Patrick McKenzie wrote a great blog post about software registration a few years back.  Patrick compares your software registration system to a salesman encouraging people to step beyond a free trial and purchase the software.  It’s an appropriate analogy especially if you think about how you want your salesman to treat your best prospective customers.

It’s important to also consider how your licensing and activation system’s role as salesman impacts maintenance, upgrades, and support.  The opportunity for earning revenue doesn’t necessarily end when the customer purchases.  Even if your sales model doesn’t include upgrades for additional features, new versions, etc. having a smooth license, registration, activation, etc. system in place will minimize license related support issues and add to the goodwill that is so important in getting referrals for new business.

Patrick then discusses four types of software users and how they’ll interact with your licensing system:

1. The first type of software user is perfectly honest and goes out of his way to comply with the licensing for your software.  If the license includes one installation he will only install it on his desktop or laptop but not both even though he would only be using  it on one or the other at any given time.  If all users were this type of software user you probably wouldn’t even have a licensing system.

2. The second type of software user is mostly honest.  He’s certainly not a pirate but will comfortably buy one license of your software when your license tells him he really requires two.  He may install and uninstall time-limited trial versions to get around trail limitations.  He might just be lazy and since the licensing system enables his laziness by letting him run the software anywhere he wants just just goes with the flow.  This type of software user is where your licensing system will pay off the most because a lot of software users are this type.

3. The third type of software user wants to use your software, but if presented with the opportunity to download a crack he will.  There are a variety of excuses he tells himself related to price, features, his current need, his plans to purchase a license “someday”, etc.  Your licensing system will sell some users of this type.

4. The fourth type of user is a pirate.  He’s not going to buy your software regardless of your licensing system.  If you do get a sale from him it’ll only be temporary until he has it charged back.  He’ll never be a legitimate customer.  Your licensing system has no risk of upsetting this type of software user to the point of him not purchasing.  He was never going to purchase in the first place.  Like the first type of software user if all users were this type of software user you probably wouldn’t even have a licensing system except in this case that may be because you aren’t in the software business.

That fourth type of software user is tricky to deal with… since he wouldn’t be purchasing this software anyway it may be easy to dismiss him.  The problem is that he doesn’t just crack the software for his own use (in fact, he may crack it and never actually use it himself), he publishes his cracks and becomes an enabler for those with a more “casual” approach toward software licenses…. the second and third type of software users.

Your licensing system should enable you to help keep the second and third types of software users honest and maximize your revenue while making life difficult for the fourth type of software user but not getting in the way of the first type of software user.  This can be quite a balancing act and it’s not one with a universal solution.  What works well in once market may not in another.  It’s one reason we created the License Toolkit… to help you strike that balance between (a) keeping the mostly honest (type 2) and casual pirates (type 3) users honest; (b) keeping the pirates and crackers (type 4) unproductive (with your software at least); and (c) keeping out of the way of the perfectly honest (type 1).