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Why Reprise Software? Top Ten Reasons

Most developers involved in selecting and then implementing a software license management solution will freely admit that they are not experts in software licensing. Based on our discussions we have compiled the following list of the Top 10 Reasons why the Reprise License Manager (RLM) is preferred by today's busy software developers.

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Building Your Software Pricing Model

Deciding how to price your software products is a challenge that does not a have “one-size-fits-all” solution. A software license manager, such as the Reprise License Manager (RLM), is an indispensable tool that can help you to design and enforce pricing models that are right for today’s customers, while giving you the flexibility to quickly adapt to new opportunities as they emerge.

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Implement a Recurring Revenue License Model

For more predictable revenues, consider a Recurring Revenue License Model.

Software vendors increasingly rely on a recurring revenue license model and other pricing strategies to create steadier revenue streams. These strategies result in smoother and more predictable revenue growth which makes financial planning easier and increases business efficiency, maximizing value to shareholders.

A license manager such as RLM is an essential tool to implement these changes. It enforces license policies that promote higher recurring revenue.

Recurring revenue comes from three main sources:

  • Renewable license fees (subscriptions)
  • Annual maintenance fees
  • Fees based on usage (pay-per-use or consumptive models)

License Subscriptions

Increasingly, software vendors offer both perpetual licenses and license subscriptions. Subscription licenses are priced so that they provide a lower initial cost in order to attract new customers as well as customers who are trying to preserve short term cash. Subscriptions often seem less risky to customers too.  If the product doesn’t live up to expectations, then the customer has only limited financial exposure.

Subscription licenses are renewable licenses, usually annual, including software support and updates during the coverage period. The license is automatically terminated unless it is renewed.

Setting Prices
Prices for annual subscriptions are generally some fraction of the perpetual license alternative.  Many companies aim for a crossover point of 4 to 5 years after which the costs for the annual license begin to exceed the perpetual license fee plus the annual support costs. So, an annual license might be priced at 40% of a perpetual license.

The License Manager’s Role
Supporting the concept of term licenses are license expiration dates.  Days before the license expires, your software can display the number of days remaining. This technique improves customer satisfaction because the user is prepared for the renewal event. When the customer signs up for another term, new licenses specifying the new expiration date can be sent to replace the expiring license.

If you automate license renewal from within your product using an Internet activation solution, such are Reprise’s Activation Pro, the process is seamless.

Support RenewalsRecurring Revenue License Model

Software vendors who rely primarily on perpetual licenses can still use licensing techniques to enforce support renewals to generate higher renewal rates.  Customers are encouraged to renew their support agreements when license managers restrict access to desirable new releases.

A flexible approach is to specify a “latest release date” in place of the product version number in the license. This date represents the maintenance coverage period. In other words, it specifies the latest future software release date that can be supported by this license.  Of course, applications must be programmed to request licenses consistent with the “born on date” of its release.

Pay Per Use Pricing and Post-Use-Billing

Some software vendors offer yet another payment approach – pay per use or post-use billing.  What better way to stabilize your revenue stream than to charge based on actual usage?

License managers produce detailed report logs of license activity, recording data such as: product name, number of licenses granted, user name, host name, and duration.  With this information, you can periodically produce invoices that reflect your customers actual use. Popular license managers, like RLM, write the log in plain text so that it can examined directly. Also, the log is authenticated to ensure data integrity, and can be “anonymized” to address potential privacy concerns.

License managers that are deployed in the cloud, such as RLMCloud, collect the usage data for easy analysis and invoice generation.

Business Advantages

Recurring revenue models:

  • encourage steady, predictable revenue flow to the publisher
  • lower initial cost for the user, and faster approval cycles
  • allow for short-term rentals and faster new feature introduction
  • allow license policy to change at renewal time
  • Limit license exposure to overuse when machines are decommissioned or upgraded
  • let customers expense the budgeted license renewal fees
  • lessen price discounting pressure
  • Encourage tighter client-vendor relationship because support is bundled.

All other things being equal, companies with recurring revenue pricing are valued higher than companies who rely mostly on perpetual licenses. For these companies, revenue recognition is immediate.  It is also easier to weather a bad quarter or flat market. Bundling customer support in the license fee helps to retain customers and boost support renewal rates. Sales compensation can reward new orders at higher rates than renewals, but lower rates than perpetual licenses. Since end customers cannot opt-out of support, customer satisfaction is improved.

The Transition

If your company plans to shift from perpetual to subscription licensing models, expect lower initial growth rates. But, since new customer acquisition builds revenue incrementally on top of revenue base from renewals from previous years, after an initial period of slower growth, revenues will exceed perpetual-only models.

The mechanics of making the transition work may mean modifying your licensing code at the api level in order to handle automatic renewals. Also, your CRM system may need to be coupled more tightly to make sure that renewal orders and cancellations are reflected into your licensing solution. Remember, SaaS is not required for recurring revenue, the delivery model is irrelevant.  You can still sell desktop on-premises applications and gain from recurring revenue licensing models.

101 License Models – Nodelocked Licenses

Restricting Usage: Nodelocked Licenses

A while ago, we wrote a blog post titled 101 license models, and a followup on unrestricted license models.  In this post, we explore the second set of license models described in that post – Nodelocked Licenses.  To review, the Nodelocked Licenses we described are:

  • uncounted
  • computing environment limited
  • customer name
  • detached demo
  • expiring
  • single
  • license type (beta, demo, eval)
  • maintenance-thru-date
  • options
  • permanent
  • platform-limited
  • software version
  • timezone-limited
  • upgrade other licenses
  • user-locked
  • VM enabled

Because these licenses are locked to a machine or user, they are more restrictive than the previously-described unrestricted license models.

You use nodelocked licenses when you want to restrict how and where your software is used.  Since nodelocked licenses do not require a license server, your customer is up and running with a minimum of fuss.

What you can do with Nodelocked Licenses

With nodelocked licenses, you have quite a bit of flexibility – you can:

  • allow any user running your software on the nodelocked machine access,
  • allow only a single copy of your software to run on the (specified) machine,
  • provide an expiration and/or a start date for the license,
  • create options so that you have an opportunity to upsell to your customers,
  • specify that the license is not usable on a virtual machine,
  • include the customer name, for use in a startup screen.  This often deters software theft.

Sometimes our customers use user-locked licenses, which are locked to an operating system’s notion of the user name rather than the computer’s hostid.  While it is possible to have multiple humans logged in as the same user name, this can be inconvenient for certain applications.

In addition to all these options, you can also upgrade a license to a newer version when a customer stays on maintenance.

We will explore the other main License Model categories in future blog posts.

101 License Models – Unrestricted License Models

Unrestricted License Models

A while ago, we wrote a blog post titled 101 license models.  In this post, we will explore the first set of license models described in that post – the Unrestricted License Models.  To review, the Unrestricted License Models we talked about are these:

  • any
  • customer name
  • demo
  • expiring
  • license type (beta, demo, eval)
  • maintenance-thru-date
  • options
  • permanent
  • serial number
  • software version
  • user-locked

These licenses are not locked to any machine or license server.  In other words, they work anywhere.  So, given that a customer can use as many of these licenses as they want, why would you ever want to use one of these?

One reason may be that you want to restrict how a license is used, as opposed to how many copies of that license can be used.  At Reprise, we license RLM to an ISV, but we do not restrict how many develpers can use the development kit, nor do we restrict how many copies of their application that can be used.   We do this by using an unrestricted license model – we lock the RLM license to the ISV’s short name (what we call the ISV name).  Once “out in the world”, a customer can only have software from one ISV of a particular name, so multiple companies would not use the same ISV name to license their software.  This provides sufficient licensing protection for our software.  A customer who has purchased an RLM license would get a permanent license with this ISV name, whereas a demo customer would get an expiring license with an ISV name of “demo”.

Another Reprise product that is licensed in this way is our Activation Pro product.  This is a server-based product, and the real value comes from having a single server that activates the licenses for an ISV’s customer, but we allow our ISVs to run multiple copies of this server, primarily so that they can do testing on a second installation.

Similarily, a product could display a customer’s name in a splash-screen.  Most legitimate businesses would not want another company using software that was licensed to them by name.

Frequently, our customers use user-locked licenses, which are locked to an operating system’s notion of the user name.  While it is possible to have multiple humans logged in as the same user name, this becomes inconvenient.

Also, ISVs might license their main program using floating or node-locked lienses, while some ancillary program or utility uses one of these unrestricted license models so that there is some amount of control, but provides convenience to their customers.

We will explore the other main License Model categories in future blog posts.