Software Licensing and Deployment Basics


This page introduces and discusses several common types of software licensing for business desktop applications and operating systems, as well as some additional notes on software activation, registration, and why you might want to ensure you only use genuine software.

Page Contents

Software License Types


This purchase channel offers the best level of features, services, and flexibility for small businesses. Buying retail includes purchasing it:

  • From a regular office supply store,
  • From an online seller,
  • Directly from the publisher from their website or online store, or
  • Through a value-added reseller such as J.D. Fox Micro.

Retail software usually comes with the right to call the publisher directly for technical support, and the call should be free for at least a certain amount of time (anywhere from 30 days to a year).

Retail software may be licensed per-device, or per-user. If it's per-device, you need to purchase one license for each computer, laptop, or tablet on which the software will be installed. With retail software, you should have the right to transfer the software (and the license) from one device to another.

In recent years, many publishers have changed their retail licensing from device-based licensing to user-based, meaning each user can install the same copy of an application simultaneously on all of that user's devices (such as her desktop at the office, her company-owned laptop, and her personal computer at home). The packaging for retail software, or the product information in an online store, should describe the licensing terms.

You'll notice that retail software may come in a "Full" package or an "Upgrade" package for less money. To use the upgrade package, you have to own a previous version of the same software, or a competitor's version of similar software. The publisher should list in the product specifications what qualifies you to use the upgrade edition. For example, you might qualify for upgrade pricing to version 9 of a PDF authoring application if you have a license for version 7 or 8, but have to pay the full price if you have version 6 or earlier. Whether you buy the full or upgrade package, you will always get all of the software; sometimes people think a "full" version has more functions or features than an upgrade disc or installer program, but this is not the case. The only limitation of the upgrade package is that it may ask for proof you own a qualifying product before it will install.

A "Step-Up" is when you have the current version of a software product, but want to move to different edition for more features—moving from a "Home" edition to "Professional", for example. The price for a step-up is usually a little more than the difference in retail pricing for the two editions.


In the last several years, most publishers of conventional software that was traditionally sold as a perpetual license now offer their software on a subscription basis. A perpetual license, also called a one-time purchase, means you pay for the software once, and can use it forever. A subscription means you pay a much smaller monthly or annual fee. But, once the subscription term expires, the software will stop working or revert to a reduced functionality mode, until the subscription is renewed.

A prominent example is Microsoft Office 365, which allows users to install the regular desktop edition of Microsoft Office (Outlook, Word, Excel, etc.). Adobe likewise offers their Acrobat software either for a one-time purchase or a subscription. For their Creative Suite (including their flagship Photoshop), Adobe now only offers this software as a subscription; you cannot buy a perpetual license any more.

Usually, a one-year commitment is required, meaning you can't easily get access to expensive software for just a few bucks if you only need it for a month-long project. And, if you use subscription software for many years, you may end up paying more than you would have for a perpetual license. However, with a subscription, you automatically get to use any new upgrades that are released for that software package so long as your subscription is active. With a perpetual license, you can use it forever, but if you want any new versions, you have to pay for those upgrades separately.

Product Key Only

You may have seen software sold as a "Product Key" only, such as for Microsoft Office in your local office supply store. This is a model Microsoft introduced with Office 2010 so they can avoid having to stamp so many DVDs. Inside the product key package are instructions on how download the software; you then use the product key to activate it.

Today, most manufacturers of Windows-based computers install all the components of Microsoft Office on each new computer. If you choose to buy Microsoft Office with a new computer purchase, you will get a card with the product key in it, which you can type in to unlock the software. If you don't buy it with the computer but change your mind later, you can buy a product key at the store, or buy it from Microsoft's website and get it via e-mail.

Other publishers use this model, such as Dragon, Acronis, and Norton. With all of these, if the software is not already on your computer, you can download the software using the web address on the product key card found in the package, or in the e-mail you receive from an online purchase.

Licensing using a product key card generally only differs from a regular retail purchase in how you get the license code, and the fact it should cost a bit less because there is no physical disk. You should expect to have the same benefits, and same level of pricing, as a regular retail purchase.

Product keys can activate a perpetual license, or a subscription term only (typically one year). Look carefully at the product description or packaging to determine what you're getting.


This is software that is bundled with hardware, which you get for a much cheaper price than retail. Most copies of Microsoft Windows are sold in the OEM edition with new computers, laptops, and tablets. Other common examples of OEM software include disc recording software that comes with DVD burners, backup software that comes with USB hard drives, and video player software and utilities that come with video card upgrades.

OEM software is supported by the hardware manufacturer. This means, for example, you must call your computer manufacturer to get technical support for a problem with the copy of Microsoft Windows that came with your computer. This benefits everyone involved, because the manufacturer installed, configured, customized, and tested Windows with the computers they sell and can therefore provide better support, while Microsoft discounts the software price for not having to provide the technical support.

But, the OEM edition of Microsoft Windows has a restrictive per-device license. The license does not allow you to transfer it to another computer, even if you replace your old computer with a new one. It is forever tied to the original computer. Similarly, for peripherals like a USB hard drive or video card, the bundled OEM software can only be used with that device.

Educational / Academic Editions

Many publishers offer discounted licenses for students, teachers, and administrators of schools, and even to kids that are home-schooled. Sometimes it's the same as a commercial retail or volume license edition; other times it's a special bundle of applications you'll find useful as a student or teacher. The publisher may require you to send proof of your position in education before issuing the licenses.

In general, educational licenses you purchase are truly perpetual, meaning you don't have to stop using the software when you graduate (future upgrades will be at retail price, though).

Before you purchase an educational edition directly from a publisher or retailer, check to see if your school already has it through a site license, as you may be able to get it for free through your school. However, if you use a site license, you will probably only be allowed to use it so long as you remain associated with your school.

Volume Licensing

Virtually every publisher of standard desktop applications offers a volume licensing program. These can provide the best benefits if you have multiple users/computers in your business, even if you have as few as five. You get all the benefits of retail software at a discount, and often you get discounts on upgrades to new versions in the future.

The discounts are not much, though, especially in low volume. And sometimes the software is actually more expensive in a volume licensing program, because of the upgrade rights and other extras. One significant benefit, especially for businesses with hundreds of users or more, are the mass deployment capabilities of volume licensed editions and enhanced access to customized support, which may not be available in retail editions. But, as volume increases—into the hundreds or thousands—we will see the kinds of discounts we generally expect for a volume purchase.

Publishers may offer different volume license agreements to choose from, and may retool their agreements once in a while to try to better meet market demand or, frankly, to see if they can squeeze more money out of us. Some agreements are like a subscription, meaning your software use is terminated if you cancel or let it expire; others provide perpetual licenses that you can use after the agreement ends.

Since volume licensing can be complicated, it is often best to go through a value-added reseller or professional consultant, such as J.D. Fox Micro, for assistance signing up for the right licensing agreement. In fact, for this reason, many publishers do not even sell their volume license packages directly to end users.

NFR/Evaluation, Partner, and Developer Subscriptions

If you ever find yourself with a nice plastic DVD case of some expensive software item, but with a sticker that says "Not for resale" or "For evaluation only", read the license agreement carefully. If you use it to run or support your business, this probably violates the license terms. NFR software is usually given away at seminars or provided to IT professionals, and is licensed for a limited-time evaluation or demonstration only. It may even have a time-bomb built-in that will disable it after anywhere from 30 days to six months.

Some publishers offer special subscriptions for reseller partners, or for software engineers who develop custom applications based on their platforms. These might include free or reduced-cost licenses for applications or operating system software, either perpetual or on a subscription basis. The license agreements for these should describe in detail the qualifications to use the software, and exactly how it can be used; for example, whether it can be used for your company's regular work (production use), for evaluation and testing only, for engineer training only, for testing custom applications, for demonstration to potential purchasers of this software, etc.

Dishonest IT service providers sometimes sign up for these programs for the purpose of installing the software on their clients' computers for use in the clients' regular business, in violation of the license terms. The client may be happy because the IT provider got them software for much less than retail or volume prices, but is unaware that the software is not properly licensed, subjecting the client's company to potential civil penalties if this is discovered.

Hosted (Cloud) Software

The cloud involves running your applications directly off computers controlled by the software provider, through the Internet. This software delivery model actually came and went about twenty years ago, but it will stick this time since Internet access is much faster, and web technologies more advanced. Some of the most talked about examples today include Google G Suite, Microsoft Office Online (Office 365), Apple iCloud, and IBM Docs, which are all online versions of standard office productivity applications (word processing, spreadsheets, presentations, etc.). More examples are the various online backup and file storage services, such as Carbonite, Mozy, Dropbox, Egnyte, and Backblaze. Business management and accounting applications include NetSuite,, and QuickBooks Online. Another popular type of cloud service includes leveraging Microsoft Exchange Server to host company e-mail, shared contacts, and calendars on Microsoft's servers with a Microsoft Office 365 Business or Enterprise plan, or through a value-added, full-service provider like Rackspace or Intermedia.

Since this model is still new in this go-around, with new players and a totally different consumer environment, offerings are quite varied and change quickly. But, all of them involve paying a monthly fee per user to access the software (except the free services, of course).

Cloud software removes many of the deployment challenges we see with conventional software. However, optimizing and securing its use come with their own set of considerations that are vastly different from conventional software, but just as important (and more so in many ways, especially when it comes to confidentiality and integrity).

Mobile Apps

Apple, Google, and Microsoft all maintain a relatively new model of software distribution, called an app store. An app store is a centrally controlled software distribution point tied to a given device platform. Currently, the Apple Store is for iPhones and iPads, the Google Play App Store is for any tablet or phone running on the Google Android platform, and the Microsoft Windows Store is for phones, tablets, and even regular computers running Windows 8, Windows 8.1, and Windows 10. Anyone can write a mobile app, but it must be approved before it can be uploaded to the app store for distribution.

Apps are typically simple programs, with limited functionality compared to software that runs on a desktop or laptop, or even within a browser. But, they are generally not very expensive, and most of them are free, including the mobile app versions of paid software.

Once you purchase a paid app, you can usually download it on any compatible device you own.

A business can engage a software engineer to develop a custom mobile app to run, for example, on warehouse workers' tablets, accessing the company's central database for inventory management. These still would be published in the relevant store for the mobile platform, enabling the easy deployment of mobile apps, but with much more control over the app's function.

Software Activation

Technological efforts to prevent users from copying software have been in place for as long as software licenses have been sold. Back in the days of the Apple II and the Commodore 64, publishers implemented hacks to put secret codes on floppy disks in hidden areas that wouldn't appear on a copy, and then obfuscate the section of the program that checks for those codes. Successful software pirates either figured out how to copy the codes, or modify the program to disable the checks.

The current common technological method is similar, but the secret code is more under the control of the publisher. As you have probably experienced, you have to type in a unique product key, which you get at time of purchase, to install most any proprietary software you buy. Since that can easily be given away, it doesn't by itself stop you from illegally sharing your software. So, most applications now require that you activate your product key, which involves your computer sending a code mathematically derived by combining your product key with unique information about your computer, and the publisher sending back an activation code to unlock the software only on your computer. Usually, this can be done over the Internet with just a few mouse clicks on your part, but if that doesn't work, you can call the publisher on the phone and type in the activation code manually.

Of course, if you try to move the software to another computer, the activation may fail, because the publisher's system will recognize that the same product key is being used on another computer. It very well may work, but please keep in mind that just because you can activate software on more computers than your license allows, this doesn't mean you're using the software legally. If it doesn't work, you can usually call the software publisher and explain the situation (such as, your old computer crashed), and then get the activation code for your new computer.

Software Registration

Virtually every retail software product—from a free download to an expensive application suite that came in a glossy cardboard box—seems to demand that you register after you first install it, by popping up a window asking for your name, street address, phone number, even your fax number, and, of course, your e-mail address. And if you don't do it, then the program will bug you every so often until you do, or until you figure out how to get it to stop asking, which isn't always easy.

Let's get to the point: You don't have to register standard off-the-shelf desktop application software. You're welcome to register, if you want to receive e-mails from the publisher every so often, and if you really think you will get special deals on upgrades. Of course, sometimes the time window during which you can call them for technical support is extended, and you may very well get special offers for things you might find useful. So, it's up to you.

A lot of software is acquired these days by starting with a free trial, or purchased online, or through a subscription, which all require your logging in to their website to download the software. So with such software, you're already registered, and you can expect to get soliciatation e-mails with offers for related products until you opt out.

Apart from actual registration, many software products ask you to at least just enter your name and your company name, and it often will display those on the title screen that flashes when you open the program (called a "splash screen"), or if you look up the license information inside the program itself. Since it will usually say "this software is licensed to" and then show your name, you might think it is important whether you enter this correctly, or you might wonder if you have to enter the name of the user for each computer it's installed on or maybe the business owner's name, or you might think you need to change the name if an employee leaves the company or you trade computers. None of that matters, though. Your license is substantiated by the purchase receipt for the software and/or the license information provided with your purchase (in an e-mail, physical product key card, etc.). It doesn't matter what name shows in the software as installed.

Is your software genuine? And why should you care?

If you ever read a software publisher's essays on software piracy, you know they often talk about whether the copy you got is "genuine". What this means is the software files on the DVD you used, or in the software package you downloaded, comprise an untampered copy of the program as produced by the publisher itself. See, it's sometimes possible for a software pirate to illicitly unlock protected programs by modifying the program code, meaning you don't need an actual product key to use it. This could be a problem for you, because the pirate could also add program code designed to capture your password when you visit your bank's website, and steal all your money. Unlikely, but certainly possible, especially if you downloaded an otherwise expensive software package for just a few bucks from an overseas website.

The genuineness of software also applies to the product key itself. Certainly you've noticed how some companies provide product keys on paper media with counterforgery technologies that rival the most advanced paper currency, such as watermarks, foil threading, textures, and holograms. Well, of course, if you get a product key that was copied from someone else, then it will usually be missing all those features, and so that's obviously one way you can tell that your product key isn't genuine. If you don't realize this, and use it to activate software you downloaded directly from the publisher, you might find that your particular key won't work because it's already been activated on the computer it was copied from, or, worse, that particular code was mass-copied by an ambitious pirate, and it triggers an alarm when you try to use it! If that happens, good luck getting your money back from whatever shady dealer sold it to you.

So, there are risks involved in acquiring the software download files from an outlet that claims you don't need to activate it with a product key, as well as getting a product key from an illegitimate source.

Next:  Managing Conventional Software   >>

What a Business Manager Should Know About Software

Table of Contents

  1. Introduction
  2. Software Licensing and Deployment Basics
  3. Managing Conventional Software
  4. Inadvertent Software Piracy