When developers sell software they are actually not selling the software, they are selling a license that allows the user to use the software. Software licensing can take a number of different forms. Software can be licensed based on the number of computers that the software is loaded on or, as is common with network software the software can be licensed based on the number of users accessing the application.

Considerations When Licensing
These issues could come up, so make sure you know how you want to handle them before they do.

1. Some developers expand a single user license to include a secondary system, like a notebook. For your software users will require a second license, if so is there a discount?

2. Can a single license be used on different computers if they are not used simultaneously? This is a "backup" installation for redundancy. Do customers need to purchase a second backup license.

3. If you have both a Windows and Mac version, can the purchaser use their license in the opposite operating system than the one that they purchased?

4. Is the license transferable or assignable? If the company is sold are the software licenses transferable to the new owners and computers? If a user no longer uses the software can they sell their license on ebay?

Price Software
Some say pricing software is an art, and that maybe true. Pricing software can be a very difficult proposition. It can be a challenge to find the pricing "sweet spot", the price that generates the most revenue. Some developers experiment with A/B split testing while others take a critical look at their closest competitors and determine how they wish to position themselves in the market.


Not surprisingly developers often under value the value of their software. Undervaluing software is as bad as over valuing. If the software is priced too low customers will not purchase because they might think there is a catch - it is a perceived value or lack of value that "cheap" software faces. Like it or not an inexpensive software application might be perceived as poor quality and frighten prospective customers away. Higher price implies higher quality, cheaper is not always better.

Pricing can be a marketing strategy. To low and poor quality might be assumed. To high and the price might frighten prospective customers away. The pricing sweet spot is the price that results in the largest profit.

A number of factors need to be taken into consideration in order to price software. Look at competing products and then ask yourself the following questions:
How much will customers pay to use the software?
How much do competitors charge?
How much is the software worth to customers?
what are the differences between the products?
How does your software stack up?
How much competition is there?
What is the market saturation?