Question

I have begun work on a personal project that may end up having some real-world applicability. I am beginning to entertain the idea of selling licenses. I am sure some others here have done this before, and I was wondering what successfully processes you’ve used to do so.

There are many questions on SO regarding licensing, legal implications, etc. However, I have looked around and could not find a duplicate question for this one. To be clear, I am not looking for information on what licensing strategy to use, how to advertise your software, and so forth, but rather, for a checklist of things that should be done to increase the probability of success, and any possible gotchas I have not thought of. If anyone has any personal success stories, they would be very welcome.

For a little background, I am set on the idea of licensing a closed-source, compiled .NET DLL.

A few things off the top of my head:

• Strong documentation, because formal technical support is unlikely
• Specifying licensing terms and formalizing them with an attorney
• Code obfuscation
• Exploring license enforcement (either using a commercial package or custom code)
• Building a website around the product, including real-world code examples since this is a library
• Possibly offering some type of beta period, for feedback and getting the name out a bit
• Offering instant/automated purchases
• Marketing (oh boy)

Is it necessary (or wise) to start a one-man company to do this?

I will keep this list updated as answers come in. Thanks all!

Answer 1

You have most of the practical things listed out, in terms of actually getting a product from you to the customer –

However, there are a couple of things I’d also recommend.

• Figure out how you want to handle all of your accounting/purchasing/billing/etc.
• Rethink formal technical support (for money), but not at the exclusion of documentation
• Talk to a lawyer regarding all of your licensing decisions, agreements, etc., as well as company structure
• Talk to your accountant (and/or find one who is good at working with small tech companies)

Some of this will cost some money up front, but save headaches later.

The last two bullets are crutial – there are MANY options for how to setup yourself from a tax perspective, each of which has potential advantages and disadvantages depending on your specific situation.

For example, if you’re in the US, there are many advantages to incorporation prior to doing anything on your checklist. If you decide to incorporate, you may want to do it in your state, but there are also advantages to incorporating in Nevada or New Jersey (very pro-corporate states legally). If you’re successful, doing this early can save a huge amount of work over time and have significant benefits.

Also, if you incorportate, you might want to consider S vs C corps (S Corps are great if you’re a one or two man operation). If you don’t incorporate, you can run as a sole proprietorship or an LLC, both of which have advnatages and disadvantages. A lot of this depends on your product (what it does), your expected returns, etc. – having a good lawyer and a good accountant is a huge blessing.