Featured Article from Software Licensing

Software Licensing Models Must Be Flexible to Remain Competitive

October 05, 2016

The way software is licensed and monetized is rapidly changing out of necessity, as the technology world evolves and the digital age becomes a reality. Not only are software developers and sellers under pressure to generate more revenue, but they must continue to innovate their development, all while bowing to customer demands for subscriber-based, as-a-service and pay-as-you-go models.

It can sometimes seem like walking a tightrope to companies that have successfully relied on a traditional software licensing models for decades. But these companies must change the way they do business to stay competitive, according to Eric Free, SVP of strategic growth at Flexera Software. Free recently spoke to App Developer Magazine about how software companies can painlessly make the transition to today’s licensing and monetization models.

Free cited a Software Licensing report stating that only 43 percent of software producers credit perpetual software licenses with bringing in half or more of their revenue. Meanwhile, 70 percent of those queried plan to change their pricing and licensing during the next two years in a bid to generate more revenues, become more competitive and improve customer relations and engagement.

In a nutshell, software companies are changing their licensing policies to accommodate changes brought on the by the cloud, virtualization, SaaS (News - Alert), mobile platforms and the Internet of Things (IoT). And customers overwhelmingly prefer flexibility when it comes to paying for software and services, often choosing usage-based and subscription pricing over traditional perpetual pricing models.

Software monetization planning and management solutions can go a long way toward helping companies make this transition smoothly while increasing customer engagement. Flexera’s solutions, for instance, encourage flexibility and automation by supporting several types of business and revenue models.

“Software monetization represents the art and science of maximizing customer value and capturing that value through revenue,” said Free. “Application producers need to provide the right model for their customers in the preferred environment and get paid for delivering that utility. If they do not, customers will find other solutions whose licensing models better align to how they want to use software.”

Based on what Flexera has observed among its customers and the software marketplace at large, the company predicts software companies will add consumption-based and subscription/term licensing strategies to their repertoires. Companies may also be expected to use Internet and network licensing to enforce agreements as well as automated monitoring and management.

Software monetization and optimization solutions will undoubtedly play an integral role moving forward, as companies diversify to offer flexible pricing and licensing models.

Edited by Maurice Nagle
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