When Subscription Licensing Doesn’t Fit

Much has been written recently, in this space and elsewhere, about the growing popularity with end users and ISVs alike of cloud-based subscription software delivery. Subscriptions offer ISVs several benefits: recurring revenue, ability to rapidly shift product bundles and pricing plans to adjust to changing market conditions, and business resilience even during uncertain times like the current crisis. End users avoid the large upfront expenditures of traditional perpetual licensing and can easily upgrade to the latest features and functionality in a software-as-a-service scenario.

The truth is, however, not all applications lend themselves to a subscription delivery model and not all consumers have gotten on board with the trend. But it doesn’t mean that the rest of the industry is stuck with perpetual licensing. Let’s take a look at a number of consumption-based and other licensing options that might be a better fit for the application and the end user while providing ISVs with additional monetization opportunities:

• Feature-on-Demand License: In many instances, the full capabilities of a particular software program are rarely utilized, or perhaps an end user doesn’t need them initially but may grow into them over time. In this case, a features-on-demand model makes perfect sense. The end user makes an initial investment of just those capabilities that are needed at the time of purchase. Later, additional software features can be enabled through a simple software key activation without requiring any hardware changes since the features already exist in the device and need only to be unlocked. Read how a medical device manufacturer leveraged feature-based-licensing to generate new business opportunities.
• Pay-per-Use License: The pay-per-use model has come of age and is being widely embraced by consumers, particularly those with low volume needs or those whose usage fluctuates in and out of peak periods. The pay-per-use model is relatively straightforward: use of the product is metered and customers pay only for service they use, much like pay-per-view TV or publishers and research firms who sell access to high value content on per-use or per-download basis. One interesting example of a company who has implemented a creative pay-per-use strategy is Desoutter Industrial Tools. They allow their customers to purchase licensing credits that can be used to enable a certain feature, and upon completion of a task, re-deploy the credits for a different feature or service when their needs shift.
• Volume License: The customer is sent a large number of licenses to cover the many seats needed in an organization. Customers of such licensing schemes are typically large enterprises, governmental or educational institutions, with prices for volume licensing varying depending on the type, quantity, and applicable usage-term. Software publishers can define whether each individual computer should be activated, or the system needs to be policed by audit.
• Borrowable License: The user is entitled to borrow a license for use on a local computer (CmActLicense) or CmDongle for a fixed period of time. During this time, the license remains allocated to the license server and cannot be used otherwise. When the borrowing time expires, the license is automatically made available again on the license server and can no longer be accessed locally. It is possible to return the license manually to the server or renew a borrowed license.

For ISVs, the flexibility to offer licensing models tailored more closely to their customers business needs and preferences is critical. And while they might recognize the need for a more modern licensing approach, ISVs need to decide whether their existing licensing system can deliver the level of flexibility required to change their business model, or they should consider a licensing solution offered by a 3rd party to achieve their business goals.

Take for example the case of Agfa HealthCare, a leading provider of diagnostic imaging and healthcare IT solutions for hospitals and care centers around the world. In the digital healthcare market, computed radiography is an important driver in making medical imaging more accessible, especially for smaller healthcare facilities in emerging countries. However, the upfront capital investment in equipment and software remains an important hurdle for healthcare providers with a relatively modest need for medical imaging. Agfa was able to implement a solution for time-based licensing using Wibu-Systems CodeMeter licensing platform that allows healthcare providers to use the computed radiography package in a pay-per-use scenario. Their customers pay as they go, with a fixed down-payment followed by equal and regular installments, thus keeping upfront capital investment low and cost management easy. The time-based licensing model allows the user to pay according to only the imaging volume they need.

See the comprehensive range of license models readily available to ISVs with the CodeMeter licensing platform.