How Software Licensing Works

Software is a crucial part of any business. Whether you are using the Microsoft Office suite, accounting software, or graphic design tools, each of these programs likely utilizes a software license. If your business uses many different types of software, it is important to ensure that you understand how software licensing works. At EC Managed IT, we offer complete software management solutions as part of our managed IT services. Our experts will work with you to ensure that you have the perfect Microsoft software or other solution for your precise needs and budget.

How Does Software Licensing Work?

Software licensing varies based on pricing models, terms of use, and the number of registered users. By agreeing to the terms of use for a piece of software, you are likely entering an End-User License Agreement (EULA). This agreement is outlined by the software manufacturer and owner (Microsoft, Adobe, etc.). Some software is available forever for a one-time fee, but most modern programs are licensed to a set number of users for a fixed monthly or yearly fee. Understanding the various types of software licensing on the market will enable you to make an informed decision for the specific needs of your business.

Types of Software Licenses

The most common types of software licenses include:


Some software programs offer free licenses for an unlimited number of users. These programs are often referred to as FOSS (Free and Open-Source Software), meaning they can be edited and added to by nearly anyone.


This is a free trial for software that typically requires payment. Some programs will offer their first month (or multiple months) for free but will automatically withdraw payments after this period.

Named User

A named user license is for software that belongs to one user, typically on one device.


Volume licenses are similar to named user licenses but, instead of one user, they are for multiple users and devices. They are often intended for family use but can be effective for small businesses as well. Volume licenses can often be installed on anywhere from 3 to 10 devices.


Enterprise licenses are similar to volume licenses, but they cover many more devices. Some enterprise plans cover hundreds of devices, making them ideal for large companies or corporations.


This type of software license is unique in the sense that it can be installed on nearly limitless devices, but only accessed by a set number of users at the same time.

OEM (Original Equipment Manufacturers)

These software licenses come pre-installed with certain hardware or at a discounted rate compared to standard retail pricing. For example, some devices may come pre-installed with productivity software or an antivirus program for one year.

For more information on software licensing and how it affects your business, reach out to experts at EC Managed IT. We will be happy to answer any questions and help you to determine the ideal software management or other managed IT solution for your needs.


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