In the 21st century, the rise of usage-based business models has been one of the major disruptions—thanks to technological advancements and subsequent changes in user behavior. Now, consumers prefer to invest based on exact needs, rather than paying a lump sum and failing to utilize the product or service purchased. The same is also reflected in also software licensing as major software vendors are moving from perpetual licensing to usage-based licensing models such as elastic licensing.
What is Elastic Licensing?
Elastic licensing or elastic access is a combination of subscription and pay-per-use access models. Here, you initially pay for basic features and can subscribe additional functionalities any time to meet changing demands.
If you use products or services whose usage patterns keep varying, elastic software licensing can be your go-to model. With it, you will be able to increase the number of licenses or specific features for a short period of time, and then automatically go back to the basic subscription.
In real-life scenarios, engineers may need temporary access to a simulation license for one particular project. They may also require a tool once or twice a year for scheduled tasks. Cloud platforms that offer short-term scalability are also examples of elastic licensing.
The term elastic stands for flexibility, and it is the same in elastic licenses—upholding the agile nature of the model.
How does elastic licensing function?
Wondering how elastic licensing works? Usually, with a basic subscription, you can access licensing as per your expected requirements. However, you can also purchase additional tokens or credits to use them whenever there is a spike in demand.
Consider a scenario where you have bought an annual subscription for 100 licenses and 50 additional tokens. Now, you can use these tokens to buy features or additional licenses for a short term. There will be a rate table defining the cost of the different types of additional access.
| Rate Chart | Items | Costs (Number of tokens required) |
| A | 5 | |
| B | 3 | |
| C | 7 | |
| … |
What are the advantages of the elastic licensing model?
Elastic licensing model is all about usage-based monetization, so it offers numerous benefits for software vendors as well as subscribers.
The model is flexible
Thanks to elastic licensing’s flexibility, customers can ensure they have access to additional licenses or features whenever they need them—even if for a short time. This enhances the user experience as workflows or projects run without delay.
Minimal wastage and maximum optimization
With elastic licensing, you can ensure there are no unused licenses in your software ecosystem and buy licenses or features according to your exact requirements. This licensing model also promotes OpEx (operational expenses) against CapEx (capital expenses) accounting, which is a simpler and more efficient accounting model modern organizations prefer.
Availability of detailed usage reports
By tracking peak usage, variations in usage as well as items most requested, elastic licensing models enable you to make data-driven procurement and management plans. These models come with functionalities such as threshold alerts and automated expiration to save you from unaccounted bills and discontinuity in services.
Easy access
Traditional licensing models come with hurdles such as lengthy sales processes, lumpsum initial investments, and more. However, you can rise over all these with instantly available elastic licensing monetization where you can customize your investments as per your exact needs. As a result, customers such as medium or small-sized companies or even home users can easily procure such models.
An example of elastic licensing
Notably, Ansys, a prominent player in the Engineering Simulation and Design (EDA) space, is following this modern licensing model.
With traditional licensing, Ansys was receiving customer grievances as they were failing to procure additional functionalities when required—leading to the loss of valuable project hours. To overcome this bottleneck and prioritoze efficiency, Ansys soon switched to elastic licensing.
While the 2023 Monetization Monitor projected usage-based licensing models to spike by 59% by 2025, it is prudent to bring the topic of elastic licensing into the popular software licensing discourse. And also, with smart license management solutions such as OpenLM, monitoring elastic licenses becomes a simple task as you get advanced analytics over the usage reports and can easily plan optimization.
Want to know more about OpenLM support, features, and solutions? Reach out to us right away!
We also invite you to join our upcoming webinars, where we cover topics ranging from OpenLM new releases, support to different licensing models as well as insights from the ITAM industry.
