Software Licensing: Why It’s Important and 4 Ways It Can Help You

Software Licensing

Software licensing helps protect the customer and the software company.

Using unlicensed software can expose you to cybersecurity risks, costing you time and money. Not to mention it is illegal.

However, we still see people taking the risk and using it anyways. It is estimated that at least 37 percent of software installed on personal computers is unlicensed. 

Here is everything you need to know about software licensing and 4 reasons you should use licensed software. Also, check out the special discount below to save money on eco-friendly products. 

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What is Software Licensing?

Most software is licensed, not sold, meaning there are terms the end-user must follow. When you buy software, you don’t own it, you just have the right to use it. Because you don’t own it, there are rules called “terms and conditions” you must follow when using it.

The terms and conditions are often described in the Software License Agreement and include rules and restrictions on using the software.  

Software Licensing Agreement - picture of two people signing a contract

For example, the Software License Agreement usually describes how long you can use the software (e.g., 12 months), how many computers you can install it on, and what types of uses are permitted (e.g., educational vs. commercial use). It also includes restrictions on reverse engineering, modifying, selling, transferring, or distributing the software.

Why is Software Licensing Important?

Software licensing protects the software company’s intellectual property. It also protects the customer from cybersecurity threats.

Software agreements protect the software company and the end-user - picture of two people shaking hands

For instance, someone could purchase the software, reverse-engineer it, and sell a knock-off version. The software company misses out on revenue, and the customer receives an illegitimate copy of the software, which could lead to performance issues and cybersecurity threats. 

If a customer violates the terms of the software agreement, they could lose the right to use the software or be forced to pay a fine.

Individuals and organizations should read and fully understand the terms of the software license agreement and ensure compliance.  

4 Reasons You Should Use Licensed Software

1.Using Unlicensed Software Is Against the Law

Using unlicensed software exposes you to legal and financial risk.

Using unlicensed software is considered software piracy. Software piracy is the unauthorized use, duplication, or distribution of copyrighted software.

The copyright owners can take legal action against you, and the government can force you to pay damages.

Legal Risks - Picture of a Judge

Depending on the severity of the violation, they could also seek personal liability, meaning they could hold you personally accountable. Especially if you are a manager or director and know about or encourage using unlicensed software.

Some people think they won't get caught using unlicensed software. Unfortunately, they are mistaken. 

Companies have a financial incentive to enforce software violations. According to the Business Software Alliance ("BSA"), software companies lose about $46 billion annually due to unlicensed software. Companies use tools and services that identify unlicensed software users to help recover revenue.  They also conduct regular audits to ensure customers are using their software correctly. 

Software Licensing Enforcement - Picture of homepage of BSA Compliance Solutions website

2.Licensed Software Offers Better Protection from Cybersecurity Threats

Licensed software decreases the risk of cybersecurity incidents. 

Did you know that you face a nearly one-in-three chance of encountering malware when you obtain or install unlicensed software?

Reports have shown that people and organizations using unlicensed PC software generally encounter more malware. Why? Because cybercriminals can pre-install or embed malware in the software and use it to gain unauthorized access to your information.

Important of Software Licensing - Using Unlicensed Software can expose you to malware and cybersecurity threats - picture of computer that has a virus on its screen

A survey conducted by BSA revealed that users rated malware among the top three reasons to avoid unlicensed software.

BSA Global Software Survey Results - 68% of computer users and 48% of CIOs rated malware among the top three reasons not to use unlicensed software due to loss of corporate or personal data, system downtime, network outages, and the cost of disinfecting systems

Source: BSA

3.Using Licensed Software Can Save Money

Licensed software can save money and increase efficiency.

According to the BSA, fixing problems with malware from unlicensed software can cost more than $10,000 per infected computer. 

Malware Costs - Dealing with malware associated with unlicensed software can cost more than $10,000 per infected computer for a worldwide total of more than $359 billion
Unlicensed Software Malware Costs - picture of person looking unhappy due to high costs

It is more efficient to pay for the licensed software and avoid any issues.

4.Licensed Software Provides Better Support

With licensed software, you receive updates, bug fixes, and technical assistance from the developer.

You can’t obtain those features when using unlicensed software. Your software could quickly become out of date or obsolete and you will have to start from square one. 

Types of Software Licenses

You can use different types of software licenses to fit your needs.

For example, buying multiple licenses for multiple people can get expensive. A solution is multi-user packages or volume licenses. These can save you time and money.

Additionally, some software is in the public domain and is free.

How to Select the Correct Software License

1. Understand Your Needs

Before downloading software, you must understand what you will need it for, how you will use it, and how many computers you will use it on. 

2. Look For Official Purchasing Channels

When purchasing software, try to go through official channels and websites. Most legitimate software companies have customer service lines or trialware that you can use first. Don't immediately trust an offer or a website because the price is lower. If the price seems too good to be true, it probably is.

3. Read The License Fully

Take the time to read the software licensing and fully understand the terms and conditions. Watch out for unusual restrictions or obligations. Remember, even free and open-source software can include obligations for reuse. 


If you are part of an organization or business then it can help to have a policy on software licensing and discourage the use of unlicensed software in writing. Businesses must train their employees on proper use to protect themselves from cybersecurity attacks and lawsuits.

Being smart about software licensing can put you in a position to be successful and can save you a lot of headaches in the long run.  

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Our writers come from all over the world, but one thing unites them - their passion for sustainability.

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