Ask HN: free-personal/paid-commercial licensing model

[huhtenberg]

I'm considering adopting a licensing model that permits free personal use and requires purchasing a license for commercial use. Quick Google search brought up few examples:

* http://www.jetbrains.com/idea/buy/buy.jsp - Java IDE

* http://free.avg.com/download-avg-anti-virus-free-edition - AVG Antivirus

* https://secure.logmein.com/products/hamachi/licensing.asp - VPN service

Berkeley DB is (sort of) of this variety and so is the Aladdin Ghostscript license. Are there any obviously notable examples out there ?

Does anyone has any experience with this model ? From either side - as a licensor or a licensee.

Thanks

(edit) I though I'd elaborate on this a bit. First of all, the context is a standalone application. Its target audience is not dumb users, but the app is not very specialized either. It is equally useful to both the home users and IT professionals.

Secondly, my take on the above model is this. It is viable because it appeals to the users who are

* capable of paying (from the company budget)

* generally feel obligated to pay (due to internal IT practices)

* and who are easier to part with the money (as it's not their own)

In case of home users neither of these three points holds. The only way to facilitate the payment is to appeal to their conscience (by nagging, by enforcing the restrictions via some sort of DRM mechanism, etc) - very .. err .. uncertain and effort-intensive endeavor compared to focusing on commercial users only.

Also, giving away fully-functional version under some sort of a free license effectively counters the need for hacked "full version" and eliminates the need for the licensing enforcement provisions in the application. Former helps to maintain greater control over the installation base and latter makes for a cleaner and simpler application.

[noodle]

as a licensee, i would suggest that you not bother. too many people are dishonest about it, and too many things blur the lines between personal and commercial usage.

looking back at it, i've installed something intended for personal use, but later on used it for commercial use, totally forgetting about the license agreement. one product in particular, i can think of, i would've paid for if i would've remembered. but they went under. probably from the license that few paid for.

instead, i would suggest you offer two version, a "lite" version for free and a fully-featured version for $$$.

[huhtenberg → noodle]

> but later on used it for commercial use

This is remedied by periodic re-verification of the usage purpose when in personal license mode.

I am wary of lite/pro model, because it complicates the offering. Looking through the feature comparison matrix may be quite confusing, especially if pro version is packed with not so frequently used features.

Also, if too many features are withheld from the lite version, it will drive users to use 'patched' pro versions. On other hand, if the lite version is liberal, the pro version will suffer as its usefulness will decline. Finding a balance depends on knowing your userbase and the userbase won't stabilize until the lite/pro matrix is stable. So it's a catch 22.

[noodle → huhtenberg]

> This is remedied by periodic re-verification of the usage purpose when in personal license mode.

this "might" be remedied by periodic re-verification. again, you're fully relying on the individuals being honest and reporting their own usage.

i'm just pointing out that your revenue stream is going to be inconsistent.

with respect to lite/pro model, look at the 37signals products. they've definitely made headway with the pro/lite model. they don't strip away many features, but they also limit the product in other ways.

[huhtenberg → noodle]

> you're fully relying on the individuals being honest and reporting their own usage

Both models rely on this. Just keep in mind it's not a service, but an application. There's no way to enforce certain usage, so it comes down to whether you want dishonest users running a hacked version or the original app (and thus allow them an option of going straight at some point).

[noodle → huhtenberg]

there's a big difference between someone clicking "personal" on your popup to be dishonest on the personal/commercial license model, and someone spending the time to crack and reverse engineer your product to be dishonest with the lite/pro license model.

i disagree with your assertion that there's no way to enforce certain usage.

[huhtenberg → noodle]

The difference is not as big as you might think. The end-user won't be cracking the protection himself. He'll just create an (implicit) demand for the crack and other people will create it. Absolutely all protected applications are broken within few months (or weeks) of the release. Even the most boring and virtually useless ones. That's a first-hand info from various shareware devs that I personally know; and it's also quite obvious from a trivial Google search for any given app.

> i disagree with your assertion that there's no way to enforce certain usage.

There is, of course, a way to enforce the usage, but effective protection very quickly becomes very ugly. Proper protection requires rootkit-like functionality, some untrivial code encryption and self-consistency checks, etc. And in the end it's all about fighting users that have their mind set on stealing. That's just pointless.

[noodle → huhtenberg]

as you say, its about fighting users that have their mind set on stealing. the vast majority of people who actively steal your application have the mindset to steal it, and almost definitely wouldn't have paid you anyway.

the point i'm trying to make is that the subset of people who are actively looking to steal your application is smaller than the subset of people who will passively steal it by not registering it as commercial. you're providing the "do you want to steal this application?" button straight away yourself, making anyone, whether their mind was set on stealing or not, have to actually make that choice.

if you're looking to make money off of this, why would you even give your users that option?

[huhtenberg → noodle]

> the subset of people who are actively looking to steal your application is smaller than the subset of people who will passively steal it by not registering it as commercial

Well, yeah, I hear you. Your conjecture is exactly what I'd like to validate. My guess is that it's not that much smaller and that a commercial trialing period may steer passive stealing crowd towards buying.

Consider the case when a user is super happy with the application, the purchasing process is streamlined and he can in fact afford buying it. Do you think lots of people would cheat ? Especially considering he's a commercial user and the $$ come from company's pocket.

[noodle → huhtenberg]

i don't necessarily think a lot of people will cheat, but i think you're lumping two different types of trust into one.

the one trust is trust that your users won't steal your stuff -- trust that they won't actively look to break the license.

the second trust is the trust that your users will not be lazy or incompetent -- trust that they won't passively or accidentally break the license.

with both personal/commercial licenses and lite/pro licenses, the people who break the first type of trust will always exist. you'll have your pirates and thieves no matter what. however, only with the personal/commercial licenses will you have the second group. only with personal/commercial licenses can you break the license without actively looking to do evil.

[huhtenberg → noodle]

It's a good deconstruction of the problem. I agree with the split. There are two things I am counting on:

1. Having just a single product is simpler to understand and thus it may result in a larger user base. And so this difference would compensate for the presence of opportunistic/passive cheaters.

2. Parts of both passive and active cheaters are going to be swayed towards buying if left alone for a while. Partly because of an expression of a "good will" on developer's part, which causes some people to simply reciprocate.

Having further thought about this, I think it might help to have one or two features under a commercial license. Something that's very easy to understand and that is in fact useful only in a commercial setup. Like an access to a tech support.

In any case - thanks for your input, it was useful and interesting. Gave me some stuff to mull over.

[emmett]

30 or 60 day free trial, and after that an infinite-use key available for $X. That's what convinced me to buy TextMate and many other software products that I use.

[huhtenberg → emmett]

Ah, good point. I meant to say there is a N days trial period if you are uncertain which license you are going to use. This is effectively needed to enable trialing the app in commercial setups.

[emmett → huhtenberg]

I wouldn't make a distinction. Your work is worth something, charge for it!

[huhtenberg → emmett]

Well, there's more than one way to charge for it. I can try and charge everyone $10 a pop or focus on a selected few and sell $1000 licenses.

There are few elements in play here including who's a target audience, the feature set, the simplicity of the offering, the good will attitude towards the users, the license enforcement issues, etc. The goal is to weight and balance so them so that to maximize the revenue.

The model I am looking at looks very promising from many angles, so I wanted to evaluate it from other angles that I am not perhaps considering.