Account-Based Software Licensing: Complete Guide

Published on: May 19, 2022
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This guide will discuss issuing software licenses and configuring license entitlements to Accounts that may represent multiple departments or locations, and how LicenseSpring’s data model supports Account-Based Software Licensing.

LicenseSpring was born back in 2015 when my Co-founder built a simple License Manager to help us distribute a Desktop PDF Editing Software that we publish. The initial requirements were straightforward: Programmatically generate license keys from a purchase on our web shop, node-lock perpetual licenses to a unique device, and generate trial licenses from within the application. The initial version of our License Server worked really well. So well, in fact, that we soon decided to abstract the License Server APIs and offer it for use by any software developer that needed a License Server who didn’t want to build one themselves. LicenseSpring was born!

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Software Licensing is easy when issuing licenses directly to the end user

Once other Independent Software Vendors (ISVs) came kicking the tires, we quickly understood that there is a whole lot more to software licensing than we had initially anticipated. Apart from needing to offer many new license types (we initially only had trial and perpetual licenses), consideration for many unforeseen edge cases, and adding support for different programming languages, one of our key

insights came from vendors requesting extensions to our data model to allow for Account-Based Software Licensing. PDF Pro is mainly a B2C product, where the buyer is also the end user of the application. In simple B2B environments, there is a clear distinction between the purchasing department, the IT department that dispatches the software within the organization, and the employees that end up using the application. In larger firms spanning across divisions or countries, the license attribution model can be even more convoluted, there can be multiple “buyers” within a firm, multiple IT departments, in charge of their own group of employees to administer licenses to. Essentially, a software Vendor might be selling to multiple “customers” within the same organization.

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Software Entitlement management can become more difficult with large accounts

What is Account based software licensing?

Account-Based software licensing primarily refers to enterprise-based software sales, where the software vendor may sell to different groups within an organization, and where there are several “customers” within that organization. Instead of considering each of these groups as independent and unrelated to one another, it often helps to think of them as all belonging to the same account. If there is one department or division within an organization interested in using a vendor’s software, there are likely other departments within the same account.

When should you consider account-based licensing?

Thinking of account-based software licensing can be helpful when there are multiple buyers for multiple orders within the same company, or in general when many licenses are being issued to a single customer, and there are different people who purchase licenses, administer the license, and then use the application. Additionally, if you manage your accounts through a CRM like SalesForce or Microsoft Dynamics, you often would want the data model of your Software Licensing provider to match the data model within that CRM!

How does LicenseSpring support account-based licensing?

At the time that I write this, LicenseSpring’s data model is broadly organized in the following way:

  • An Account is the highest level in the software licensing hierarchy. This will represent a large organization or company for example.
  • Every account can have one or more Customers within it. Each customer would represent a distinct branch, division, or region of the Account.
  • Every customer will have 0 or more orders to them. Additionally, every order can belong to a specific user role, which we broadly call a “License Manager”. This person can assign or reset licenses for the end user and their devices.
  • And finally, every order will have 0 or more licenses associated to it, meaning that a single order can group multiple licenses within it.

Other Enterprise-Grade capabilities that come with LicenseSpring:

LicenseSpring offers other Enterprise-grade Software licensing capabilities which often come in handy when and ISV uses an account-based licensing model. For example, user-based licensing is an authorization model, where the end-user “logs in” to the ISV’s application either via SSO, or using an email and password. Additionally, consumption-based licensing, offline/air-gapped license activation, and support for concurrency (known as floating licenses) are often used to configure software entitlements for customers of a large corporate account. LicenseSpring also provides distributor portals, which enable an ISV to designate an intermediary to issue licenses to customers.

Contact us for more information on how to setup and manage your own account-based licensing!

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Edmon MorenLicenseSpring Co-Founder
Cofounder of PDF Pro Software ltd. and of LicenseSpring Software Inc. I live in Beautiful British Columbia. I want to build the best Software Licensing Company in the world.
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