The basics of usage based licensing

Usage-based or metered approach to software monetization

Software licensing that tracks what your customers use enables you to adopt a new pay-as-you-use style of licensing to police what customers use. One of the leading modern ways to sell and monetize your software is to offer it using Usage-Based Licensing, charging your customers for what they use and billing them pre- or post-usage.

Usage-based or metered licensing explained

Software vendors are excited about a usage-based or metered approach to monetizing software. This approach perfectly complements entitlement management in several ways.

When you sell an entitlement to a customer, you're defining what they can do—what features, abilities, and capacities will be unlocked in the software based on their purchased license. This allows you to implement various business models like perpetual, floating, and others. However, this doesn't account for how customers actually use the software. For example, if you sold them 100 concurrent seats, how many are they actually using?

We allow you to bring usage data back into the cloud for analysis as part of entitlement management and license enforcement. From a usage-based pricing standpoint, we can map that usage data against a billing model, creating a hybrid between an entitlement (defining capabilities) and usage tracking (determining billing).

Here's an example: You might sell a one-year subscription for 100 seats and allow an overdraft capacity of 20 or 30 additional seats. While you monetize the base subscription for those 100 seats, you'll also track the usage of the overdraft seats. This usage data flows against a pre-agreed business model—perhaps charging based on peak usage or charging for any day that exceeds the 100 purchased seats.

You can also use this information to understand usage patterns without immediate billing. Instead, you might consider this data during renewal discussions to configure their license more appropriately. This marriage of entitlement management, usage tracking, and billing creates a comprehensive usage-based or metered approach to monetization.

You may commonly use Usage-Based Licensing in conjunction with Subscription-Based Licensing. For example, you may wish to sell a Monthly Subscription that includes a preset amount of usage, then offer customers the ability to purchase additional usage when they exceed their initial quota.

Zentitle Usage-Based Licensing works by tracking usage for specific features belonging to a License Code. Setting initial usage limits is easy, and it is equally simple to adjust these limits as required using simple automated web-service calls or manually in the Zentitle Licensing user interface.

What's great about Zentitle's Usage-Based Licensing is that it can be used in conjunction with many other forms of our licensing.

For example, you might use our Concurrent Licensing so that only a limited number of users within a larger total of users can use your software at once. This can even be done with one license code. So, you can effectively have a group of users all sharing the same usage limits.

Another example: In conjunction with our Account-Based Licensing, you can have your users log in using their Email Address and Password to use your software (they don’t need to be exposed to conventional License Codes) and can use whatever they pay for.

Common configurations, such as subscriptions to differently priced tiered offerings, including pre-defined usage limits, are as easy to deploy as pure and simple Pay-as-you-go Models.

In short, usage-based licensing provides extremely flexible ways for this modern licensing method to work for you.