Blog on Software Licensing, Commercialization, and Revenue Optimization

Let’s start this SDK Licensing and Pricing Guide with some background. Software Development Kits are becoming more and more popular, and it’s easy to see why. As software products themselves become more popular and advanced, developers see a growing interest in not having to reinvent the wheel. Selling libraries, APIs, and documentation to help developers speed up the process is, therefore, a great solution. They are not only are they helpful, but they can also be very profitable to sell.

For Software Development Kits (SDKs), there are some unique considerations you need to keep in mind when it comes to software licensing. Getting it wrong could mean that far too many will have access to the SDK. Although it is a bit more complex to sell and protect SDKs from unauthorized users, we will also cover how you can turn that challenge into an opportunity today.

We have made the following YouTube video on this topic that you might want to check out:

Challenges with SDK Licensing

The reason why SDKs have unique licensing requirements is because of end users. SDK licensing is where you distribute a component such as a library that will later be a part of another commercial solution. To keep it simple, the image below illustrates the purpose of an SDK. Let’s say that “Company SDK” in the image is the company that develops and sells the SDK. That is then the company that implements a software licensing system to restrict who has access to the SDK. The customers of Company SDK are called Customer A and Customer B, and they each get one license key so they can access the SDK.

It’s pretty straightforward so far, right? The two customers integrate the SDK into their own software products that they sell to their own customers. These customers are called end users because they are the final customers in the chain.

So what is then the difference between licensing an SDK, compared to a desktop application, for example? Well, because the customer of Company SDK is not the end user of the SDK itself, all of the end users of Customer A will share Customer A’s license key and all the information stored within. The same is true for Customer B. This is of course not ideal since the the intention is to only allow the customer, and not all of the end users, to access the SDK. Desktop applications will usually not run into the same problem, because their end users are most likely their own customers.

Opportunity: Pricing Model Efficiency

This scenario poses both challenges and opportunities. In order to protect your SDK, the software licensing system has to ensure that end users cannot access the SDK. The positive aspect is that you have quite a lot of freedom to implement a very effective pricing model that charges for the actual value that customers receive.

An effective way to price an SDK could be to charge customers per end user, or per installation of the SDK. That way, you ensure that the more value your customers get, the more they have to pay. Customer A in the example has a lot more end users and will pay a high price as a result. They are probably fine with the high price because all of the end users are giving Company A a pretty nice revenue stream. Company B will pay a lower price because they have fewer end users.

As a final remark, I would like to highlight the fact that not all SDKs are alike. The SDK is required to have an internet connection to keep track of the end users or installations. That means that these pricing models are not possible to implement in an offline setting.

We at Cryptolens offer you another solution for offline protection which involves storing the application’s identifier inside the license file. For more information on that approach, please check out our full technical implementation guide. You can of course also charge per installation or end user even with our software license management tool.

Thank you for reading, Stay Smart!

What is the best software license management tool? Well, the answer to that question is very dependent on your unique licensing requirements. In today’s blog, I will highlight the main aspects you need to consider when searching for the best provider for your application!

If you’d rather watch a video on the topic, please watch this one:

How to Find the Best Software License Management Tool in 2024

First of all, what do I mean when I say software license management tool? I am referring to a service provider that helps you create a software licensing system to protect and sell your software application.

When you are choosing between different Licensing as a Service (LaaS) providers, I would advise you to first list your licensing requirements. Will you, or are you, selling your application to businesses or private consumers? What licensing models are you interested in? What integrations with other business systems do you require, and how important is scalability to you? We will cover all of these questions in more detail today.

B2B and B2C Applications

Let’s start with the first question. Many LaaS providers set a limit to how many license keys you are allowed to create on each pricing tier. As a result, it can get quite expensive if you are selling a lot of licenses at a cheap one-time price, which is quite usual for B2C companies. If you are selling B2B, you will probably require fewer license keys, and you are less price-sensitive since you most likely will sell each license key at a high price, maybe even a recurring subscription fee.

Licensing Models

That brings me perfectly on to talk about the next consideration, which relates to licensing models. Most LaaS providers will give you the basic licensing models such as the perpetual and subscription models. This is usually fine if you are selling B2C, but for B2B companies, you might benefit from other models, such as floating, or node-lockled licenses to allow for multiple seats. Maybe you even need licensing to work in an offline setting.

The more advanced licensing models can come at an extra cost with some providers, so make sure to check that your provider is able to accommodate your chosen licensing model. If you are unsure about what licensing model you want to implement, you can check out this blog post.

Integrations and Scalability of the Software License Management Tool

The last point I want to mention is related to scalability. You of course need to investigate what integration capabilities you need from a licensing provider today, but you also need to have a more long-term perspective. Today, you might be fine with manually creating license keys in the LaaS dashboard, but when you get more customers, you might want to automate the process using, for example, Zapier. At some point, you might even want to invite more employees to work in the dashboard. It is then good to check if your licensing provider is able to supply you with the integrations and features you need to allow for future growth.

Cryptolens Software License Management Tool

Lastly, with all of these considerations, choosing the correct software license management tool can be tricky. Especially when it comes to scalability since it can be difficult to predict exactly what your licensing needs will be in 5 to 10 years.

That is where Cryptolens comes in! We offer all licensing models and comprehensive implementation guides in your programming language. If your needs still exceed our capabilities, we are willing to tailor our product to your licensing needs. And the best part? You can get started with software licensing for free, within minutes.

Thank you for reading, Stay Smart!

How do you market a software application? Today, we will answer that question by sharing three steps on how to launch a software product, going from (1) the market research phase to (2) testing an MVP, to (3) selling it at a larger scale. These three steps are quite common for software startups to begin with, but they are, contrary to what some other creators are saying, not that easy to get right.

We have made the following YouTube video on this topic that you can check out:

3 Steps on How to Market a Software Application

Step 1 – Market Research

To cover the main points, allow me to tell you a short story about an innovative software developer wanting to sell their software product. Our story begins with a brief prototype of a software product. The first question to ask yourself is; will anyone buy it? In marketing terms, you will have to research your market and audience. Let’s say that the product is a code cleaner that checks for errors and suggests code improvements. The audience to target will most likely be software developers who write a lot of code each day and want to ensure top quality.

One important question to research is “How can I reach out and find my target audience?” That question is important for the step after market research. Here are some other questions to research:

“What does my target audience look like?” “What problem does my target audience need to solve?” “How do they solve that problem today”. You can use many tools and analyses for this step, but we will cover more of those in future blog posts.

Step 2 – MVP Feedback Collection

Once you know a bit more about the target audience and market, the next step is to try to sell an MVP, a Minimum Viable Product, to a couple of early users. What is a Minimum Viable Product? Well, it is the simplest version of your product that has just enough features to satisfy early users. The main goal with an MVP is to evaluate how well your product fits the needs of your customers, which we sometimes call the product-market fit.

Remember how I told you to research where your target audience can be found? Well, now you know why because this step includes reaching out to them and getting their feedback. Going back to our example, early users might want you to color-code the code suggestions according to different categories. When you implement such a feature, your product-market fit will improve, because your product is more in line with what the market wants.

Step 3 – Getting Customers to the Software Application

The last broad step that we want to mention is how to get more customers after you have enhanced the product. For software businesses, getting more customers usually means getting more website visitors. Traffic to a website can come from paid channels such as Google Ads, and organic channels, such as your company’s blog or social media pages. Paid channels can be set up with Google Ads, but let’s not focus too much on that today.

Content creation is a great way to grow the organic channel where you educate people about what your product is and who it’s for using videos, blog posts, and social media posts. Levering SEO, or Search Engine Optimization, can work very well to grow the organic channel faster than just making content without having a clear plan. Working with SEO essentially means that you try to appear in top positions in Google’s search results when future customers search for the solution you are offering.

In our example, “Code cleaner” seems to be a relevant keyword to make content for. You can, for example, write a blog about the importance of keeping a code clean to improve your SEO score and rank higher on Google. With a clear SEO and content strategy in combination with Google Ads, you are well on your way to success. With these 3 steps, we hope you have learned something about how to market a software application.

The Moral of the Story When Marketing Software Applications

To conclude this story, we want to quickly bring you back to reality. As we mentioned in the beginning, there are a lot more aspects to think about after you get your first couple of customers, and there is even more to learn about the three steps we have mentioned today!

For example, when I launched my first startup, I completely ignored the MVP step and launched a working prototype immediately. As a result, I had no clue what I needed to fix when no one was buying the product, and we even gave it away for free! Simply reaching out to our target audience and getting a couple of them to try it out and give feedback would have helped greatly, but there were also major flaws in the distribution of the product. Either way, I am happy that I tried, because trying and failing is always more illuminating than not trying at all.

Thank you for reading, Stay Humble!

When you look at the software startups that receive venture capital investments today, many of them are software companies selling to businesses rather than private consumers, but why is that? What can make businesses better customers than private consumers when developing B2B software products?

Today’s blog will answer that question and also show you some things to consider when selling B2B. In case you’d rather watch a video, I have made the following one on this topic:

Developing B2B Software Products – Advantages

Now, it is quite different to sell software products to companies than to private consumers. For example, companies are usually a lot less price-sensitive compared to private individuals, and they tend to buy in bulk.

Selling to businesses can also give you more freedom when it comes to pricing models. Private consumers like to buy products at a one-time price, but businesses are more willing to buy subscriptions and other pricing models. We have other blogs that cover the many benefits of that, such as providing companies a predictable and stable monthly revenue.

Alright, let’s get to the developer’s perspective. If you sell a software product to private consumers, they tend to care a lot about the user design and they usually want things to look pretty. But when selling to companies, you don’t have to spend as much time on the user design because they tend to value the functionality a lot more. This can free up a lot of time and enable you to develop the features you really want instead of having to design everything to perfection.

Since business customers can bring in large deals, having a couple of customers can be enough to get a decent revenue. You are then also given a lot of possibilities to tailor the software product specifically to their needs. This can pose interesting challenges that will not only make your product better and more advanced, but they can also make you a better developer!

Disadvantages

However, tailoring your product after a few customers will take time. If one churns, most of that time might have been in vain. This also indicates a strong dependence on a few customers, which is not ideal.

Because companies rely on your software product to make money, they expect your customer support to be top-notch. Private consumers might not care as much about support or uptime, for example. They might use the product just for fun!

The professional nature of business customers also means that they require your software product to be integrated with a lot of other business systems such as ERP or CRM software. Creating seamless integrations with those systems might pose a bit of a challenge.

Mitigating the Disadvantages

At the beginning of this blog, I mentioned that companies like to buy products in bulk. That is also true for software products because they want multiple employees to be able to access the product. The best way to implement that is by choosing a floating or node-locked licensing model.

Cryptolens makes it effortless to implement any licensing model in your favorite programming language! With our easy-to-use software license manager, you can implement licensing for free, within minutes.

Thank you for reading, Stay Smart!

What is a floating license? Well, a floating license, or concurrent license, is where multiple users can access a software product using the same software license key. This is quite common when selling B2B where a company can buy a license allowing for multiple seats.

This blog will answer some common questions when it comes to floating licenses. We have also made the following video covering this topic:

What is a floating license?

Firstly, what is the difference between a standard license and a floating license? A standalone license can only be activated by a single user on one device. So if a large company wants to buy a software product, they have to buy individual licenses for each employee. With floating licenses, the same license key can be used by a network of users and devices. One advantage of that is that it can help to keep the cost down.

Since this licensing model only counts the number of concurrent users, the company can install the software product on more devices than what is allowed by the concurrent user limit, but the license cannot be used by all devices at the same time.

Great, so how does a floating license work? Well, a floating license has a limit to how many machines or seats can use the same license key simultaneously. When a user tries to access the software product with a floating license key, the software licensing system sends a request to a license server, which checks if the concurrent device limit has been reached. Access will only be granted if the limit has indeed not been reached.

You might also have heard of another term called “node-locked licenses”, so what is the difference between a locked and floating license? With node-locked licenses, the software license system will count how many machines have activated that license key. It will grant the user access to the product as long as the limit has not been reached. Once the device limit has been reached, you have to manually deactivate a machine in the software license system to allow another one to be added.

Implementing floating or node-locked licenses

If you want to implement floating or node-locked licenses for your software business, you can check out Cryptolens. We make it effortless to implement any licensing model in the programming language you love. It is even possible to set up floating licenses in an offline setting, and you can find that tutorial here.

Thank you for reading, Stay Smart!

Should you develop a software plugin? That’s a great question, because plugins, or add-ins, are very common today and can really add a lot of value to pre-existing software. Just like WooCommerce for WordPress, Prettier for Visual Studio, and Pipeline for Jenkins.

Today’s blog will be about the advantages and disadvantages of the plugin business model in general, along with some tips on how to code them. If you’d rather watch a YouTube video, we have made the following covering the same topic:

Business benefits when developing software plugins

First of all, plugins and ad-ins are software products that plug into a pre-existing application to add extra features. From a business model perspective, relying on a host application in such a way can be great. It means that you can build your business based on the pre-established name and customer list of the host.

Let’s take WooCommerce for WordPress as an example. How difficult do you think it would have been for WooCommerce to come out with an entirely new platform for building online stores? They would have to spend a lot of time and money on marketing to try to make people aware of the product and understand it. Good thing they decided to develop a software plugin instead!

Being a plugin removes a lot of those issues, because WordPress is already a trusted platform for building websites, and WooCommerce gets a lot of recognition by simply being listed in their store. Plugin developers can then easily get access to a lot of customers, and you can even work in partnership with the host application to get more business opportunities.

Coding benefits when developing software plugins

Sure, that sounds great, but what about the developer’s perspective? Because a plugin operates within the framework of another application, a plugin can take less time and cost less money to develop. You can just rely on the pre-existing framework, APIs, and libraries. This also means that you have less infrastructure to develop and manage!

Plugins are then great because you can truly focus on what you do best, which also helps with innovation. In other words, by working within another application’s framework, you get a lot of pre-written code for free!

Except sometimes, it does not come for free at all…

Disadvantages and solutions

Relying so heavily on the host gives them a very powerful position. For example, developers of host applications have realized all the benefits that plugins face and have begun to charge for them. When selling on their marketplace, a 35% take rate is not uncommon, but I have seen marketplaces take as much as 80% of the revenue from the plugin sales!

In those scenarios, it is a lot more profitable to sell the plugin outside of the marketplace and on your own website. When doing that, you not only get 100% of the money from every sale, but you also get a lot more freedom regarding pricing models. Some stores only allow you to sell a product at a one-time price, which is not always ideal. There are many benefits to be had if you instead sell a product with a subscription fee, for example. You can find out more about different pricing models here.

Software licensing helps you sell independently

Lastly, while marketplaces are not always perfect, they do provide some sense of safety. You don’t have to worry about marketing or getting website visitors, and it is easy to sell a product on marketplaces. If you want more freedom by selling the product on your own website, you need a software licensing system that restricts access from unauthorized users and allows you to implement the pricing model you really want.

Coding those systems can be tricky…

But not with Cryptolens! Our easy-to-use platform makes it effortless to sell your plugins independently, and to alleviate some of the stress, you can even implement software licensing for free, within minutes.

Thank you for reading, stay smart!