When a subscription is ordered, the billing system sends the necessary information to CodeMeter License Central. The order has to include details about the products covered by the subscription, the original purchase number, and the next payment date. CodeMeter License Central then produces a ticket with the required temporary license, with which the user activates the subscription. The ticket is stored in the license or on the user’ s computer. specific market and the specific product. How many more users would I be able to reach that I would not reach otherwise? In this scenario, the success of the model would be visible quite soon – if I cannot reach more clients with a subscription model, it would mean less turnover overall compared to outright sales.
The above chart shows the typical development of sales revenue for outright purchases, maintenance subscriptions, and license subscriptions.
The picture might be completely different for your specific software, but the general rule is that a license subscription is slower out of the blocks, but will then outpace the other options going forward. In many cases, the model should initially be used for specific- ideally new products- or specific markets.
Implementing subscriptions There are two basic ways to set up subscription licenses:
1. You create unlimited licenses and cancel them when the subscription ends.
2. You create limited licenses that are active until the next payment date( plus a grace period) and renew them automatically when payment has been received.
The first approach makes for simpler handling, as it only needs one action in the case of a cancellation. However, it does leave considerable room for fraud: Dishonest users could try to keep their licenses active by either not going through the cancellation process or by interrupting that process by not going online. This is why the second approach is preferable. The common objection that it forces users to get active regularly to renew their licenses is easily explained away: Simply use an automatic renewal process, ideally with a certain grace period. For most users, this will let the renewal just happen automatically and in the background. Another advantage of the second option is how simple it makes it for the subscription to be transferred to a new computer. Since the license on the old machine is time-limited, it will simply run its course, and you can show goodwill and allow the user to activate the new one on the new machine in the meantime.
Technical workflow In order to introduce a subscription model, you need CodeMeter License Central to create and automatically deliver the licenses, and you need a billing system. This can be a popular ERP system like SAP, an e-commerce solution like CleverBridge or Digital River, or a CRM system like Salesforce.
For an automatic renewal of the subscription, the billing system transmits again details about the products, the new purchase number, the next payment date, and the original purchase number. CodeMeter License Central uses the latter number to allocate the renewal to the right subscription and produces a license with a new expiry date, which is set to the existing ticket.
The user’ s software uses the ticket it has stored and checks regularly whether a license renewal is available. If it is, the license is automatically updated. Within a certain grace period, in which the license stays active beyond the next payment date, the whole procedure can run transparently in the background, without ever interrupting the user in his daily life with the software.
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