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perpetual software license

Contributor(s): Matthew Haughn

A perpetual software license is a type of software license that authorizes an individual to use a program indefinitely. Generally, outside of termination, a perpetual software license allows the holder to use a specific version of a given software program continually with payment of a single fee.

Along with a perpetual software license, the vendor typically provides a technical support period of one to three years. During this initial period, the vendor also provides software updates often. However, updates may or may not be provided for free in perpetuity.

With perpetual software licensing, a customer pays an upfront charge for the software license as well as a limited supplemental support period during which additional benefits are included. After the support period ends, the customer has the option of continuing to use the current version of the software without additional support or paying a lower-cost fee to resubscribe for support and upgrades.

Use of perpetual software licensing is declining as subscription-based licensing increases in popularity. This increase may be in part a result of perpetual software licensing’s high initial cost. At the same time, however, it can be hard for the software vendor to ensure profitability in perpetual software licensing because of the uncertain term of licensing and unforeseeable future development costs.

This was last updated in July 2017

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