IT Glossary
What is a software license?
The contract governing your use of a program: you never buy the software, you buy the right to use it — under the terms written in the license.
The money a company spends on software does not buy the software; it buys a license — the right to use it under precise conditions, set out in a contract almost nobody reads. Those conditions come in models worth recognizing before signing anything. A perpetual license means paying once and using that version forever, and it is increasingly rare. A subscription means paying monthly for as long as you use it, which is today’s default. Per-user and per-device pricing is the arithmetic that decides the invoice once thirty people are involved, and volume agreements change the arithmetic again. Open source is a category of its own: free to use, yet still governed by licenses with clauses — most of them permissive (MIT, Apache), some copyleft (GPL and especially AGPL) carrying publication obligations that matter enormously if you build a product on top. Three reasons the topic is more serious than it looks. Compliance first: unlicensed or under-licensed software — five licenses against fifteen installations — is illegal, and vendor audits are real, with retroactive invoices attached. Then money: a license inventory almost always uncovers seats still billed for people who left, duplicate tools doing one job, and editions far above what anyone actually uses. Finally dependence: exit terms — do you get your data back, and in which format? — are read before signature, not during the divorce.
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Why it matters for your business
Compliance without retroactive surprises
A correct license inventory removes vendor-audit exposure — retroactive invoices and penalties land precisely on the companies that simply did not know.
Dead subscriptions, cut
A twice-yearly review almost always finds seats still paid for former employees and duplicated tools — recurring savings with nothing lost in return.
Informed negotiation and a clean exit
Knowing the licensing model and the exit clauses lets you negotiate renewals from a position of fact, instead of discovering at departure that your data stays behind.
Frequently asked questions
What does a company risk by using unlicensed or insufficiently licensed software?
Legally, copyright infringement, with civil liability and in serious cases criminal exposure. Practically, vendor audits with retroactive billing and penalties, plus the security risk of pirated software, which is frequently infected at the source. The cost of licensing correctly sits almost always below the cost of a single one of those incidents.
Open source is free — can I use it however I like inside the company?
As an internal tool, almost always yes. The nuances appear when you build products: permissive licenses such as MIT and Apache allow essentially anything, while copyleft licenses — GPL, and AGPL in particular — can require you to publish your own code if you distribute it or offer it as a service. On any product build, reviewing the license of every dependency is standard due diligence; ask your development partner for that list.
Subscription or perpetual license — which works out better?
On paper the perpetual license used to win over a long horizon, but it hid costs: paid upgrades, your own server, maintenance staff. A subscription costs a steady amount and includes updates, hosting and support. In practice the choice is rarely yours any more, since the market has moved to subscriptions; what remains negotiable is volume pricing, annual versus monthly commitment, and the data-export clause that applies when you leave.
Let’s talk about your project
Message us on WhatsApp or send an email — you talk directly to a developer.
office@northdan.com · +40 752 070 247