Software Licensing Basics

In a nutshell, software licensing is technology that software publishers use to help their customers automatically comply with their software products' licensing terms. At the same time, licensing helps vendors increase their revenues by giving their customers a reason to buy more licenses when they are needed.  Increasingly, software users rely on their vendors to keep them compliant through electronic software licensing.

Licensing works by describing licensing terms into secure keys. These keys are issued to each customer to enable the software that was ordered. When a customer runs a licensed application, it requests a license to run by way of a call to the licensing software. If a valid license key is found and it contains all the right attributes needed to grant the license, then the product runs as normal. If a license cannot be found or is not available (due to all licenses in use, expired licenses, etc) then the program can take the appropriate action to gracefully exit, or continue based on the vendor's policy.

Increase Pricing Depth

Licensing software gives vendors many strategic choices, allowing them to match the optimal policy to each type of customer based on their usage profile. For example, a vendor might sell a dedicated personal-use license to a particularly heavy user of a product. This license might be less expensive than a license that could be shared by many users. These shared licenses are sometimes called "floating," "concurrent," or "network" licenses. Using licensing to fine-tune policies that correspond to the use of the software helps vendors increase pricing depth by offering prices that best fit the usage profile - avoiding the "one-size-fits-all" model or the highly sub-optimal "site-license."

Improve Software Security

Since license keys are usually "locked" to a computer's ID, vendors also benefit by decreasing revenue leakage that might be caused by users who inadvertently use more software than they are licensed for. Licensed software can run only on machines for which it is authorized.

Enable Evaluation Programs

Software that is electronically licensed can also enable demos, trials, and evaluations. Since license keys may have expiration dates, vendors can offer their fully-functional products to their prospective customers for a limited time period, using the expiration date as an "impending event" to help close additional sales. Vendors can securely offer customers a peek at a new release or a complimentary products to help boost sales to their existing base.

Decrease Manufacturing and Distribution Costs

Software that is enabled with a license manager also helps vendors lower their manufacturing and distribution costs because a single binary copy of an application can address various customer types (replacing multiple SKUs) by simply issuing different license keys for each class of user. What's more, an application that is secured by its software license key can be safely downloaded over the internet resulting in further savings and customer satisfaction. Using RLM's Internet Activation will lower the costs of servicing your customers and will improve customer satisfaction by providing 24x7 access to license activation via a simpler installation process.

Benefits to End Users