L I C E N S I N G
Divide and conquer : Modular Licensing
Many enterprises in the software business want to generate additional revenue streams . The solution depends on many aspects , but one classic option is frequently mentioned : Feature-on-demand licenses .
Features-on-demand . The concept needs no explanation . The term does not even have to be translated into other languages . Everybody understands it intuitively : Software makers do not sell their work as a single , monolithic block , but instead offer individual features that can be activated for a certain fee . This relies on a modular license , which is often combined with additional licensing models like the current favorites : subscriptions and pay-per-use options . Why is this done ? First , to create new , continuous revenue streams and , second , to break into more cost-sensitive markets , as the initial investment required from buyers is spread out over a longer time . One fact that should not be ignored is that the right combination of feature-on-demand and subscription concepts will generate more revenue over a product ’ s lifecycle than a simple upfront sale would ever bring .
Feature-On-Demand as an Aftermarket Afterburner
All of these advantages apply to software makers , but they can apply in the same way to hardware manufacturers ( Intelligent Device Manufacturers , or IDMs ). Most of the features and capabilities of their hardware is determined by the software that runs on it . Espe- cially in particularly competitive markets , enterprises have to ask themselves how they can lower the entry threshold to attract more buyers , without losing sight of their overall commercial performance . And this is where modularity can be the answer .
The basic features of an application can be included in a package that allows users to enjoy the product in its essential form . Attractive add-on features can then be offered as top-up purchases . The users would originally receive a license for the basic package and can then buy additional features to match their profile and requirements .
The challenge for the vendor is to define the right separate pieces with added value that creates real demand in the market . These could be add-on modules or functions that might be particularly interesting for specific user groups or markets . These customers would be more willing to invest extra to enjoy the additional benefits .
Modular licensing also creates interesting new opportunities in the aftermarket business . There might be more demand for certain features that is only discovered once users have become accustomed to using it . Alternatively , vendors could innovate and add new features over time . Both are interesting possibilities not just for pure software developers , but increasingly also in the industrial arena . Machines are sold with the entire feature set on board , and the buyer either pays for the entire lot upfront or buys additional features in the aftermarket over time , activating the licenses for them online or offline . The automotive industry is already making use of such models in many areas , with Tesla pioneering the idea of activating features separately .
The ability to produce one standard hardware with all features theoretically on board , instead of many feature-specific variants , also reduces manufacturing costs . But even for devices that need separate hardware added , there are lots of savings to be made and successful business models to be introduced in the aftermarket if the add-on features are defined and priced intelligently .
Realized with CodeMeter The simplest way to integrate a feature-on-demand model in your software is to use Code- Meter Protection Suite . AxProtector , the protection tool available for a range of target plat-
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