Subscriptions range somewhere between the holy grail and the gold standard for software vendors. They have already become the norm in much of the consumer world, and they are becoming increasingly popular for commercial options as well. The secret to their success is not so secret at all: For the vendor, they promise a steady stream of income. For users, they offer affordable access to software without steep upfront costs for the licenses. The costs for maintenance and further development become more predictable for both sides, and users know that their software will always be the latest version available. Despite these many plus points, the decision to switch from straight-up sales to subscription models deserves some care and attention, as it can mean a drop in actual revenue in the initial transition period. Beyond these financial considerations, the switch to subscription models also calls for some attention to the technical nitty-gritty. There is one technical hurdle that needs to be taken in any case: All subscription models need some form of channel between the vendor and the user – magical thinking is not enough, and telepathy is out of the question. Even in today’s hyper-connected world, this is still a live issue, as there are many devices that need to operate offline, maybe even in secure and cordoned-off environments. Speaking generally, there are two possible routes to consider: * Licenses can be created as permanent licenses that work without any further intervention. When the subscription is cancelled, the license is turned into a temporary license or deactivated on the spot, ideally with a form of receipt to record that transaction. One major drawback of this choice is that licenses may still be used by more fraudulent users (e.g. those claiming that they lost the device they had bought the license for). And even for legitimate and upright users, there is little incentive to care about deactivating their licenses properly. Still, this straightforward option has the considerable advantage that it needs hardly any updates or interventions in the case of offline use. * Licenses can be created as temporary licenses that are renewed on a regular basis. Should a subscription be cancelled in this case, the license is given a new fixed expiry date and is not renewed anymore beyond that time limit. From the point of view of license enforcement, this is the way to go, as it essentially prevents all fraudulent use after the planned expiry date. The approach does, however, need a mechanism for regularly updating the licenses, even if they are used in offline scenarios. Preplanned push updates by file transfer can facilitate this, with lots of automation opportunities to make the process as unobtrusive as possible.

1. Relationships built to last Ruediger Kuegler
VP Sales & Security Expert, WIBU-SYSTEMS AG
Joerg Jans
Professional Services, WIBU-SYSTEMS AG
Subscriptions
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2. Where to find the accompanying audio
To access the on-demand reply of this masterclass, please visit
www.wibu.com/resources/webinars/2022/subscriptions-relationships-built-to-
last/access
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3. Basic Foundations of
Subscription Models
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4. License Subscription
 The User leases the software
 The right to use the software ends when the subscription expires
 In technical terms
 Time-limited license with Expiration Time
 Examples:
 Anti-virus software
 Office applications like Office 365
 Game portals like Sony Entertainment Network
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5. Maintenance Subscription
 The User purchases the software & signs up for a maintenance contract
 The right to use the software does not expire
 The right to receive updates expires at the end of the maintenance period
 In technical terms:
 Perpetual license with a Maintenance Period
 Examples:
 Microsoft Software Assurance
 Perpetual Fallback License (JetBrains)
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6. Pricing of Subscription Models
 Purchasing software only
 Full price 100%
 Price of the update 50% - 100%, depending on the last purchase
 Maintenance Subscription
 Annual maintenance fee 12% - 25% of license fee
 License Subscription
 Monthly fee 2% - 5% of license fee
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7. Sample Calculation 1
 New customers per year
 100
 Price of the software application (license fee)
 $5,000.00
 Selling a software update
 50% of the customers purchase the update
 Update priced at 50% of the software’s
 Purchase after 2-3 years
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8. Sample Calculation 2
 Maintenance Subscription
 75% of customers sign up for a maintenance contract
 Maintenance fee is priced at 20% of license’s
 Churn rate: 10% per year
 License Subscription
 Price: 4% of license fee
 25% more customers thanks to lower upfront costs
 Churn rate: 5% per year
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9. Sample Calculation 3
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0,50
0,58
0,16
0,51
0,64
0,45
0,56
0,70
0,74
0,61
0,76
1,00
0,63
0,81
1,26
$0,00 Mio
$0,25 Mio
$0,50 Mio
$0,75 Mio
$1,00 Mio
$1,25 Mio
$1,50 Mio
Perpedual
Maintenance
Subscription
Perpedual
Maintenance
Subscription
Perpedual
Maintenance
Subscription
Perpedual
Maintenance
Subscription
Perpedual
Maintenance
Subscription
Year 1 Year 2 Year 3 Year 4 Year 5
New Licenses License Updates Maintenance Fees Subscription Fees

10. Conclusions of the Sample Calculation
 Selling maintenance contracts via subscriptions is risk-free
 A license subscription model generates more revenues in the long term, but
represents a risk in the early years
 Introducing a new license model attracts more customers
 For a successful outcome, the selection of the right subscription price is essential: its
relation to the full software price and certain psychological barriers at $50 / $100 /
$200 / $500 come into play
 It is recommended to proceed in stages, i.e. for individual products or markets
 Specific considerations for each software and market!
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11. CodeMeter License Options
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12. Activation Time
CodeMeter Product Item Options
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(Extended) Protected Data
Expiration Time
Feature Map
Hidden Data
License Quantity
Maintenance Period
Secret Data
Text
Unit Counter
Usage Period
Named User License
Linger Time
Customer Own License Information
Module Items License Transfer
User Data
Universal Data
Access Password
Minimum Runtime Version
Maximum Encryption Rate
Activation Time
Usage Period

13. Renewal Triggered
by the ERP
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14. WIBU User
Vendor
Subscription – Triggered by the ERP 1
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3. Activation
1. Create License
Protected
Software
2. Ticket
License
Central
e-Commerce /
ERP / CRM
5. Auto Update
4. Triggers Replace
… Triggers Replace …

15. Subscription – Triggered by the ERP 2
 The ERP, CRM or e-Commerce requests a time-limited license
 CodeMeter License Central creates a time-limited license
 The User activates the license using the ticket (Software Activation Wizard
or License Portal)
 The ERP, CRM or e-Commerce triggers the renewal of the license
(replace)
 Software (Activation Wizard) collects the renewed license (auto-update)
 The subscription stops when the ERP, CRM or e-Commerce stops
renewing the license
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16. Subscriptions – Triggered by the ERP 3
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End date from ERP
(on order)

17. Automatic License
Renewals
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18. WIBU User
Vendor
Subscription – Automatic Renewal 1
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3. Activation
1. Create Subscription
Protected
Software
2. Ticket
License
Central
e-Commerce /
ERP / CRM
4. Renewal
… Renewal …
Cancel Subscription

19. Subscription – Automatic Renewal 2
 The ERP, CRM or e-Commerce triggers the creation of a subscription
 CodeMeter License Central creates the license, which renews itself
automatically
 The User activates the license using the ticket (Software Activation Wizard
or License Portal)
 Software (Activation Wizard) renews the license periodically and
automatically
 The ERP, CRM or E-Commerce triggers the cancellation of the subscription
 Automatic renewal stops
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20. Subscriptions – Automatic Renewal 3
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Automatic renewal
(on activation)
Storage of ticket for
automatic renewal
Duration Threshold

21. Multi-channel Time
Contingents
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22. Reseller
WIBU User
Vendor
Subscription – Multi-Channel Time Contingents 1
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3. Activation (merge time contingents)
1. Create Time Contingent
Protected
Software
2. Ticket
License
Central
e-Commerce /
ERP / CRM
3. Activation (merge time contingents)
1. Create Time Contingent
2a. Ticket 2b. Ticket

23. Subscription – Multi-Channel Time Contingents 2
 The ERP, CRM or e-Commerce creates multiple tickets with time
contingents
 CodeMeter License Central creates the licenses
 Optionally: Tickets are distributed via multiple channels
 The User activates the license using the specific ticket (Software Activation
Wizard or License Portal)
 Dynamic calculation of Expiration Time during activation
 If the User already has a license (with same identifier), time contingents are merged
 If the User doesn’t have a license yet (with this identifier), a new license is created
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24. Subscriptions – Multi-Channel Time Contingents 3
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Subscription ID
(on activation)
Duration

25. Summary
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26. Summary
 Subscription models are realized using an Expiration Time in CodeMeter
 CodeMeter License Central can handle different workflows
 Triggered by ERP, CRM or e-Commerce
 Automatic renewal
 Multi-channel time contingents
 CodeMeter License Central Extensions (WebDepot, Gateways, License
Portal) handle renewals and time contingents
 Custom adaptions are possible
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27. https://www.wibu.com
info@wibu.com
Europe: +49-721-931720
USA: +1-425-7756900
China: +86-21-55661790
Japan: +81-45-5659710
Many thanks for your kind attention
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