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The Benefits Of Software Licensing For SaaS Companies

Software licenses are much more than a simple click-to-proceed agreement. These licenses outline what the end user may and may not do with the software while also providing detailed legally binding guidelines for the distribution and use of the software. Software licenses also identify the end user’s rights and explain how the software must be used to avoid infringing on any copyright laws. 

These licenses are also relevant for all kinds of software, from gym software to accounting software and everything in between. 

Why SaaS Businesses Need Software Licenses

SaaS businesses can’t always rely on their customers to be responsible when it comes to using their intellectual property. Even though most customers will have no intention of infringing on any laws or misusing software, software licenses act as a secure safety net to protect both businesses and end users from legal penalties. 

There are also different kinds of software licenses. White-list, use-time, support-and-maintenance, subscription, project-based, floating, proprietary, perpetual, permissive, offline-use, metered, LGPL, fixed-duration, feature, device, copyleft, and anchored software licenses are all subcategories of software licenses. 

Software licenses provide SaaS businesses with the following benefits. 

Prevent Software Misuse

When customers are not restricted by a software license, there is not much to prevent copying, editing, or distributing the software. With proper licensing in place, businesses can rest assured that their intellectual property is safe from all forms of misuse by the customer. 

Maintain Ownership

Software licenses make it possible for businesses to rent their software to customers instead of selling it. As a result, the software creator maintains ownership while licensing the software to multiple end users. 

Maintaining ownership of the software is essential for SaaS companies that offer software as a service rather than a product. Without licensing, renting out software to customers will be an immeasurable risk to an organization or software creator. 

Define Warranties And Disclaimers

It’s common for software to fail to meet a customer’s extensive expectations. With this, businesses and software creators can rely on software licensing to explain disclaimers and warranties. Should problems occur, the business won’t endure a loss simply because the customer expected too much from the program. 

End User Termination

Even though there’s a good chance you want to avoid terminating customer and end-user accounts, suspending access can upset customers. However, there are some instances when businesses must suspend or terminate access to the software. 

Unpaid subscription fees explain one instance where software access must be terminated for a customer. However, there are several other reasons. So, it’s essential to maintain the right to terminate or suspend software access. With software licensing, you’ll have the right to revoke software access with consideration to licensing guidelines. 


Software licensing is fundamental for SaaS companies. In addition to the primary benefits listed above, software licensing also helps reduce the costs of purchasing high volumes of licenses and easier tracking of licenses. 

Nevertheless, keep in mind that software licensing pricing will depend on volume, payment frequencies, package-based deals, and perpetual pricing. So it’s important to compare options when investing in the right software licensing for your SaaS company. 


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