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Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

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BreezeTree Software

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host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

"Honor System" Licensing and Quarterly Payments

Hi All,

I am new to this forum and like a lot of what I have read. I have a somewhat unique situation.

I have a software I make free for individuals but have fees for commercial purposes called Windows 7 Boot Updater (see http://coderforlife.com/projects/win7boot/ and http://coderforlife.com/projects/win7boot/commercial/ ). The commercial applications of this are many, including being able to re-brand machines you sell during boot up, completely hiding the fact that it is running Windows (for example on a medical device that runs use WES7), or marking the machines used by employees of a business.

The software itself operates a level where any sort of license-checking would be impossible (it modifies system files that run before the filesystem itself is available) and the modified files can be copied to any machine without the program being run again. Hardware locking is also not viable as the modified files run prior to many when many hardware-locked numbers are available and would add significant time to the boot process which is usually tried to be minimized for WES7 installs.

So in the end I have decided on the "honor system". Commercial licenses are requested in bulk (just given an invoice saying the number of licenses, no actual keys). The licenses themselves grant the use of the modified files on a single machine (not the actual use of the program itself). I see this overall as a combination of licensing and royalty system.

However some larger companies are wanting larger orders and are not sure how many they will need in advance. My idea for this has been to say on a quarterly basis purchase the estimated number of licenses plus/minus any short/unused licenses from the prior quarter (as long as the licenses they were short was close).

I am just looking for ideas on if this is a good setup or what I could change to make it more friendly for business and myself alike. Additionally, is there a name for this system? How are royalty streams handled?

Thanks for any inputs!
Jeffrey Bush Send private email
Monday, March 25, 2013
Honor System is a good name for this, and it's difficult to police an honour system.  My advice is have a minimum initial fee (say half of what they estimate they will use in a year) and then let them pay monthly at the same per license rate once they use up the quantity they paid for initially.  I suggest monthly to keep the size of each payment lower, which makes it much easier to collect, but isn't so frequent it becomes annoying.  Most businesses pay bills monthly, anyway.  Anything you do that seems stingy or greedy will backfire, but remind your customers every chance you get how trusting you are.
Howard Ness Send private email
Monday, March 25, 2013
Sounds  like a good system to me based on the mutual trust of the parties involved. How would this work when you sell your software directly to OEM vendors ?
Web Developers Send private email
Tuesday, March 26, 2013

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