Time to Review Your Software Licensing Policy?
In days gone by many software developers had little in the way of a software licensing policy. Licensing agreements were drawn up on the fly by sales execs as a part of negotiating individual deals with potential customers.
This approach to software licensing could be seen as flexible or chaotic, depending on your point of view. It may or may not have helped sales to clinch more deals, but it certainly has led to a lack of transparency for customers and a good deal of licensing confusion for ISV’s.
In a recent report the IDC sets out the case for developing a coherent software licensing policy. Some of the key benefits they see include:
- A shorter and more efficient software sales cycle
- Reduced time spent re-inventing the software licensing wheel
- Reduced software licensing contract administration time and costs
- Reduced opportunity for error
- The ability to create a strategy for addressing important issues that impact the way software is licensed that works for the vendor from a profitability perspective while addressing the needs of the customer.
IDC points out that whilst a price list published on an ISV’s website probably doesn’t bear much relation to what many customers are actually going to pay – it will nevertheless be welcomed by customers along with any other information that helps them to understand your licensing policy, the rationale behind it, and the options open to them.
Increasingly both business and private customers are no longer happy to take a passive role in the software buying process and simply be “sold to”. They are demanding the information needed to make educated buying decisions themselves and as the IDC points out an ISV who offers that information will have created a point of differentiation for themselves.
The IDC recommends that software licensing policy communication should:
- Outline the key elements of your policy.
- Show sample scenarios to help customers navigate choice.
- Explain the rationale behind your approach.
- Offer a tool or calculator to help customers make choices and understand what
- they might need to pay.
- Make it easy for customers to obtain this information — don’t put it behind a registration page.
In an age of rapidly changing software licensing models, and rapidly changing consumer behaviour, regular review of licensing policy is probably going to become a necessity.
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