Software licensing models
Nowadays using software is rather mainstream. We are connected to our phone almost 24/7. Besides the basic functions, calling, texting and setting an alarm, we also use it for listening to music or watching movies and series. We sometimes use it to help us keep track of our health and mindfulness or to connect with other people. We do all of this through different apps for which, most likely, we pay a monthly fee – a fee for the software license that grants us the right to use the software. Similarly, if we work in an office, we use a computer to do our job. Depending on the kind of work we do, we use at least 2-3 different licensable software programs. But are you aware of the kind of software licensing models that you can use?
Let’s have a look at some of the most common software licensing models
End User License Agreement
The End User License Agreement or EULA is quite popular amongst the small businesses and start-ups around the world. This software licensing model entails that each new copy of a software installed on a computer comes with its own unique license code. A registered EULA license can be installed on only one machine at a time. So if you need to install the same software program on a different computer, you need to either purchase a new EULA license or contact the manufacturer to re-register the software.
The EULA licensing model is also used in larger companies, if an employee needs to use a software for his work, but it’s a singular case. Generally, large organizations make use of other software licensing models, more suited for their needs.
When a company decides to make use of the pay-per-use licensing model, the fees they’ll pay to the software vendor are measured based on their software usage. This depends on some factors, such as number of hours, specific metrics and CPU usage. Similar to the EULA software licensing model, this model is preferred by smaller organizations. Once the software starts to be used heavily, it’s more convenient to purchase a full software license.
Concurrent licensing, known also as Floating licensing, allows companies to purchase a specific number of licenses that can be used by multiple employees, at different times. For example, if you have a small company of 30 people, but they don’t all need to access the software program at the same time – for example some work night shifts – you can purchase only 15 licenses. For each new employee that needs to use the software at the same time with the others you need to purchase a new license.
One of the oldest software licensing models is the perpetual licensing. This means that once you purchased the software, you can use it forever. One thing to keep in mind is that the perpetual license generally applies to a specific version of the software product. However, for a yearly fee you can get maintenance and support included. This is something that you need to discuss with your software vendor and decide if this is the best software licensing model for your needs.
Support and maintenance licensing
As mentioned above, you can purchase support and maintenance licenses on top of your perpetual licenses if you want to make sure that you have software updates and fixes included.
Subscription based licensing
One of the most popular software licensing models today is subscription based licensing, which is used both for individuals (e.g.: Spotify, Netflix) and companies (e.g.: Oracle, IBM, Microsoft, SAP). With this particular software licensing model, you license the software program or application on a recurring basis for a defined period. This can be 30 days, monthly subscription, or 365 days, annual subscription. Generally, subscriptions don’t have a termination date and they automatically renew after the initial term.
Proprietary licenses allow companies or individuals to purchase the right to use software, while the software publisher has full ownership of the software. This is a quite common licensing model today and most vendors are using it. When you purchase a software program through proprietary licensing model, you have to agree to the Terms & Conditions of the publisher.
Cloud based licensing
Increasing in popularity nowadays is also the cloud based licensing model. Most software publishers are trying to move their customers to the cloud. The main benefit of this software licensing model is that it offers the possibility to access and use the programs anywhere, anytime. Even if it’s in theory a flexible licensing model, a lot of companies are still skeptical about it.
How can B-lay help you?
If you want to understand which software licensing model is best suited for your needs, don’t hesitate to reach out to us. We’ll analyze your situation and together we’ll make a plan.