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The Adaptability of Software Licensing

by David Burkett, Nov 21, 2016

For any innovative company looking to develop software, there are a few key points you should consider. Firstly you should determine why you're developing the software, is it to simplify internal processes, or is it a public offering? If it is a public offering, there are a number of ways you can license the software. This will primarily depend on your business model. I will outline the more common software licensing strategies as well as approaches you can take if your software is for internal use. Check out this article for more on how we license our software.
Possibly the most popular strategy is to license per user. This means that the license is tied to the specific user. The user will be able to log in on various computers but the application can only be used by the one person. Alternatively, you can license according to installations on a computer. The best example of this is Microsoft Office. This is not recommended for anyone offering a SaaS product, given the main advantage of SaaS is usability over a number of computers. A different option is to segregate licenses according to clients. So you may have a number of large scale clients who can purchase a license and within that they can freely create users for each employee. Your choice will depend on your product offering and business model.
If you're developing software to simplify internal processes this may benefit you greatly, but that doesn't mean you can't get some kind of return on your investment. The software may have been constructed to solve some kind of problem within your industry. It may be that other businesses are experiencing the same problem. Licensing your software to these businesses would see you reclaim a proportion of your initial investment or possibly even profit from it. Obviously there's the risk that you're assisting your competitors so you'll need to be careful who you license the software to and what it would do for them.
However the point remains, software is adaptable enough to license a range of different ways and for a range of different purposes. The most important question you should ask yourself before commencing software development is how should I license my software in order to maximise return while keeping my competitive edge. Many businesses struggle to profit from innovative software because of their licensing strategy. Ensure you don't fall into that category by carefully considering your software licensing strategy.
If you want to read more about software, check out How to Accurately Estimate the Cost of Software.