6 Software Licensing Models & Types to Consider

The cost of running a business seems to be increasing even with tools promising to do more for your business. Choosing the right type of software licensing model can help your business save money. Pricing models shape how businesses procure and use software—a software licensing model can influence cost, adaptability, and accessibility to software.

It's crucial for buyers to understand the various types of software licensing models when procuring software. This blog will explore the different software licensing models and how they can affect your business.

1. Perpetual Licensing

Perpetual licensing allows buyers to own the software outright by paying a one-time fee with the benefit of owning the software forever. It’s a straightforward software licensing model without recurring fees, simplifying the purchasing process. However, this often comes at the price of limited support and major updates. If software has a high upfront investment for a perpetual license, it may alienate small businesses that can find flexible and cost-effective solutions with a subscription.

2. Subscription-Based Licensing

Subscription-based software licensing models provide easy access to the latest features and updates and reliable support, all for a predictable monthly or annual fee. This licensing model for software is common among SaaS companies and cloud-based software. It simplifies budgeting with consistent costs and offers flexibility to adjust subscriptions based on changing needs. However, it’s crucial to consider the long-term cumulative costs as an organization expands over time.

3. Feature-Based Licensing

Feature-based software licensing models allow users to tailor their experience by selecting specific features or components that align with their needs. This tiered pricing model enables users to pay only for the services they intend to use, optimizing cost-effectiveness and resource allocation. Feature-based licensing empowers users to curate their software experience according to their unique requirements by providing a customizable approach.

This targeted selection of features ensures that users maximize the value derived from their purchase or subscription plans. While it seems like a smart way to cut costs and streamline operations, managing and upgrading licenses for specific features can become a headache, especially in larger organizations. Having a technology partner to help with careful strategizing and planning is best.

4. Concurrent Licensing

Concurrent licensing is a smart solution for businesses that have fluctuating user needs and want to maximize their resources. With this licensing model for software, a set number of users can access the software simultaneously.

Companies can save on expenses by eliminating the need for individual licenses for each user. However, effective management must be implemented to handle fluctuating usage demands. This will ensure availability for key users and may require additional administrative resources to maintain a smooth operation.

5. User-based License

User-based licensing offers a streamlined approach to accessing your software product across various devices. If the software has a desktop, mobile, or web-based version, users can access it on their chosen device. This is ideal for bring your own device (BYOD) approaches to work or companies that support remote work environments.

By issuing licenses to specific users rather than devices, your organization can ensure seamless accessibility and convenience. This method simplifies user experience by allowing access to your product suite with just one set of credentials. It’s also scalable and flexible because you can add and remove users to control costs.

6. Device-based License

Device-based software licensing ties a software application’s use to a specific device. The software can only be used on one device unless additional licenses are bought. This model is commonly used for software intended for a single user on one device, like operating systems or specialized professional software.

The main benefit is the simplicity of managing licenses for the software vendor and the user. Tracking compliance is easier and on-premises workstations can be physically secured. It can be less flexible for users needing software access from various devices, leading to costs for extra licenses or alternative licensing models to suit their needs better.

Reduce Expenses and Streamline IT Management

With the right IT partner by your side, you can find the best software license model for your budget and needs. Your business is unique in how you operate. Ciracom Cloud works closely with our partners to develop solutions that work for you. Explore our catalog of cloud services. We make cloud business solutions simple, affordable, and secure.