Understanding Concurrent User vs. Named User Pricing

What are Named Licenses?

Named licenses, also known as single or user licenses, give a specific number of registered users the right to use a resource, such as software or a platform. Only a predefined number of selected users may access the resource. This means the number of licenses is directly proportional to the number of users, with a 1-to-1 ratio. For example, if a company has three named licenses for a software, only three registered users can use the software, regardless of whether they are using it simultaneously or not.

Advantages of Named Licenses:

1. Predictability: Costs are straightforward and predictable, as they are based on the exact number of users.
2. Customization: Easier to manage and customize individual user settings and permissions.
3. Security: Ensures that only authorized users have access to the software, enhancing security.

Disadvantages of Named Licenses:

1. Higher Costs for Large Teams: If you have a large number of users who infrequently use the software, this model can become expensive.
2. Underutilization: Paying for licenses that might not be fully utilized if certain users rarely access the software.

What are Concurrent Licenses?

Concurrent licenses, also known as group licenses, allow a specified maximum number of users to access the resource simultaneously. Each user is entitled to use the resource, but only up to the specified maximum number of permitted accesses. This means that more users can be registered than there are concurrent licenses available, but only a limited number can use the resource at the same time. For example, if a company has ten concurrent licenses for a software, up to ten registered users can access the software at the same time. If the limit is reached, additional users must wait until a license becomes available.

Advantages of Concurrent Licenses:

1. Cost Efficiency: Ideal for organizations with a large user base but only a few users accessing the software simultaneously, reducing the total number of licenses needed.
2. Flexibility: Users can share licenses, making it easier to accommodate varying usage patterns without purchasing excessive licenses.

Disadvantages of Concurrent Licenses:

1. Complexity: Tracking and managing concurrent usage can be more complex, requiring monitoring tools to avoid exceeding the limit.
2. Potential Bottlenecks: If the number of concurrent users exceeds the licensed amount, some users may be unable to access the software, leading to potential workflow disruptions.

Which Licensing Model is the Best Choice for Me?

Choosing the right model must be assessed on a case-by-case basis. Here are some guidelines to help you decide:

1. Parallel Access Needs: If all users need to access the resource simultaneously, it is advisable to choose the named user model. Each user is assigned a right of use at all times, and these licenses are typically more cost-effective than the concurrent model in such scenarios.
2. Shift Work or Low Simultaneous Use: The concurrent user model is ideal if employees work in shifts or if less than half of the users need to access the resource at the same time. This model allows for significant cost savings as fewer licenses are required compared to named licenses.

Choosing the Right Model for Your Organization

The choice between concurrent and named user pricing largely depends on your organization's specific needs and usage patterns. Here are some factors to consider:

1. User Access Patterns: Analyze how often and how many users need access to the software simultaneously. For instance, if only a few users need access at any given time, concurrent licensing might be more cost-effective.
2. Budget Constraints: Consider your budget and the total cost of ownership for each model. Named user licensing might be more predictable, but concurrent licensing can offer significant savings for larger organizations.
3. Scalability Needs: Think about your future growth and scalability requirements. If you expect to scale your team or usage significantly, choose a model that can accommodate this growth without excessive additional costs.
4. Management Capabilities: Assess your ability to manage and monitor license usage. Concurrent licensing requires more oversight to ensure compliance and avoid exceeding user limits.

Both concurrent user and named user pricing models have their place in software licensing, each offering distinct benefits and challenges. By thoroughly understanding your organization's usage patterns, budget, and management capabilities, you can select the model that aligns best with your operational needs and financial goals. Careful consideration of these factors will help you optimize your software investment and ensure efficient, cost-effective access for your users.

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