You’ve spent a lot of time and effort making your software. Now that you’re selling it as a downloadable online product, you probably want to get paid for it too.
You could offer your software as a download for a one-time payment. However if you’d like to:
- easily push updates to your software
- keep your customers from burning free copies for their friends
then you’ll want another method. Perhaps a subscription model, where customers pay for access to your software for a set time and the access is removed once they stop paying.
To create a subscription for a downloadable product, you’ll need to create a fence through which customers can access your product. And to do that, you’ll need to operate a license server.
Below, we’re going to tell you exactly how license severs work and how you can find the right one for your business or make it yourself.
What is a License Server?
A license server is a server that gives and revokes customer access tokens – also known as software license keys – allowing licensed software to run on their computers.
Think of your software as a theme park. Your license server is the front desk where guests buy tickets and the security staff that escorts them out of the park if they stay beyond closing.
What’s a License Key?
A license key is a password that you use to unlock access to a software product.
If you’ve ever downloaded software like a video game or Adobe Creative Suite, you’ve probably seen a popup asking for a license key from the internet. Those are generated by license servers.
Product owners can use a license server to dictate:
- How long key’s last
- How many different devices are allowed in one subscription
Sounds pretty simple, right? Conceptually, it is. But implementing it is not so straightforward.
How do you create a license server?
Naturally, if you’re selling paid products on the internet, your first instinct might be to make your own license server for distributing products. This is doable but complicated.
To build a license server you’ll need a couple of things:
- Server and cloud storage space – This can be purchased through subscriptions to larger servers like Google Cloud or AWS, or through your own, proprietary servers.
However, as a rule of thumb, almost no business that’s not a giant like IBM or Mitsubishi buys their own servers. You’re going to spend valuable time and money maintaining and updating them. That’s why the big server companies like AWS, Google, and Microsoft Azure are making the big bucks right now. You’ll probably be using their cloud-based servers.
Since you’ll likely be renting server space to take care of your licenses, you only need to focus on finding a developer to create the backend functions on the cloud. Once they’ve built the infrastructure, you’ll need to pay regular server fees to run your license server through your cloud provider.
How much does it cost to run a license server?
Here’s where it gets complicated. To use cloud server space you could end up paying anywhere from $10 to over $100 per month. It varies wildly depending on how many accounts you use and which provider you choose.
That’s not too bad, but if you’re running your own license server you’ll also have to keep it updated and pay a developer to update it. Skilled cloud developer fees in the US average at roughly $60 per hour. That’s time and money that could be better spent on other projects.
If you just want to run licensing for one product, say a WooCommerce plugin, then running your own licensing is just going to cut into your bottom line. You’ll want to look into a third-party service provider to provide a license.
Who can I use to run my license server?
Most businesses use online tools to run their licensing as it’s cheaper. There are two common sets of features you can expect out of a third-party license server:
- Software Key Management: These provide license key protection frameworks, aka license servers both on your premise and with your customer. At licenseserver.io, we provide this service for subscriptions.
- Subscription Management: Let you manage subscription-based licenses, usually bundling in payment automation, basic user analytics, and fraud-detection tools. PayPal and Stripe are the most well-known providers of this service (as well as licenseserver.io).
You’ll need to search the internet to find exactly the license server product you need for your business.
At licenseserver.io, we provide both license keys and subscription management, payment automation, and analytics. Our software is specialized in WooCommerce themes and plugins.
In fact, we have a special message for you below if you’re licensing WooCommerce themes and plugins through major providers like Envato.
If you sell WooCommerce plugins though Envato, you’re overpaying for licensing – likely by more than 6x
When you made your first theme or plugin for WooCommerce, you probably took the obvious choice for capturing your first sales – you went with one of the big plugin providers like Envato.
It makes sense, it has the most reach and you wanted to get your plugin in front of as many people as possible. But now that you’re getting regular sales you’ve probably noticed how much you’re spending on additional fees.
Say you sell a WooCommerce theme for $10 a pop and do just 100 sales in a year. Envato will take as much as 55 percent off your sales plus pad an additional $12 onto your customers’ prices.
Using Envato, you’ll make about $320. They’ll make $550 on your sales plus an additional $1200 on what they upcharge your customers.
You made $320 while they made $1750 on YOUR product. Let that sink in.
We made Licenseserver.io to give plugin makers a simpler, more profitable option. We charge a flat rate of $249 per year and can be set up in as little as five minutes.
We did the math for you below.
Using Licenseserver on the same 100 sales, you’ll make $751 (more than 2x) plus you can halve your asking price.
If you add the same padding competitors add to the buyer side, you’ll make almost $2,000 on the same 100 sales. More than 6x what you were making on Themeforest.
While, obviously, platforms like Envato give you an opportunity to easily market your product – if you’re confident in your product why not try to do your own licensing?
Interested in learning more? Fill out our contact form and we’ll tell you exactly how we can help your business.