SaaS Management

What Are the Types of Software Licenses? | Lumos

Software as a service (SaaS) models offer numerous benefits for businesses, along with some pitfalls. Discover how to make the most of SaaS licensing models.

by Erin Geiger, Director of Content at Lumos

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Picture this: you sit down to start your workday. You log in and begin entering customer data into your sales pipeline tracking application. To find all of the information you need, you also open the customer health management application. You then get a notification from your manager in the messaging application, alerting you that your team will be switching to a project management application. You take a deep breath and look at all of the windows open on your desktop, each with a different application.

Does your job actually require all of these different apps? What happened to the programs you used to use? Is your company still paying for them? Is there sensitive information floating around in old accounts? Proactive SaaS management can help provide the answers to these pressing questions—reducing costs and improving security in the process. In this blog, we cover key aspects of SaaS license management, including licensing model types and examples and the best tools to get the job done.

What Is a License Model?

A license model is a transaction system in which the customer purchases access to a product rather than purchasing ownership of the product. In the business world, software as a service (SaaS) licensing models allow companies to be more agile when investing in applications. Rather than needing to spend a hefty amount upfront to develop a program or purchase one outright, businesses can spread the cost over a monthly or yearly subscription. The other benefit to a software license agreement is that the publisher will often provide ongoing support and product updates.

A prime software license example is a customer relationship management (CRM) system. Often, companies will purchase a license to use CRM software. In exchange for a monthly or annual subscription fee, the company gains access to the software’s features, cloud-based storage, updates, and customer support. Sometimes, businesses may even try out “freemium” plans, in which they can use the basic features for free before deciding whether or not to upgrade.

While licensing models can be beneficial for businesses, it’s easy to let unused subscription costs stack up. With Lumos, your team can take charge of your SaaS management. Book a demo to learn more.

What Are the 5 Types of Software Licenses?

The five types of software licenses are:

  • Public Domain License: Highest level of free access for both personal and professional use. 
  • GNU Lesser General Public License: A subset of public domain licensing that doesn’t require users to share changes made to open source coding.
  • Permissive License: A subset of public domain licensing that places restrictions on what aspects of the software users can modify.
  • Copyleft License: A subset of public domain licensing that requires users to share changes made to open source coding. 
  • Proprietary License: Restricts use to licensed customers and doesn’t allow for modifications. 

Five types of SaaS licensing models include:

  • Subscription-Based Licensing: This structure is one of the most common models for SaaS licenses. Customers pay a recurring monthly or annual fee for access to the software.
  • Freemium Licensing: Users can access the basic features of the software at no cost, but must pay to use additional premium features.
  • Pay-Per-Feature Licensing: This model lets users purchase specific features or modules a la carte rather than providing a base set of features. 
  • User-Based Licensing: Businesses must purchase individual licenses for each user that will access the software. 
  • Concurrent/Floating User Licensing: Rather than paying for each individual user, businesses will pay for a set number of users that can access the software at one time.

What are the 2 most common software licenses? The 2 most common software licenses are public domain and proprietary license. Often, B2B SaaS programs will fall under proprietary licensing. 

What Is an Example of Software Licensing Management?

The most common example of a use case of software licensing management is to reduce

software license cost and redundancy. At Lumos, we know this because we’ve seen it happen, time and time again! Don’t just take our word for it. Here’s an example of the results our clients have seen by taking control of their SaaS license management:

How Checkr Reduced SaaS Spend While Improving Efficiency

Checkr had two primary goals: increase profitability and free up IT resources. The two obstacles they identified were an overwhelming amount of IT support tickets and licensing costs that kept piling up. By partnering with Lumos, Checkr’s team gained access to self-service through the Lumos AppStore. Because employees could now solve many of their problems on their own, IT had the time to focus on SaaS spend. With Lumos, Checkr could see which apps employees were actually using and cut the licenses that were underused.

As a result, Checkr experienced a 20% reduction in IT tickets and a $230,000 reduction in SaaS costs. The best part? They started seeing results within 90 days of implementing Lumos. Read the full story here. 

Lumos: Your All-in-One Solution for Software License Management

When you choose a platform for SaaS license management, the goal is to simplify your tech stack, not needlessly grow it. That’s why it’s important to use a platform that does it all, like Lumos! Our system allows you to manage the following, all in a single platform:

When you can get an overview of all of your SaaS licenses, you can identify what applications are propelling your business forward and which ones are holding it back. Schedule a demo today to see how easy SaaS management can be!