Software licensing models

The Register has a good article on Software Licensing Models which is a useful primer if you’ve never had to encounter this wonderful world before… I thought it might be worthwhile examining our choices in this area from a vendor perspective. I know some Lab Informatics and especially ELN vendors have some quite complex models, so this area is of continued interest to us (and then there’s Oracle’s model!).

We’ve always had a very straightforward model; because our Electronic Lab Notebook needs to know about every user to do its job (every user needs to be uniquely to sign and witness their entries), it is easy to just charge for the number of users which are enabled on the system. Fairly straightforward.

We do have a slight complexity in that we split PatentSafe functionality into modules, so you can have cheaper licenses for people who just want to read, or people who just want to submit and sign stuff, etc. We have assigned “points” values to these functions, and customers buy a certain number for their system which gives them a lot of flexibility.

Sometimes we’re asked about concurrent pricing but that request generally comes from an IT dept who are (quite reasonably) looking for ease of administration and don’t realise every user is going to be setup (automatically or otherwise) with a PatentSafe account anyway. Concurrent licensing wouldn’t help anyone in our use case.

We do have a mix of perpetual and rental options in our licensing structure; this accommodates customers who have capital and want the reassurance of owning something (generally larger more established customers) as well as making enterprise-grade solutions attainable to companies who might either be short of capital (being VC funded and at the end of a round) or unsure of their growth curve.

We don’t do anything silly in terms of copy protection; it just adds to pain for the users, and ultimately support pain for us! We don’t even lock a system to a particular number of users – PatentSafe just points out how many users you have and we trust our customers to have that many licenses. We also don’t charge for test servers, although we do make a small additional support charge if you want production-level support for an additional server.

I guess we are unusual in that we’re a records system which is intended to go into court at some point, so we can trust our users to do the right thing in terms of having the right number of licenses. This level of trust makes everything easier, and interestingly means users are more trustworthy back – in all the years I don’t think I’ve ever heard of a reason to be worried that a customer may be exceeding their entitlement.

I know some software companies view having a complex licensing structure as a sales tool but I’ve never found it all that attractive. We’re providing and supporting a tool which will benefit a customer’s organisation, and the question is how to fairly measure the value we provide and hence should be compensated for. We’ve found the easiest and most reliable way to do that is count up how many scientists we’ve freed from the drudgery of the Bound Paper Lab Notebook, so that’s how we price the system. Simple, transparent, predictable – and fair.

Interestingly treating our customers like adults means they act like adults; and the relief expressed in the sales cycle when the realise we’re straightforward to deal with is quite gratifying! I continue to remain befuddled as to why more companies can’t have understandable pricing schemes – I can’t see how complexity helps the vendors or the customers.