Software Licensing Metrics – Performance

In our most recent article on software licensing metrics, we looked at the Managed Capacity metric which enables you to distribute different types of software to a wide range of customers of different sizes and charge them accordingly. In this article we will be looking at the Performance metric, which is a little harder to define, but is still worth considering as it comes under the same banner as Managed Capacity metric  – namely a metric which does not measure the individual aspects of the software’s use but rather the overall service which it provides to the customer.

On the surface, the performance metric is used to measure the speed or capacity of the software independent of the hardware upon which it is being run. Rather, it measures how fast the software can operate in the specific environment within which it is being used. The price which you can charge for use of the software is therefore largely reliant upon its ability to perform well under the workload required by its user (your customer).

This is a metric which more than the others which we have so far covered in this series, measures the actions of the software developer more than the user. For example; if the software is used to manage a large Virtual Private Network for a customer then it is up to the developer to make sure that it has the capacity to maintain its high level of performance as the workload increases.

The financial impact of this works both ways; from the point of view of the end-consumer they will pay more for a product which is faster and has a greater capacity to carry out the task than one which does not deliver as a high a level of performance.

However, for the developer and you the vendor, it is worthwhile investing time and money in ensuring that the software performs as highly as possible as you will be able to charge more for it! This can mean that the price which you charge a customer for the software can increase or decrease in accordance with the performance which it delivers.

This metric is most suitable for software which is licensed on a subscription basis, as this will enable an easier fluctuation of the price.

The performance metric certainly places a significant amount of pressure upon the developer to maintain the software’s performance although this can prove beneficial for them as if the software is licensed on a performance basis then they will receive a largely royalty as the vendor is able to charge more to the customer. In short, the better the software performance, the more everyone benefits!

Image Credits: © Jeff Sheldon -