Software License Types: Everything You Need to Know
Knowing the different software license types is crucial for any business owner. If you intend to create and distribute software.3 min read
2. Software License Types
Updated October 30, 2020:
Knowing the different software license types is crucial for any business owner. If you intend to create and distribute software, or if you plan to utilize software in your business, being aware of the different forms of licensing uses can be a critical part of your business structure.
What is Software Licensing?
According to Wisegeek, software licensing is a form of contract between a person in a company that creates a type of software and the person who downloads or buys the software to use for his or her own purposes.
Software licensing exists to protect a copyright of software and can restrict the way that the user can use it. In general, the restrictions consist of copying the software or having it installed on more than one device.
Making any changes to the software or altering the code is also a violation of a software license. Any software that has a copyright and is covered by a license is done through different methods, meaning there are different types of licensing that can be used.
Software License Types
There are different individual software licenses you can choose:
- Perpetual: This lets the customer install and utilize the software for an indefinite amount of time. There is limited technical support, typically 90 days.
- Subscription: This license lets the user utilize the software for a certain amount of time. It will include technical support and allows the user to access upgrades or patches that are offered during the subscription period. At the end of the subscription, the user has some different options, such as:
1. Renew the subscription
2. Buy a perpetual license at a discount
3. Remove the software from the device
- Freeware: This license is provided by the creator that lets the user use the software for free without paying any fees.
- Shareware: This allows for a trial period of software use. If the user likes it, they can then pay a shareware fee or discontinue use of the software.
There are also Special Channel Licenses:
- Original Equipment Manufacturer (OEM): A license that covers software for notebooks and stand-alone personal computers that have to remain bundled alongside the computer system and may not be sold as a stand-alone product.
- Educational Software: This is any software that is labeled for distribution to students and educational institutions at a reduced cost. It is labeled for such use.
- Not for Resale: This license specifies that it is made available by vendors of the software to the distributor and are marked NFR. It is not licensed for commercial distribution.
- Concurrent Use: This license will require you to buy a license for all of the people who will be using the software at the same time.
In addition, there is also special licensing for individuals and multi-users:
- Volume License: This allows you to install software on a specific number of computers. You will be required to make a minimum purchase to get a reduced price. When you buy the licenses, there is one copy of the software and instructions on what to do when you want to buy more.
- Site: It provides you access to the software at a certain location.
The following are network and multi-user licenses:
- Server License: Provides for a license per each server. It requires you to have one copy remaining on your file server. A certain number of CALs are offered per server. There is a set number of devices that can access the software per server.
- Per Seat: Provides for a license per each machine. You will need to buy a license for every computer or device using the software.
- Per Processor: You will buy a license for every processor on the server that is running the software. It will include access for an unlimited number of users. You will not need to buy anything additional.
- Per Mailbox: This is for education customers. If you are using an exchange server, you can also deploy a license through mailbox mode.
In addition to all of these licenses, there are some extra add-ons that you can purchase. An upgrade can be purchased if you want to move to a newer version of the software you already use. You can also purchase a student-use add-on for students to utilize at educational institutions.
If you need help with learning all of the software license types, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.