Choosing the Right Software Licence Model for Your Business

Software licensing decisions are often made on the basis of headline price per seat. They should be made on the basis of total cost of ownership, compliance risk, operational flexibility, and strategic fit. The gap between a well-structured licence portfolio and a poorly considered one is frequently significant, and it compounds every year at renewal.

The Major Licence Model Types

Perpetual licensing: you purchase the right to use a specific software version indefinitely. Often supplemented by an annual maintenance fee for support and updates. Lower ongoing cost but version lock-in risk and potential compliance exposure as vendor support ends.

Subscription licensing: you pay a recurring fee (monthly or annual) for the right to use current software. Always on the latest version. Easier to scale up and down. Becoming the dominant model for enterprise software, particularly in the Microsoft and Adobe ecosystems.

Named-user licensing: specific, named individuals are licensed. Straightforward to audit, easier to manage, but can feel inflexible if workforce composition changes frequently.

Concurrent/floating licensing: a pool of licences shared across more users than there are licences, on the assumption that not all users will be active simultaneously. Can deliver significant savings for software used intermittently, but requires accurate usage modelling to avoid compliance shortfall.

Site/enterprise licensing: unlimited use across a defined organisational scope. Provides certainty and simplifies administration, but often priced at a premium that only makes sense at high adoption levels.

The Compliance Risk Most Organisations Underestimate

Software licence compliance is not an administrative inconvenience. It is a legal exposure. Enterprise software vendors conduct audits, and the penalties for under-licensing can be severe: retrospective licence fees, interest, reputational risk, and in some jurisdictions, legal action.

The most common compliance failures we see when auditing client licence estates are:

• Deployment drift: software installed on machines not covered by the licence count, typically through imaging or contractor device management
• Version confusion: organisations believing they are licensed for a higher version than they have paid for
• Cloud/hybrid counting errors: particularly in Microsoft, Oracle, and VMware licence models where cloud deployments have specific counting rules that differ from on-premise

How to Approach a Licence Review

A licence review done properly covers three areas:

1. Discovery: what software is actually installed and being used across your estate. This requires tooling (Microsoft MAP toolkit, Flexera, Snow, or similar) rather than relying on purchase records.

2. Entitlement reconciliation: mapping actual usage against licence entitlements and identifying shortfalls and surpluses.

3. Optimisation: identifying where you are over-licensed (recover cost) and where licence model changes would better suit your actual usage patterns.

When to Involve a Licensing Specialist

If your organisation is approaching a major renewal, particularly Microsoft EA/MPSA, Adobe VIP, or Oracle, involving an independent licensing specialist before entering negotiations with the vendor is almost always worth the engagement cost. Vendors negotiate from a position of information asymmetry. Closing that gap before the conversation starts materially improves outcomes.

As an authorised reseller and partner for Microsoft, Adobe, Red Hat, Monday.com, and AWS, Prish Group provides licence advisory that is independent of individual vendor commercial incentives, which is a rarer position than it might appear.