INNOVATION

The Adaptability of Software Licensing

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.

ABOUT THE AUTHOR

David Burkett

Growth en­thu­si­ast and res­i­dent pom

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