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Floating licensing is a software licensing approach in which a limited number of licenses for a software application are shared among a larger number of users over time. Nice for the corporates to reduce the costs. It has also the developer aspect.

I saw lots of pricing examples for many software. As far I understood, there is no standard to set the prices.

As a software developer, it is also a goal to maximize the yield. Which criteria should I take in account by setting the floating license price?

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2 Answers 2

up vote 7 down vote accepted

my opinion: This is a business decision. Pricing exists because markets can be segmented.

For instance, someone will pay $x for candles. Someone else might pay $x+3 for blue candles, or only pay $x-1 for pink candles. You get the picture.

Pricing is a function of value (and cost, and other things too). One presumably gets atleast $x worth of value for an item which costs $x. If you get more value, customers are happy (and you potentially could've made more).

Figure out how much value you are providing, and come up with a number. I don't know how companies arrive at pricing, perhaps, some courses can help, or someone with business background.

So, figure out who you want to sell floating licenses to. Big companies, small companies, academia, industry specific sectors? Is there a "norm" for similar service? If not, be bold and set it high. You can always reduce it. If you set it too low, raising it becomes difficult.

Hopefully, it helps. I read an excellent article a couple of years ago. It is provided in the accepted answer for How do you decide how much your software will cost? It does a really good job of explaining software pricing.

Some other useful insights...

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That's why pricing a float is interesting. They have a 1000 users but only 10 need to use the app at once, so your price has to be more than 10x the cost of one seat but less than 100x. –  Martin Beckett Aug 18 '12 at 16:00
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And as a side note: try to remember that 'value' is value TO THE USER. No one cares what it cost you to make the thing - it will sell (or not) based on how much it's worth to the person buying it. –  Michael Kohne Aug 20 '12 at 14:32

The pricing algorithm will be complex.

Start with basic pricing:

  • How much does a single user license cost?
  • Do you have a volume discount?
  • Do you have a plan for an enterprise license?

Where does the software run?

  • PC only?
  • Server based?
  • Do you allow the use of Citrix?

The use of hardware dongles

  • Is the standard license fixed to a particular machine or is a hardware dongle used? The hardware dongle still requires it be attached to a PC/Laptop in order to be used.
  • Can the dongle be placed on a server?
  • Will the server only be used to hold the license dongle with the code existing on individual machines?
  • Will the dongle still be matched to a particular piece of hardware?

Usage Mode

  • What percentage of time is the software in use for a typical user?
  • How long does it take to install?
  • How often will multiple people clash when trying to use the software at the same time?
  • Will the user grab the license at boot up, or will they need to do something explicit to lock a license?

Flexibility

  • Do you plan on being to split licensees, with some users/machines have priority and the ability to kick others off the system?
  • Do you plan on having the licensing software calculate usage numbers to show how often they clash, so you can get them to add more licensing?

The price of floating licenses is set to maximize the revenue you can get in some of the variety of usage modes. Now you know why there is no standard.

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I am deeply impressed. It is more complicated than I thought.. –  Kayser Aug 18 '12 at 21:17

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