The Different Types of Software Licenses - Look Licensing (2023)

If you use any type of application or software in your business (you are), then you certainly have a license agreement with the person or company that created that software. These license agreements and the terms and conditions that you agree to when you install an application can become very complicated and may take some time to fully understand.

Fortunately, a little knowledge of software licenses in general can keep you informed and mitigate the unnecessary risks involved in deploying an application to your user base. There is a lot of information to take in, which is why some companies outsource to companies like Outsourcing.See licenses, who can ensure calm and deal with this somewhat dry subject.

What is the software license?

Before we delve into the different licensing models used by most software companies, let's focus on answering the question "What are software licenses?" TOSoftware licenseis an agreement that establishes the legal guidelines for the use and distribution of the corresponding software. In principle, it grants the licensee the right to use the software. It should be distinguished that the licensee does notownthe software, you may only use it within the specified parameters. These parameters often include software limitations, warranties, disclaimers, warranties, and protections. Software licenses are free, proprietary, oropen source. What differentiates these two is how users can copy or redistribute the software for future use.

In short, the software license determines how many times you can install the program, where and how you can install it, whether you can modify, copy, or redistribute it, and whether you can view the underlying source code.

Types of software licenses

Software licenses can take a variety of forms and flavors. Familiarizing yourself with the different methods software vendors use to protect your property is the first step to ensuring you're optimizing your software investment and mitigating risk. We've compiled the list below and included a summary of each to give you an idea of ​​what's available. Take some time to look around and let us know what you think.

Company/Site/Perpetual License

An enterprise software license is often granted to large companies or corporations, which is very similar to location-based licences. Allows the licensee to install the program on multiple computers at the same time. This often means that as long as the actual physical location or business itself is licensed, any number of deployments within that location or business are allowed. The advantage of this is that you don't have to buy the software separately every time you install it on a different computer, which makes it convenient for large companies.

(Video) What is a software license and what types are available?

server license

A server is a centralized computer software system that "serves" software (or services) to other users/devices. When software is distributed in this way, the license usually reflects this. The function of the server license is to control and direct the use of this program throughout the organization. While some programs only require one license for the server, most server licenses have a corresponding client access license (CAL) required for each user/device that interacts with the server.

concurrent license

This license type is based on the number of concurrent users accessing the software. It focuses on instances of programs running on a server where users connect over the network. For example, if you have five concurrent licenses and five users use the software at the same time, a sixth user may not use the program. However, if one of the first five users logs off, the next person can log on and use the software. The concurrent license basically provides broader access to the software, but limits the number of concurrent users that can log into the program.

device license

This license depends on the number of installations of the product. You may uninstall the Software on one computer and install it on the other within the same organization, provided the total number of installations does not exceed the number of licenses purchased. A good example of the use of this type of license would be in the case of shift workers who share machines. Each computer on which the application is installed has a device-based license. Then different employees/persons/users can come and use that machine throughout the day and still be within the limits of the license agreement. If the same application had a user-based license, each individual user would have to own a license. The quick and dirty rule is to count your devices (don't forget mobile devices) and count your users, and then use the license type that has the least.

Trial/evaluation license

The evaluation license is often a marketing ploy to get you to make a purchase. It generally allows the user to access the software a limited number of times and may have other limitations. For example, if you use a certain type of PDF writing software, the program might insert the name of the software and the trial version into the PDF document. After the trial expires, users can choose to purchase a full license or uninstall the program entirely. A good example would be Adobe Acrobat. You can enjoy all they have to offer.a 7 day free trial. Here you can find more information about all legal provisions of AdobeHere.

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Node-bound license

This license allows access to the program on a certain number of computers. They are usually used for server applications likevmwareProducts. The license can be transferred from one computer to another by requesting a new license key. The key is tied to a specific computer and gives you a software license for a single computer. Because this type of license is not counted, there can be an unlimited number of concurrent runs on one computer. This license is more suitable for engineers or companies that develop projects in a few positions.

perpetual license

Perpetual licenses, often called "traditional" software licenses, give you perpetual access to a specific version and edition of an application. Generally, the purchaser pays an advance license fee for the software, and when later versions of the software are released, an upgrade license is required to upgrade the program. You can find more information about perpetual licenses hereHere.

Processor/CPU license

Processor, CPU, and core licenses were introduced when software vendors needed to adapt the business model for server-based applications. Although we have already covered server licenses/CALs, this licensing model does not work for applications with an unknown number of users. To solve this challenge, CPU licenses were introduced, just to license the underlying performance of the server. To properly license a server in this way, you need either a CPU license for each socket on the server, or a core license for each core on each processor on the server. It gets more complicated with virtual environments, but I hope this gives you an idea of ​​the concept and why these licenses exist.

Rental/subscription license

Subscription-based licenses, which are sold and marketed as a service rather than a product, are becoming more popular. Generally, a user pays for access for a year or a month and has unlimited access for as long as the subscription remains active. If you don't like the program, you can stop paying instead of having to pay a flat fee up front.

token-based license

Hetoken-based licenseit is a variant of a license model. Every time a certain program or title is run, it checks a server's license key for the duration of the operation. For example, if software X requires a license key from a license server each time it runs, and if it is available, then the software is licensed to run and operate. The software eventually returns the license to the server when it stops. Basically, the vendor creates a generic license key token instead of a license key associated with each product.

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User based license

User-based licenses grant access to the program to a specified number of users. Each time the user installs the software, this is counted as one installation on different devices for the same user. This type of license is similar to device licenses in terms of simplicity: the number of users using the software is the number of licenses required. When a company's employees have multiple devices that require the software, a user license is attractive because one user license can cover multiple devices that access the software.

OEM license

This license comes with the hardware and is only used for that specific hardware. The license is tied to the hardware and cannot be transferred to other devices.

FPP license (bundled).

The industry term for packaged products is FPP, which stands for "Fully Packaged Product." This is the case when you physically go to a store and buy ready-made software. In the event of an audit, it is difficult to trust these licenses. The examiner needs 3 test points to be valid"Certificate of Admission". These elements are: Proof of Ownership, Proof of Authenticity, and Proof of Purchase.

Why is the software license important?

Software licensing can be a challenging topic, and for this reason, many companies look to companies likeSee licenses. If companies ignore this, it can lead to painful problems. Computer programs can be very expensive, and software vendors have gone to great lengths to ensure that they can reliably generate income from the use of their software. There is no way to get around the licenses other than to refuse to install and use the software. Therefore, it is very important that the software your company uses understands the terms and conditions.

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Using a licensed program reduces risks

Before implementing any software, it is important to understand the legal implications. You must have a software license each time you install or use the program (even if this license is free, it is still required). Failure to understand and abide by the license terms of the software you are using is a very significant legal and security risk. We understand how overwhelming and confusing trying to figure all this out can be. Put on your detective hat oroutsource to othersto find details about your software.

Understanding and managing your licenses can save you money

Using the wrong license type can quickly lead to lost IT money. For example, if you're using a CPU-based license to license a server with fewer than 50 users, you're probably overspending thousands of dollars. Licensing the same server with 1 server license and 50 CALs is much cheaper assuming all other factors are within the licensing parameters. It's worth considering, as the difference in cost can run into six figures.

get support

Some software license companies offer 24/7 technical support, but most offer limited support. They also tend to charge more money for additional support. Please note that a software vendor will do thisnoprovide support for a license-free installation as a purchase is required.

You should be sure to read the terms and policies in advance to understand the limitations of installing and distributing the software package. A goodUnderstand the software licensesave money and reduce your risks.

final thoughts

Ultimately, any time you use a piece of software or a program, it's important to understand what type of license it comes with. Each software license has a specific purpose andBe well informedIt is essential to minimize the risk to the company.

Software companies are not stupid and have gone to great lengths to ensure that they can generate revenue. Our advice is not to try to "fool" these companies by finding license loopholes or loopholes, but to understand how those licenses work and then use that knowledge to optimize your licenses for your particular environment.

Hopefully it was at least a little useful. If you have any questions or even want to add something, get in touch!See licensesstrives to be a valuable resource to you and your team!

(Video) Software: Lesson 22 License Types

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What are the different type of software license? ›

There are two primary types of software licenses: commercial and open-source. Commercial software licenses typically require a fee, while open-source licenses are free to use. However, open-source software licenses do come with certain obligations.

What are the 3 common types of software licenses? ›

These encompass a wide spectrum of licensing scenarios, from free software (public domain) to paid commercial software (proprietary). Between these two extremes, there are also three categories (GNU/LGPL, permissive, and copyleft) that apply to various forms of open-source projects.

What are the most common types of software licenses? ›

Popular Permissive Software Licenses
  • MIT License. The MIT License is one of the most commonly used and permissive open source licenses. ...
  • Apache License 2.0. The Apache License 2.0 is another commonly used permissive open source license. ...
  • BSD License. ...
  • GPL License. ...
  • Mozilla Public License 2.0.
Jun 26, 2019

What is a software licensing system? ›

A typical software license grants the licensee, typically an end-user, permission to use one or more copies of software in ways where such a use would otherwise potentially constitute copyright infringement of the software owner's exclusive rights under copyright.

What are the 5 main types of software? ›

Among the various categories of software, the most common types include the following:
  • Application software. ...
  • System software. ...
  • Driver software. ...
  • Middleware. ...
  • Programming software.

What are some examples of licensing? ›

Some examples of things that may be licensed include songs, sports team logos, intellectual property, software, and technology. Licensing agreements allow parties to control property and enter new markets without having to spend the money to do so.

What are the 7 categories of software? ›

This classification has seven major elements. They are: platform and management, education and reference, home and entertainment, content and communication, operations and professional, product manufacturing and service delivery, and line of business.


1. Level 1 Software Lesson 10: Software licensing
(Computer Applications Technology)
2. Microsoft Licensing Basics, Models, Fundamentals Training 2021
(SAMexpert TV – Microsoft Licensing and Cloud)
3. The Software License Compliance Equation & SAP Licensing in SAM
(ServiceNow Community)
4. Understanding Software Licensing
(Cunningham Law)
5. 81 Software Licensing
(Network Learning Planet)
6. Software License Compliance


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