing strategy shift.
Most companies have landed on hybrid models. A predictable base payment that finance teams can budget for, plus variable components that capture value from heavy usage. It’s more complex than the old “buy a box” days, but it’s also more flexible.
The old box of floppies is gone. The monthly invoice is here to stay. The only questions are how many line items it contains and how the billing data is collected.
The next shift is already underway. Whoever comes up with the most effective pricing model will have a leg up on the competition (until everyone copies it, of course). Keeping an eye on this drama will help you find winning software investments.
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About the Author
Anders Bylund is a contributing Motley Fool media and technology analyst covering semiconductors, cloud computing, internet infrastructure, quantum computing, and streaming media. Previously, Anders was a systems administrator for Nielsen Technology and CSX, gaining hands-on experience with enterprise-class systems. He was also a freelance writer for Ars Technica, TIME, USA Today, CNN, WIRED, and AOL’s Daily Finance. He holds a bachelor’s degree in English and a master’s degree in library and information sciences from Florida State University. He believes in coyotes and time as an abstract.
Stocks Mentioned
Salesforce
NYSE: CRM
$171.20
(-3.54%)-$6.29
S&P 500 Index
SNPINDEX: ^GSPC
$7,400.96
(-0.16%)-$11.88
International Business Machines
NYSE: IBM
$219.22
(-1.94%)-$4.33
Oracle
NYSE: ORCL
$186.81
(-3.63%)-$7.03
Microsoft
NASDAQ: MSFT
$407.68
(-1.21%)-$4.98
Amazon
NASDAQ: AMZN
$265.79
(-1.19%)-$3.20
Adobe
NASDAQ: ADBE
$240.83
(-2.16%)-$5.32
Twilio
NYSE: TWLO
$192.78
(-2.93%)-$5.81
Zoom Communications
NASDAQ: ZM
$102.96
(-3.88%)-$4.16
Snowflake
NYSE: SNOW
$151.98
(+0.32%)+$0.48
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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