Avoiding Obsoletism in Perpetual Software Licensing

October 27, 2018 9:47 am.

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The software industry is fast-paced and constantly progressing. Updates, upgrades, and bug fixes are turning out faster than ever, and users don’t want to be left behind. In this age of rapid advancement, software users might be wondering whether perpetual licenses will quickly lead to obsolete products. If you’re working to keep the attention of present and potential licensees, you’ll likely need to address the issue of obsoletism in your perpetual licensing agreements.

Built-In Updates  

Perpetual licensing has enjoyed a long and healthy life in the software industry, as many of its advantages are undeniable. Software users and software companies alike benefit from the payment of a one-time fee for perpetual access to and use of a product. When individuals and companies need to make cuts to expenses, one of the first areas they typically examine is monthly fees. Licensors with perpetual agreements do not have to worry about becoming the next monthly expense on the chopping block.

However, today’s software users are becoming more accustomed to (and expecting of) on-demand updates for their software programs. A perpetual licensing agreement should not completely overlook the necessity of these updates, lest your licensee buy new systems and equipment that are suddenly incompatible with your older product. One way to avoid obsoletism in your software licensing is to structure built-in updates. As the licensor, you have flexibility in offering updates, upgrades, and support to your licensees. Licensees find built-in updates quite attractive and will usually be willing to pay more up front to save headaches later. 

Subscription-Based Updates

If you are not careful in handling built-in updates, however, you might swiftly encounter problems. You might quickly reach a point when it is cost prohibitive to continue offering updates and support for the up-front price paid at the beginning of the license. Single updates or subscription-based updates can alleviate this problem. Your licensees can still enjoy continual use of your software by paying a convenient one-time fee, and they can reach out for a single update at an additional fee or receive continual updates and support on a regular basis by paying a subscription fee. You can offer varying options to meet the needs of your business and your customers.

The arrangement that works best for you will depend on your goals, as well as how you characterize your product and your business. Perpetual licensing has numerous benefits, and while some licensing arrangements can lead to obsoletism, a carefully crafted agreement will ensure your licensees are on pace with the progress of your software visions.

To review your software licensing agreements for obsoletism, contact an experienced software licensing attorney. Larsen Law Offices, LLC, can help you create a licensing arrangement that takes into account changing technology and the demands of your existing and potential customers. Contact Larsen Law for a consultation today by calling (303) 520-6030.