Is supply of software a sale or a service?

Well.....this matter troubled Microsoft long ago and has been settled in the courts of US and subsequently accepted worldwide...supply of software is sale although the buyer is bound by a license agreement. Provided the supplier/vendor has a valid copyright claim over the software.

IN It industry we have three types of companies product based, service based and mixture of both.The supply of software is completely a sale provided with some sustainance according to the license between vendor and the user.The service based give services to there client on a particular product(s/w) but that is not supplying a SW.Like a company can use another company product to provide service to the third party in that case the first organization is buying the product from the second company that is sale and providing service to the client that is service.

it depends on how you deliver it to client. If your client wants to own the software as a COTS (Commercial Of the Shelf package..like MS Office).. you sell it.. If your customer wants to subscribe to your Software (as a services- SaaS).. like SalesForce.com CRM..then it is a service.

Anything which is sold as a product is a SALE. Service is part of the entire sales process. it may be pre-sales service, after sales service or point of sale service.

with respect to software be it Networking software, business integration software, database software or operating system software they are products. When may be sold as a complete package or through license, it is SALE. Anything that is offered as installation, maintenance & tech support or customization is charged as service.

It depends which way one is putting the service. even the service is supposed to be generating revenues (like education, hospital, repair and maintenance and other services). What we understand by sales is anything which is generating revenue on a regular basis for the organisation is sales and with same logic no one can deny the status of software  as sales.

If the soft ware is charge able then its called to be a sale, but when its cost free then it will be a service like upgradation.

We have off the shelf products let us for example - MICROSOFT OFFICE - if you purchase from MS or MS sales partner - it's clear SALE transactions as there is not service attached. What u get is CD/DVD/Media and License.

Now we have MICROSOFT offering same product on AZURE or Cloud based then it's SERVICE as product sold to you is itself a SERVICE rather than CD/DVD u use it as service. Another exmple is SALESFORCE.COM

So you have sale scenario of both software on Medias as well as Service. Both the purchase attract SALES TAX, IT TAX, Service TAX and EDU SESS as may be the case.

As Architect, I would like to design product which can be OFF THE SHELF as well as HOSTED... you as ARCHITECT know the NUTS and BOLTS of both the scenarios :)