In short: The main types of software licence are subscriptions (pay per period, usually per user or device), perpetual licences (pay once, plus optional maintenance), term licences (a fixed period), usage-based licences (pay for what you consume, often billed in arrears), free tiers and open source licences. Most business security and cloud software is now sold by subscription.
Subscription licences
A subscription gives you the right to use software for as long as you keep paying. It is now the standard model for business software, especially cloud services. The subscription usually includes updates, new features, cloud hosting where relevant, and vendor support.
Subscriptions are counted in some unit, typically users, devices, mailboxes or servers (see per-user vs per-device licensing), and run on a term: month-to-month, annual, or multi-year. The term decides how easily you can reduce numbers or leave, which is covered in monthly vs annual licences.
The advantages are predictable cost, always-current software and the ability to scale. The disadvantage is that you never own anything: stop paying and the software stops working, so plan renewals carefully.
Perpetual and term licences
A perpetual licence lets you use a specific version of software indefinitely after a one-off payment. Updates and support usually need a separate maintenance or support agreement, renewed annually. If maintenance lapses, the software keeps working, but you stop receiving updates, and reinstating maintenance later can mean back-paying the missed period.
Perpetual licences are becoming rarer as vendors move to subscriptions. Where they still exist, they suit software that runs on your own systems and changes slowly. Remember that unsupported software fails the Cyber Essentials requirement for software to be licensed and supported, so a perpetual licence without security updates is not a long-term answer.
A term licence sits between the two: you buy the right to use the software for a fixed period, such as one or three years, often for software installed on your own servers.
Usage-based and consumption licences
Some vendors charge for what you actually use, measured each month. Examples include backup services billed per GB stored or per protected workload, and security platforms that count active devices and bill in arrears. Cloud platforms bill on consumption of compute and storage.
- Pros: you pay only for real usage, and counts adjust automatically as your estate changes
- Cons: monthly bills vary, and costs can rise unexpectedly if usage grows or data is not cleaned up
- Good practice: set alerts or review the monthly usage report, and remove retired devices and old data promptly
A variation is the credit model, where you buy a pool of credits and spend them across a vendor's products as you choose.
Free, freemium and open source licences
Free and freemium products offer a basic tier at no charge, often with a user cap or limited features, and charge for business features such as central management, support and security controls. Check the terms: some free tiers are for personal or non-commercial use only.
Open source software is licensed under terms that let you view, use and usually modify the source code. Permissive licences such as MIT and Apache 2.0 impose few conditions; copyleft licences such as the GPL require you to share changes if you distribute the software. Most organisations use open source within other products without needing to act, but software developers should understand the obligations.
OEM and bundled licences come with hardware, such as an operating system on a new laptop, and are usually tied to that device.
Education and nonprofit licences are discounted or free versions for eligible organisations; see education and charity licensing.
Choosing and managing the right type
| Licence type | Best for | Watch out for |
|---|---|---|
| Monthly subscription | Changing teams, trials, seasonal staff | Higher unit cost |
| Annual or multi-year subscription | Stable estates, lowest unit cost | Reductions usually only at renewal |
| Perpetual plus maintenance | Stable on-premises software | Lapsed maintenance and unsupported versions |
| Usage-based | Backup storage, variable estates | Bills that drift upwards |
| Free or freemium | Very small teams, evaluation | Commercial use limits and missing controls |
Whatever the model, the essentials are the same: know what you have through software asset management, keep counts accurate, and review before renewal. We can explain the licensing of any product we supply before you commit. Contact us and ask us for a quote.
How Forever Systems supplies your software licences
Forever Systems Ltd supplies business software subscriptions to UK organisations from one account, with one monthly invoice and a UK team who know the products.
- The right edition first time: we check what you need before you buy, so you are not paying for features you will never use
- Monthly or annual terms where the vendor offers them, and help timing renewals and commitments
- Licence changes handled for you: add or remove users, upgrade editions and true-up without starting a new contract
- Deployment and support from engineers who run these products every day, not just a reseller account
- Consolidated billing and renewal reminders so nothing lapses unexpectedly
We work with businesses, schools, charities and public sector organisations of all sizes.
Need a licence quote or a second opinion on your renewal?
Tell Forever Systems what you need and we will come back to you by email with options, not a hard sell.
Contact usFrequently asked questions
What is the difference between a perpetual licence and a subscription?
A perpetual licence is paid for once and lets you use that version indefinitely, with updates only under a separate maintenance agreement. A subscription is paid for each period and stops working if you stop paying, but includes updates and usually support.
Is open source software free to use in business?
Usually yes, under the terms of its licence. Permissive licences have few conditions; copyleft licences such as the GPL add obligations if you distribute modified versions. Check the specific licence.
What does billed in arrears mean?
The vendor measures your usage during a month and bills for it afterwards, rather than charging in advance for a fixed quantity. It is common for usage-based security and backup services.