Category: Business Success

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!

Would it not be great if all products were priced in exact relation to how much value we receive? The usage-based pricing model for software products works just like that!

Read this blog to learn the basics of the usage-based pricing model and see if your next software product can use it to get more customers. Alternatively, you can watch the video we created on this topic:

The usage-based pricing model example

Let’s start off with an example to really illustrate the benefits of usage-based pricing. Say that a company sells a product that automatically edits images based on user input. The one-time price would be high because the product took a long time to develop and has a lot of advanced features. With such a high price, the company can really only attract real photo enthusiasts.

By instead implementing subscriptions, the company gets a much larger addressable market. They can get more customers because subscriptions lower the entry barriers for customers! They could sell a limited version of the product to allow hobby photographers to try out the product at a much lower price. We have already covered subscriptions in this blog.

Now, what would happen if the company began charging the customer a fixed price for every photo that the application edits? Hobby developers would still be able to try the product at a low price since they would not edit that many photos. Real photo enthusiasts would edit a lot more and pay a higher price, but they also receive much more value from the product.

So how is that different from subscriptions? Well, with subscriptions, you have to mess around with pricing plans and feature fits. You simply have to figure out how to motivate advanced users to upgrade pricing plans, and that is not always easy. With the usage-based approach, customers automatically pay more the more they use the product!

Considerations before implementation

Doesn’t that sound great? Well, the issue is actually that not all software products can use the usage-based pricing approach. The pricing model works for photo editing software because the value metric is very clear, the more images you edit, the more value the product generates and the higher the price can be. Not all types of software have such a clear value metric, and I suggest researching how your product is or will be used to figure out if you can implement the usage-based approach.

If you struggle to find a clear value metric, you might want to combine the pricing model with other pricing models for a more effective pricing strategy. You can implement subscriptions and charge extra each month for the use of certain features, or even give a customer a limited number of credit points that are reduced each time the feature is used. If they run out of credits, they have to pay to get more!

Implementing the usage-based pricing model in code

The usage-based pricing model can be a game-changer for some software products, but only if customers think it works fairly. That is why the first step is to investigate your value metric. Then, the second step is to implement the pricing model in code. For that, you need a software licensing system that tracks the feature usage. It also makes sure only people who pay have access to the feature.

We have already made a blog on how to implement such a system for free, within minutes.

Should you develop a SaaS application? That question is very valid, because today, SaaS products are everywhere, and they are very profitable too. Just look at Microsoft, Oracle, and Adobe. Some of the world’s leading companies have adopted the SaaS business model, so should you?

Today’s blog is all about the SaaS business model. The advantages, disadvantages, and some tips on how to develop them. We have already made the following video covering this topic:

First of all, let’s make sure that we are all on the same page here. What is a SaaS application? Software as a Service, or SaaS, is a type of cloud-based software where customers are able to rent the use of an app and connect to it, usually using a web browser. A SaaS product does not have to be downloaded or installed because the underlying infrastructure and app data are stored in the service provider’s data center. GitHub, Slack, and Trello are some examples you might be familiar with.

Advantages for customers

With that in mind, a customer doesn’t necessarily buy a SaaS product, they rather buy the right to use it for a limited period of time. The subscription pricing model is commonly used, and we have already made a blog post covering that pricing model. One benefit that I mentioned in that video is that subscriptions lower the entry barriers for customers, and that is also one of the benefits of SaaS products, as seen from a customer’s point of view. It’s just cheaper to get started with subscriptions than a one-time payment!

Another benefit lies within the cloud itself. Since you do not download a SaaS product, customers can use it anywhere, with any device that is connected to the Internet. There are no download or setup time delays, just log in and start!

Advantages when developing a SaaS application

Great, but what about the developer’s point of view? When you begin to code a SaaS app, you can have a lower initial cost because you can leverage cloud services from Amazon, Microsoft, or Google to host your product so you don’t have to invest in hardware.

These providers also make the application very scalable and flexible, you can simply tell them to increase your computing power as you face a higher demand for growth or seasonality reasons. This does not come with any unnecessary overhead costs and can be done pretty quickly. You can then fully capitalize on the high demand!

Disadvantages and solutions when developing a SaaS application

Now, there are also some important disadvantages and challenges we need to consider. If you really want to develop a SaaS application, I also have some solutions to share. One issue is that you have to code a lot of functionalities to facilitate all kinds of users. That can easily take a lot of time and effort. The solution to that problem could be to integrate with third-party products instead of coding everything yourself. For example, some products might benefit from having a sophisticated map function. Why code such a feature yourself, when you can simply integrate your product with Google Maps?

Another third-party solution you can use to save significant time and money is a special type of SaaS product called LaaS, Licensing as a Service. Cryptolens offers such a service! Instead of coding your own software licensing system that controls who has access to your application, you can use Cryptolens.

A final remark on continuous improvements

My last remark will be a bit broader than both the developer and customer perspective. The process of continuous improvement is a commonly used term within business management that refers to the ongoing improvement cycle focusing on employee involvement and customer enjoyment.

The SaaS business model makes continuous improvements easier since you have greater access to usage analytics data. You will then know exactly what features your customers are using in real time, and you can focus on enhancing the features your customers love the most.

Thank you for reading, stay smart!

Today, subscriptions are everywhere. If you want to watch a movie, you need a subscription. What do you need to listen to music? A subscription! And what about a car? You guessed it, you can actually get a car with a subscription with some brands. But why is that? What made companies switch from perpetual, try-and-buy pricing models to the subscription pricing model for software products?

In this blog, we will answer that question and show you how a subscription pricing model can take your software business to the next level. We have also made a video covering this topic:

Advantages of the subscription pricing model

Firstly, subscriptions are oftentimes preferred over a one-time payment since they significantly lower the upfront cost for your customers. Most people do not have $50.000 in liquid cash to spend on a car, but they might be able to afford $500/month. And although software products are usually a bit cheaper than cars, the logic is still the same.

You can also create different pricing plans to attract different kinds of customers. A basic pricing plan can be sold for a small subscription fee of $50/month for users who will only use the basic functionality of your application. It is then possible to charge extra for an unlimited pricing plan with all features at a higher price, let’s say $350/month. Both newcomers and advanced users can buy your product!

But that’s not all. You can also get more predictability from the cash flow of your business. Instead of having them buy your product and then you never see them again, subscriptions will give your business an MRR – a Monthly Recurring Revenue.

For example, let’s say that you have 10 customers, 8 of them are on the basic plan, and 2 of them are on the unlimited plan. That would give you, in this example, a monthly recurring revenue of $1.000. This is a game-changer for budget planning, you know exactly how much money you can spend on ads each month, for example!

Unless a customer cancels their subscription…

Disadvantages of subscriptions

That gives me a perfect opportunity to cover some disadvantages. The churn rate can indeed be a problem. If you charge customers on a monthly basis, you give them a lot of opportunities to churn. In the previous example, we can see that it would be especially bad for the MRR if one of the 2 customers on the unlimited plan churns since they actually bring in most of the money each month. This highlights a dependence on a few customers that you don’t have if you let customers pay the entire price at once.

You can incentivize people to pay upfront even with subscriptions. A popular way is to offer a slightly cheaper price if customers pay once a year instead of once per month, but that is not always ideal. The churn rate is definitely something to consider before choosing to implement a subscription pricing model.

Implementing subscriptions with Cryptolens

If you sell a software application as a subscription, you need a system that can automatically restrict access to your application from customers who stop paying. The system you seek is a software licensing system, but coding such a system will take significant time and money.

Using Cryptolens and our easy-to-use software licensing system is a lot more effortless! Since Cryptolens is also completely free during the development phase of your application, there is no risk of trying it out. We are trusted by hundreds of innovative and world-leading companies worldwide.

With comprehensive implementation guides in the programming languages you love, you can implement the subscription pricing model within minutes!

Choosing between different pricing models can be hard, but it is a crucial decision to get right. Should your software product be sold at a one-time price? Should you charge a continuous subscription fee? Or should you maybe even charge customers differently depending on how they use the product?

These questions will be answered in today’s blog, as I will briefly introduce three of the most common pricing models, Try-and-Buy (Perpetual), Subscriptions, and Pay-per-Use.

You can also find the video that we have made for this blog here:

The Try-and-Buy (Perpetual) Pricing Model

To illustrate some different ways a software product can be priced, consider the case of a music streaming app. They could let you try the application for one month before you have to pay the price of $50 to continue to use it forever, a so-called Perpetual, or Try-and-Buy model. That way, users are able to temporarily realize the value of your product for free, and at that point, they have an easier time justifying the one-time price.

The Subscription Pricing Model

The streaming app could, maybe more realistically, choose to impose a continuous fee. Let’s say a monthly fee of $12. Does that sound familiar? That is called a subscription model, and it can be beneficial from a business model perspective since you get a more predictable cash flow each month, and you might be able to attract users who are not willing to pay that high one-time price. The lifetime value of a customer can still be very high if they continue to use the app for a long time.

The Pay-per-Use Pricing Models

The last pricing model is to charge customers differently depending on how they use the application, the so-called Pay-per-Use model. The music streaming app could charge customers, let’s say $1, for every hour of streamed music. The more you use the application, the more you pay at the end of the month! This can create a more fair pricing plan – big users of your product pay a high price but they get a lot of value, small users pay a bit less but at that price, they still think it’s worth it.

Implementing Pricing Models with Cryptolens

So how do you implement these pricing models in practice? It all begins with a software licensing system. In short, the system is linked to your payment provider such as Stripe or PayPal, and it makes sure that only people who pay get access to your application.

With Cryptolens, you can implement an easy-to-use software licensing system within minutes with our comprehensive guides. Hundreds of innovative companies are using our licensing as a service (LaaS) platform to license all kinds of applications.

When developing a software application, many ask how they should implement a software licensing system. Should you code it yourself? Should you outsource software licensing?

I would generally say that outsourced software licensing is the most scalable, reliable, and cost-effective solution in the long run. This blog will cover exactly how a third party can help software developers save both time and money!

We have made the following video covering this topic as well:

Coding it yourself

First of all, what is a software licensing system? We have a short blog post covering that topic that I recommend you to read if you are unsure. You can find that blog post here.

This post will be all about implementing such as system in practice. One way is to code it yourself, and there are some situations where you might want to do that. If your application is not supposed to be sold on a large scale, and you want to grow your coding skills, coding a software licensing system can be a fun project for hobby developers.

You might also say that coding it yourself is the economically smart solution since you pay with your own time rather than your own money. That argument falls a bit flat when considering that some software licensing providers, such as Cryptolens, are completely free during the development phase of your application.

You can then implement software licensing without any risk!

Outsource software licensing – the benefits

Coding your own system will take time. Implementing a third-party solution is a lot more effortless, allowing you to quicker bring your product to the market. This also helps you save money, since there is no internal development cost.

So outsourcing helps you save both time and money, but let’s say that you completely ignored our recommendations and coded your own system anyway. You may suddenly find yourself in a problematic situation – your company grew so much that your self-coded system is no longer able to support your needs. Constantly getting angry emails from customers saying they can’t access your product is never good. This highlights the fact that a software licensing system needs to constantly be updated and maintained to work flawlessly.

What about coding your own system at first, and then switching to a third party when the maintenance gets out of hand? Well, at that point in time, switching licensing solutions will be a big project that will have an impact on all of your customers. Let’s face it, it is probably easier for your customers to go to a competitor than it is for you to switch solutions at that point.

A final shared value perspective

To conclude this blog, I would like to step away from the perspective of time, money, us and them, and step into a world of shared value – the concept that combines business success with providing value to society as a whole.

By outsourcing software licensing to experts, your company can focus on what truly matters:

Your own product.

That way, your company does not only become more productive and cost-effective, but it also helps you provide more value to your customers, and you make the world just a little bit better.

Thank you for reading, stay kind!

Are you working on a software application that you one day want to sell? Then you need to think about software licensing early on. No, I am not talking about End-User License Agreements (EULA) or legal documents, I am talking about a software licensing system – the system that ensures that only customers get access to the application.

Why is a software licensing system so important? Because without it, you simply cannot sell a software application to customers.

In this blog, I will briefly, and in a non-technical, way describe what a software licensing system really is, and how it can enable you to take your software passion and turn it into a business.

We have also made a YouTube video about this blog if you prefer to watch rather than read (like me).

What is a software licensing system?

To make this blog a bit more fun, picture the following analogy. Let’s say that your software application is like a house. The different rooms of the house are the different features in your application. One room can house the most basic features, and another room can house more advanced functionality.

Without software licensing, your application does not have any locks. Users can enter whatever room they feel like without paying at all! It becomes clear that no one would ever pay for such a product, since everyone can just use it without paying.

A software licensing system would establish a lock on the front door, making sure that only people with a key can access your application.

How does this system work in practice? That is a great question! So great that we will cover it fully in a future blog post. For now, let us just assume that the system indeed works as it should.

Software licensing performs key verification

The next step for us is then to create keys for the front door and give them to our customers when their payment has gone through. In software licensing terms, that key is a digital license key that is unique to each customer.

So what happens when a customer tries to enter our application? In the most basic setup, they will be greeted by a locked front door. After providing their license key, the software licensing system checks so that their license key is valid, and if it is, the door is unlocked and the customer can begin to use the application.

The customer can then leave the application, and the key verification process is repeated whenever they try to run the application once more.

If a non-customer tries to access the application, they will be greeted by the same locked front door. Without a key, they cannot enter!

Some software applications choose to charge a customer a subscription fee. Monthly or yearly subscription fees are the most common ones. Then it can be useful to block the license key of customers who stop paying their fee. If such a customer, or ex-customer, tries to use the application, they will not be let in. That is because their license key stopped being valid when they stopped paying.

Charge extra for more features

Now you know the basic setup, but what about the different rooms I mentioned earlier? Let’s suppose that the house has two rooms, one with basic features, and one with more advanced functionalities.

It is sometimes beneficial to charge customers extra for using the more advanced features. You can then create two different types of license keys for the different rooms. A green license could, for example, cost $100 and give customers access to the basic features of your application. A red license could instead cost $500 and give customers access to all of the features in your application.

The moral of the story

So that’s it, right? Is software licensing really that simple?

Of course, it isn’t. But we hope that the simple analogy gave you an introduction to software licensing and how it enables you to sell a software application.

But remember – although a software licensing system enables you to sell your application, it alone can never make your application good enough for customers to want to buy it.

That is something only you have the power to do.

Thank you for reading, stay curious!