How and Why to Create and Sell Consumption-Based Licenses
"Pricing policy is an executive matter" – this should underline how important it is who defines prices and how they are defined. If the price is too steep, you scare off potential customers and lose revenue. If the price is too low, you may win more customers, but the revenue will plateau at some point, because the increased numbers will not make up for the financial shortfall. Low prices naturally affect profits, and sometimes dramatically so.
For software developers, retail prices are directly related to different licensing options. The most common choices are still the traditional "One-off purchases" or "One-off purchases with maintenance contracts". But there are more and more software vendors offering more modern models like subscriptions or consumption-based licenses.
This webinar will cover both the commercial and the technical sides of these licensing models, specifically consumption-based models. For pricing decisions, two factors matter most: "What does it cost me to produce the software?" and "What is the software worth to our customers?". In many cases in the market, the second question ought to take precedence both when calculating prices and when trying to sell the actual software: "This printer can print 1000 pages" might be a great statement for gadget lovers. But when trying to sell the printer’s real added value, it should be "This printer is 20% faster and can save you a lot of expensive labor."
Modern licensing models can benefit from using cloud solutions, as the cloud makes it easy to capture and collect usage data immediately and renew subscriptions on the fly. But has the whole world really gone online already? Our experts at Wibu-Systems know: That is not true. In industrial shopfloor scenarios in particular, there is so much legitimate concern about cyberattacks, sabotage, or data theft that many devices are not always available online. Often, outbound connections through dedicated gateways are the limit of what can be accepted. And availability is also another legitimate worry for many users of cloud services. It only takes a misguided shovel, and the fastest fiberoptic interconnection is cut and production comes to a standstill. What good is a 20% faster connection with a network printer, if the printer has been physically cut from the network? All the time and effort saved with modern connectivity is quickly lost again to such incidents.
The technical part of the webinar will cover the concrete ways to implement consumption-based licenses with CodeMeter. The options are tracking use periods or actions with a unit counter or capturing detailed user telemetry data in a usage statistic. Both are possible with offline license containers (CmDongles and CmActLicenses) or in online scenarios (CmCloudContainers). CodeMeter has the necessary framework to collect the data, and the means to return and analyze it can be adjusted to match all given requirements, even including hybrid combinations of online and offline elements. The ability to assign customer-specific licensing models comes built in with CodeMeter, e.g. to assign licenses to automotive users as permanent single-user licenses to take out on the road, while giving office-based users the same software, i.e. the same installation package, via a named-user cloud license.
The agenda in detail:
- Pricing policy
- Calculation methods; cost against added value
- Benefit selling: How to communicate added value
- Licensing models
- One-off purchases and perpetual licenses
- Consumption-based licenses
- Online and offline scenarios
- License modelling with CodeMeter:
- Separate licenses for each trackable feature
- Unit counters and how they measure usage
- API integration in software
- Returns in offline scenarios
- Alternative: License Tracking
- Active use cases
- Additional checkout during pre-Christmas sales
- Construction software package after use period
- Billing per driving license exam
This masterclass wants to go beyond the theoretical capabilities of the model and talk about real-life experience of actual practitioners. This is why the last part of the online session will take a look at three representative implementations of consumption-based licenses that software developers have made possible with the power of CodeMeter.