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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.

EULA = End User License Agreement

Most applications require users to agree to the EULA terms during the installation process. The EULA limits the developers liability and explains how the software is licensed.

Single License - A single user license is generally defined as a software license that can only be installed on a single system.

Per Computer - One license for each computer the software is loaded on.

Per User - Allows users to use software on "home" and "work" computers.

Multi-User License - A multi-user license means that the license can be installed on multiple systems or possibly a network.

Site License - All computers at a single physical location are licensed to run the software. Site licenses are popular with corporations and schools.

Enterprise Site License - All computers within all offices of a company or school. Enterprise site license cover multiple locations or satellite offices of a company.

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?

Related Articles:
Sample EULA
How to Price Software
Sweetening the Pot