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How to Reduce Software Licensing Costs

Tamara Wilhite is a technical writer, industrial engineer, mother of two, and published sci-fi and horror author.


Major software firms and smaller ones have shifted from a sales model, where you own the software application and the right to use it upon purchase, to a licensing model. Software licensing turns a single purchase into a long term payment plan and potentially permanent budget item.

How can you reduce your software licensing costs?

Software is the lifeblood of many operations - and software creators have shifted to licensing to ensure a constant stream of income.

Software is the lifeblood of many operations - and software creators have shifted to licensing to ensure a constant stream of income.

How to Save Money on Software Licenses

  • Switch from licensing per installation to floating licenses based on usage at the time. Then monitor and manage user licenses, such as encouraging people to exit the application when it isn't in use.
  • Use software as a service or SaaS licenses to offer all software services through a common website. Then consolidate site based licenses to a single SaaS license agreement with a bulk discount. Software licenses for SaaS will typically be based on the number of users logged in at a single time instead of the total number of users.
  • Contract for a bulk license agreement based on average users per month instead of peak usage. Average usage is always lower than the peak usage.
  • Set a system log-off after a short period of inactivity (10-30 minutes) to minimize the number of licenses in use at any given time.
  • Require approval to install software or get a software license. This will prevent users who do not truly need the software from getting it.
  • Manage existing software licenses. Ensure that returned computers have the software uninstalled and the license released. Verify that software re-installations after a computer refresh do not consume an extra license.
  • Have users access their office PC remotely and run applications through the remote access instead of installing applications on both their work PC and laptop or mobile device.
  • Negotiate your software licensing agreement well before the next license renewal date. Ask about any and all discounts available. When you wait until the license is about to expire, you lose your negotiating position and time to hunt for deals.
  • Use free, open source software wherever possible and when it is compatible with your licensed applications.
  • Find out whether you have multiple software licensing agreements across project groups or work sites. Then seek a consolidated, discount software license for everyone.
  • Separate software licenses often exist because there are different versions and “flavors” of the same software in use across the organization. Upgrade everyone to the same software version, using the same operating system where possible. This simplifies software management and often the license management as well.
  • When upgrading existing software, seek a discount on the licenses to offset the purchase price of the new software version. If you cannot get a bulk discount, negotiate a better support agreement.
  • Reduce the number of software tools used by the organization. Fewer applications in use simplifies software support, reduces the number of licenses to be managed and can enable bulk license discounts for the remaining tools. At the very least, it eliminates the high cost per seat for specialized tools used by only a few.
  • Consolidate tools by finding alternative processes for specialized software tools or migrating users to tools that are company approved to be kept.
  • If your users have both open source tools and software for which you pay a licensing fee, consider reducing the number of paid licenses while making open source tools the standard on your desktop image.
  • Only include absolutely necessary tools like Microsoft Excel and email applications in your standard desktop image. Don't install licensed software on every computer, since it may not be necessary on all machines.
  • Require administrative rights for users to install software on corporate computers. Don't let users download and install software of their own choosing, since freeware and trial versions of software may not be licensed for commercial use though a demo on one's home computer is permissible.

© 2011 Tamara Wilhite


Tamara Wilhite (author) from Fort Worth, Texas on October 19, 2017:

drspaniel I'll say this issue is getting much more complex with cloud computing.

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drspaniel from Somewhere, where the sun shines once a year... on September 17, 2011:

Great information especially since I have a few software licenses.

mr-burns on September 17, 2011:

Some good information. Thanks

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