Focus on site licenses,
and sell more software
Selling individual licenses to end-users is a good way to make a living. Serious income, however, comes from selling multi-user and site licenses to corporations, government institutions, school districts, and other large organizations. While big businesses might not buy site licenses for your latest arcade game, you need to invite institutions to purchase multi-user licenses of most types of software. These larger sales can significantly enhance your software marketing.
What is a software site license?
A site license allows an organization to install your software on more than one computer. Different names are used to describe these licenses. In corporations, they're known as multi-user, site, per-seat, or enterprise licenses. In education, they're called school or district licenses. Within a microISV's organization, site licenses are called "good software marketing."
Why should you sell multi-user and
site licenses for your application?
There are many advantages to selling site licenses.
- The most important benefit, of course, is income. While you have to offer discounts - sometimes deep discounts - to secure multi-user licenses, a 100-seat license at a 70% discount results in a very attractive paycheck.
- High-profile corporations have marquee value. While you need to get the appropriate permissions, you can help your business by being able to say that you've sold a site license to, say, a Fortune-100 corporation.
- Having an attractive site license program makes it easier to attract Value Added Resellers (VARs). These folks are not nearly as interested in making 30 percent of a $25 sale as they are in taking a smaller percentage of a 100-seat sale.
Site licenses have their problems, too
Site licenses are not all happiness and joy. There are downsides to selling multi-user licenses, too.
- The biggest issue is support. If you've sold a 250-user license for 30 percent of your normal price, and if you have 250 new users phoning and emailing you for technical support, you may have created a monster. You must make clear that the licensee's help-desk is the first contact for routine in-house product support.
- Often, corporations and government agencies have contracts that you'll need to sign. Sometimes these contracts are so simple that you'll be able to evaluate them yourself. Sometimes you'll need to have your attorney review them.
- Large institutions will rarely pay for an expensive license with a credit card. They're going to give you a purchase order, and expect you to invoice them. While most purchase orders specify that the company will pay you in 30 days, it often takes them two or three times that long to send you a check. To start the purchase order process, they may ask you to send them a pro forma invoice; it's a simple invoice with a delivery date in the future.
How to compete with big companies for software site licenses
In the 15 years that I spent doing application development work for two Fortune-200 companies, one of the popular catch-phrases was "Nobody every got fired for recommending IBM". It's much safer for the purchasing manager to buy a site license from a large, well-known company than from an independent software developer. You have to work this type of corporate thinking into your software marketing. You have to design your website to overcome the concerns that corporate buyers might have about buying software from a lesser-known company:
- You can't look as if you're operating your business from your kitchen table. Your web site has to have your postal address and phone number in the obvious places. I include this information on every page of my web site. At a minimum, you have to include your full contact information on your "contact" or "about the company" page.
- You can't brag about being a one-person company or a part-time company. If a corporation is going to include your application in its list of mission-critical software, then they have to be confident that there will be a real person who will answer support calls during normal business hours.
How should you price your application's site license?
There are a lot of ways to structure and price your site licenses. Your pricing should be based on your marketplace. Learn what your competitors are doing, and what pricing structure your users are used to paying. If you're competing with companies that are household names, then you'll have to price your licenses aggressively. Pricing your licenses too low is a bad software marketing strategy; bargain-basement pricing sends up a red flag to corporate buyers. Some companies compute the license fee by multiplying the price per unit times the exact number of units. Others sell license packs, requiring companies to buy, say, a 10-pack, 50-pack, 200-pack, or 1000-pack.
Think big. It might be a major mistake to offer single-user licenses, modest discounts on two through nine users, and a single price for ten or more users. Before starting my public relations firm 19 years ago, I worked for two employers who had 72,000 and 42,000 employees. Don't make the mistake of licensing tens of thousands of users for the price of a ten-seat license.
Create a separate web page for your site license agreement and price schedule, and make it easy for corporate buyers to find it. Tell your prospects what they'll be receiving. If they buy a 200-seat license, will they receive 200 CDROMs? A single CDROM? An electronic download and a registration key?
Tell prospects about your site license and multi-user license
Specify if they can install your software on an individual computer, on a LAN or WAN, or on multiple computers in multiple locations. If your copy-protection regimen involves tying each copy of your application to a user's hardware, then you're simply not going to sell a lot of site licenses. Corporations won't agree to such a tedious installation process, either upon initial installation or when they upgrade their employees' hardware every few years.
Increase your software sales with site licenses and multi-user licenses
The bottom line - Often, it doesn't take any more work to sell a lucrative multi-user license than to sell a single-user license. If you structure your offer properly, address the needs of large organizations, and think through all of the support issues, you can substantially increase your income by selling multi-user licenses. It's a great software marketing strategy.
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