Determining the Proper Number and Price of Software Licenses

Software houses sell their products by transferring usage licenses of various software components to the customers. Depending on the kind of software, there are several different license types that allow controlled access of services. The two most popular types are the fixed license, which gives access rights for an identified workstation, and the floating license, which restricts the number of simultaneous users to a certain bound. The latter of these types is advantageous when the users do not demand full-time services and occasional lack of access is bearable. The problem of deciding the number of floating licenses is studied in the present paper. Based on the expected usage profile of the software, we calculate the minimal number of licenses that guarantees that the customers get service better than a given lower bound. The problem is studied by using certain queuing models, known as the Erlang toss system, the Erlang delay system, and the Engset model. None of these analytic models consider, however, the transient period that we analyze by means of simulation and by the so-called modified offered load approximation. We also give simple formulas presenting how the number of software licenses needed to keep the probability of nonaccess below a given blocking level grows as a function of the offered load, which is the proportion of the time used in the case that all requests were successful. Results of the study may be used for setting license prices and for determining the proper number of licenses.