site license - A multi-user license that allows everybody at a company's site to use your software legally.
Marketing 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 enterprises. 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, from business applications to Windows utilities to iPhone and iPad apps.
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 called multi-user, site, or enterprise licenses. In education, they're known as school or district licenses.
There are a lot of advantages to selling software site licenses
The key benefit is income. While you have to offer discounts - sometimes deep discounts - to land multi-user licenses, a 100-seat license at a 70% discount results in a very attractive paycheck.
High-profile enterprises have marquee value. If you can secure the appropriate permissions, you can help your business by being able to say that you've sold a site license to, say, a particular Fortune-100 corporation.
Having an attractive site license program makes it easier to attract Value Added Resellers (VARs). VARs 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.
Software site licenses have problems
Here are some potential concerns that you will have to manage -
The biggest issue is providing support to all of the end-users who are covered under the site license. 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 a problem. You must make clear that the licensee's help-desk will be the first contact for routine in-house software 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 without contacting a lawyer. Sometimes you'll need to have your attorney review them.
Few large institutions will pay for an expensive license with a credit card. These big enterprises will supply you with a purchase order. They expect you to invoice them. Most purchase orders specify that the company will pay you in 30 days. Don't hold your breath . It often takes them two or three times that long to deliver their payment.
To start the purchase order process, the large company may ask you to send them a pro forma invoice. A pro forma invoice is a simple invoice with a delivery date in the future.
How mISVs can sell software site licenses
During the fifteen years that I spent developing software applications 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 software company than from a small, independent software developer.
It's important for you to design your website to overcome the concerns that corporate buyers might have about buying software from a lesser-known firm -
Don't look as if you're operating your business from your home. You can establish credibility if your website has your postal address and phone number in the obvious places. I include this information on every page of my site. At a minimum, you have to include your full contact information on your "contact" or on your "about the company" webpage.
Don'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 ordinary business hours.
Setting prices for large software licenses
There are a lot of ways for you to structure and price your multi-user and site licenses. Your pricing should be based on your particular software niche. Learn what your competitors are doing, and what pricing structure your users expect to pay.
If you're competing with companies that are easily recognized, then you'll have to price your licenses aggressively. Pricing your licenses too low is a problem. Bargain-basement pricing does not make corporate buyers comfortable.
Some software vendors compute the license fee by multiplying the price per unit times the exact number of units. Others sell license packs, requiring their customers to buy, say, a 10-pack, 50-pack, 200-pack, or 1000-pack.
Think big. Don't limit your menu to offering a single-user license, offering modest discounts on two through nine users, and then offering a single price for ten or more users. Before starting my public relations firm in 1984, I worked for two employers who had 72,000 and 42,000 employees. Don't make the mistake of licensing tens of thousands of end-users for the price of a ten-seat license.
Make it easy for companies to buy site licenses
Create a separate web page for your site license agreement and price schedule. Make it easy for corporate buyers to find your license descriptions and pricing information.
Tell your prospects exactly what they'll be receiving. If they buy a 100-seat license, will they receive 100 CDROMs? A single DVD? An electronic download and a single registration key for each computer?
Tell customers 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 your user's hardware, then don't expect to sell a lot of site licenses. Enterprises won't agree to such a tedious installation process, either upon initial installation or when they upgrade their employees' hardware every few years.
Should your software company sell site licenses?
Often, it doesn't take much more software marketing work to sell a high-priced, high-profit multi-user license than to sell a single-user license. If you structure your offer properly, address the needs of medium and larger organizations, and think through all of the technical support issues, you can increase your income a lot by selling multi-user and site licenses.
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