New software license management tools + tips for 2025

What software license management means in 2025

Traditionally, software license management often conjured images of license keys, meticulous installation counts, and careful tracking of who had which software on their machines.

You'd purchase a certain number of licenses, and the main goal was to ensure you didn't exceed that count, staying compliant with the vendor's terms. Tools helped manage software licenses by providing an inventory of these traditional licenses.

However, the rise of SaaS solutions has shifted this landscape considerably. In 2025, for SaaS teams, software license management is less about simple installation counts.

Instead, it's fundamentally about controlling what a paying customer can access within the application, the extent to which they can use those features, and directly linking that access and usage to their subscription plan and payments. High-quality license management software is now essential for these modern approaches.

Here are some key capabilities of modern software license management:

• Entitlement gating: This involves controlling access to specific features or modules based on the customer's subscription tier or add-ons. Different plans unlock different parts of the software.
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• Usage thresholds: Modern systems allow you to set limits on resource consumption, such as the number of API calls, data storage, or user seats, according to the purchased plan.
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• Plan-based provisioning: When a customer subscribes to a particular plan, the system automatically provisions their account with the features and usage allowances associated with that plan.
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• Usage tracking: Continuously monitoring how customers are using the software is crucial. This data informs billing, helps identify upsell opportunities, and ensures fair usage.

How is license management different from entitlements?

While the terms are related, license management is the broader discipline of overseeing the agreement between the software provider and the customer regarding the use of the software. It encompasses everything from defining the terms of use to ensuring compliance and managing access.

Entitlements, on the other hand, are the specific rights and permissions granted to a customer as part of their license.

They define what the customer is allowed to do with the software. Think of license management as the overall framework, and entitlements as the specific rules within that framework. For a SaaS product, entitlements dictate which features are available based on the subscription.

Note: The concepts discussed here are closely linked to feature gating, which controls the availability of features within the application, and product and price management, which define the different subscription plans and their associated costs.

Understanding how these areas intersect is vital for a successful SaaS business. Explore our blog posts on feature gating as well as product and price management for a deeper understanding.

Why SaaS teams need modern license management

The ability to effectively monetize a SaaS product hinges on how well you package features, control access through gating, and enforce those access rules. Modern software license management is the backbone that enables this intricate process.

Without it, monetization strategies become leaky, ineffective, and difficult to manage.

Plus, the pricing landscape for SaaS solutions has become much more intricate due to the higher complexity of:

• Product-led growth (PLG) models
• The introduction of AI agents with varying consumption patterns
• The adoption of usage-based billing
• Prevalence of hybrid solutions with on-premises data and cloud-stored data

Teams need refined systems to handle all these nuances effectively.

The way software licenses are managed has undergone a transformation, especially for SaaS companies. A recent industry analysis highlights the increasing importance of this area, with the SaaS license management market projected to reach $22.12 billion by 2031.

This growth highlights the need for effective strategies in an environment marked by increasing SaaS adoption and the drive for cost-conscious operations.

To address these challenges, SaaS teams need license logic that deeply integrates with several key areas of their operations.

Integration with product usage

Understanding how customers interact with the product is critical. Modern software license management must track feature adoption, resource consumption, and overall usage patterns.

It provides valuable insights into which features are most popular within different subscription tiers and helps identify opportunities for upselling or plan adjustments. Without this integration, it's difficult to align pricing and packaging with actual customer value.

Integration with customer success

Knowing a customer's entitlements and their usage patterns is important for proactive customer success efforts. If a customer is nearing a usage limit or isn't using key features they have access to, the customer success team can intervene with timely guidance or support.

Modern software license management tools can provide the necessary data to facilitate these interactions, leading to improved customer retention.

Integration with billing and revenue recognition

The connection between license management and billing is direct. The license system dictates what a customer is entitled to and how much they have consumed, which directly translates into billing amounts.

Accurate software license management ensures correct and timely invoicing, which is fundamental for revenue recognition. Handling tiered pricing, coupons, upgrades, and downgrades seamlessly requires a tight integration between these systems.

Integration with growth marketing and experimentation

Growth marketing teams constantly experiment with different acquisition strategies and pricing models. Modern software license management should allow for the easy implementation and tracking of these experiments.

For instance, offering temporary access to premium features or adjusting usage limits for specific cohorts requires a flexible licensing system. The results of these experiments, tied to actual usage and conversions, provide useful data for improving pricing and packaging strategies.

Key takeaway: Modern software license management is no longer just about preventing unauthorized use. It is a strategic function that underpins monetization, informs customer engagement, and drives business growth in the ever-evolving SaaS industry playing field.

From license keys to real-time entitlements

The evolution of software license management mirrors the change in how software is delivered and consumed. The legacy model, deeply rooted in perpetual licenses and on-premises deployments, relied heavily on static mechanisms.

Think of the familiar license key — a unique string of characters acting as a digital gatekeeper, verifying the legitimacy of a software installation. This approach often involved a one-time purchase granting indefinite use, albeit tied to a specific number of installations or devices.

Enforcement was largely reactive, often relying on periodic audits to ensure compliance. Tracking usage was a cumbersome process, frequently involving manual data collection and reporting, providing only a snapshot in time.

The link between what a customer paid and how they used the software was indirect, primarily determined at the point of purchase.

The shift to dynamic entitlements

The advent of SaaS models has ushered in a paradigm shift. The concept of a static license key is increasingly replaced by dynamic entitlement models. Access to the software and its features is no longer a binary state unlocked by a key but rather a fluid set of permissions granted and revoked in real-time based on a customer's active subscription and usage.

Deployment moves from a local, one-time installation to cloud-based plan provisioning. When a customer subscribes to a SaaS offering, their account is provisioned with the features and usage allowances associated with their chosen plan, all happening in the cloud.

Real-time enforcement and tracking

Enforcement in the SaaS industry becomes proactive and automated. Real-time metering continuously tracks a customer's consumption of various resources and features. When usage approaches or exceeds defined limits, the system can automatically enforce those limits, perhaps by throttling access, prompting an upgrade, or triggering billing adjustments.

This continuous monitoring provides a far more granular understanding of how the software is being used. Subscription tiers dictate the entitlements, and usage-based pricing models tie billing directly to consumption. Plus, updates and new features are delivered continuously and automatically in the cloud, fundamentally changing how software evolves and is managed.

This chart shows a more detailed comparison of new SaaS models vs. legacy models:

Why real-time entitlements matter

The shift towards real-time entitlements in modern software license management delivers a multitude of benefits that extend across various aspects of a SaaS business:

• Granular feature gating and product differentiation: Real-time entitlements enable SaaS providers to offer a truly tiered product experience. Specific features or levels of functionality can be precisely controlled and made available only to customers on the appropriate subscription plans.
  
  Taking this approach allows for clear differentiation between offerings and the ability to cater to various customer segments with tailored value propositions.
• Effective prevention of overuse and better compliance: Continuous monitoring and real-time enforcement of usage limits significantly reduce the risk of customers exceeding their licensed usage.
  
  It provides compliance with the agreed-upon terms, preventing unexpected costs for the provider and potential service disruptions for the user. Automated alerts can also proactively notify customers when they are nearing their limits.
• Powering flexible pricing and packaging strategies: Real-time entitlements are the engine behind sophisticated pricing models. Usage-based billing, where customers pay only for what they consume, becomes feasible with accurate, real-time metering.
  
  Tiered plans with varying feature sets and usage quotas can be managed dynamically. Add-ons and upgrades can be provisioned instantly, offering customers greater flexibility and control over their software consumption.
• Fairness and transparency in usage-based models: For customers on usage-based plans, real-time tracking provides transparency into their consumption. It builds trust by making sure they are billed accurately based on their actual use of the software, fostering a sense of fairness.
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• Delivering a seamless and immediate user experience: When a user subscribes, upgrades, or adds new features, real-time entitlement management ensures that these changes are reflected instantly within the application. Providing immediate access makes the user experience much better and reduces friction.
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• Facilitating agile experimentation and data-driven iteration: The ability to control entitlements in real-time allows growth and product teams to run experiments more effectively.
  
  Offering temporary access to premium features or adjusting usage limits for specific user cohorts can be implemented and tracked with precision. The resulting usage data provides valuable insights for optimizing product packaging and pricing.
• Tightening security and access control: Real-time entitlement management contributes to a more secure environment. Access to sensitive features can be controlled based on roles and permissions that are managed dynamically. When employees leave or roles change, access can be revoked instantly and consistently.
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• Improving customer retention through proactive engagement: By monitoring real-time usage data, customer success teams can identify customers who may be underutilizing their entitled features or approaching usage limits.
  
  Taking this approach enables proactive engagement with targeted support or upgrade recommendations, ultimately improving customer satisfaction and reducing churn.
• Accurate billing and revenue recognition: Precise tracking of entitlements and usage directly translates to accurate billing. Tracking is crucial for financial reporting and revenue recognition, guaranteeing that the company's financial records accurately reflect customer consumption and subscription status.

Key takeaway: The shift from static license keys to real-time entitlements represents a fundamental advancement in how SaaS businesses manage their software. It provides the agility, control, and data insights necessary to thrive in the modern cloud-based landscape.

Common challenges in SaaS license logic

Developing and maintaining the logic that governs how customers access and use a SaaS product can present many hurdles for various teams within an organization. Often, these challenges stem from a lack of integration and a siloed approach to software license management. Let’s zoom in closer on these challenges.

Engineering teams own the plan logic, which makes updates painful

In many SaaS companies, the logic that defines subscription plans and their associated entitlements is often within the engineering team's codebase. While engineers possess the technical skills to implement this logic, it can create bottlenecks when updates are required.

For instance, imagine a scenario where the marketing team wants to introduce a new "pro" plan with slightly different feature access and higher usage limits. Because the plan logic is deeply embedded in the application code, even seemingly minor changes necessitate engineering resources, code deployments, and rigorous testing.

This process can be time-consuming and divert engineering focus from core product development, making it difficult to iterate quickly on pricing and packaging.

Finance can't enforce usage-based contracts reliably

The rise of usage-based pricing offers great flexibility, but it also introduces challenges for finance teams. If the software license management system isn't tightly integrated with billing, accurately tracking and enforcing usage-based contracts becomes problematic.

Consider a company that charges based on the number of API calls a customer makes. If the usage data isn't reliably captured and passed to the billing system, discrepancies can arise, leading to inaccurate invoices and potential revenue leakage.

Finance teams may struggle to reconcile usage reports with billing records, making it difficult to audit and forecast revenue accurately.

Product teams want to test new plans, but billing can't keep up

Product teams are often eager to experiment with new subscription tiers or feature bundles to improve customer acquisition and revenue. However, if the underlying software license management system isn't agile enough to accommodate these changes quickly, the billing system often lags behind.

Imagine a product team wanting to test a limited-time promotional plan with a unique set of features. If the billing system can't easily recognize and bill for this new plan, the launch is delayed or becomes overly complicated, stifling innovation and market responsiveness.

Customer success teams lack visibility into what customers are entitled to

Customer success teams play a crucial role in providing customer satisfaction and driving retention. However, if they lack clear visibility into a customer's specific entitlements and usage patterns, their ability to provide effective support is hampered.

For example, a customer on a basic plan might inquire about a feature that is only available on the premium tier. Without a readily accessible view of the customer's entitlements within their CRM or support tools, the customer success representative may provide inaccurate data or struggle to guide the user appropriately, leading to frustration.

Pricing changes often break billing workflows

Changes must be accurately reflected in both the software license management system and the billing system when pricing strategies evolve, whether through price increases, discounts, or changes to plan structures.

If these systems aren't tightly synchronized, pricing changes can inadvertently break billing workflows. For instance, a change in how overage charges are calculated might not be correctly implemented in the billing system, leading to incorrect invoices being sent to customers.

The result may come in the form of customer disputes, increased churn, and significant administrative overhead for the finance and support teams.

Best tools for dynamic license control

While legacy systems often struggle to adapt to the nuances of SaaS pricing and usage, modern platforms offer dynamic capabilities. Here, we'll explore some of the key players in this evolving landscape.

Orb: The agile monetization engine

Orb is a platform built to help SaaS companies unlock their usage data for flexible pricing and billing, moving beyond the limitations of rigid, traditional systems. A key differentiator for Orb is its focus on agility.

It allows business teams to launch new pricing without needing engineering intervention, test pricing changes using historical data, and define value metrics through a SQL-based editor and visual builder.

Orb supports various modern pricing models, including usage-based, subscription, and hybrid approaches, and offers progressive rollout capabilities for price changes.

Unlike legacy systems that often tightly couple product code with pricing logic, Orb separates usage data and pricing metrics. This separation enables greater flexibility in experimenting with pricing and adapting to evolving business needs.

Legacy systems typically lack this decoupling, making pricing changes a clunky and risky task, often requiring considerable engineering effort and deployment cycles.

Orb's approach aims to provide business teams with greater autonomy and speed in iterating on their monetization strategies, a stark contrast to the slower, more engineering-dependent processes associated with older platforms.

Thales Sentinel: Secure software monetization

Thales Sentinel offers a suite of software license management solutions focused on security and control. It provides tools for software protection, licensing, and entitlement management, catering to various deployment models, including on-site, cloud, and embedded systems.

Sentinel's capabilities include license enforcement, feature activation, and usage tracking. While offering robust security features, its approach might be perceived as more traditional compared to some of the newer, cloud-native solutions specifically built for the agility demands of SaaS companies.

OpenLM: License management for engineering and specialty software

OpenLM focuses on managing licenses for engineering and specialty software, often characterized by concurrent usage models. It provides features for license monitoring, usage reporting, and cost optimization.

OpenLM helps organizations understand how their often expensive engineering licenses are being utilized, identify idle licenses, and prevent overspending. While strong in its niche, its feature set might not be as directly aligned with the dynamic entitlement control needs of SaaS platforms with diverse subscription tiers and usage-based pricing.

Zluri: SaaS management platform with license insights

Zluri offers a SaaS management platform that provides visibility into an organization's entire SaaS stack, including license management capabilities. It helps discover applications, track usage, and manage software licenses across different vendors.

Zluri's strength lies in providing a broad overview of SaaS consumption and identifying potential cost savings and security risks associated with shadow IT. While it offers insights into license usage, its focus is broader than just dynamic entitlement control within a single SaaS product.

Zylo: SaaS spend management and optimization

Zylo is a SaaS management platform focused on helping companies discover, manage, and optimize their spending. It provides visibility into SaaS subscriptions, usage, and contracts, helping organizations identify redundancies and negotiate better deals.

Similar to Zluri, Zylo offers valuable insights into overall SaaS expenditure, but isn't primarily designed for the granular, real-time entitlement control within a specific SaaS application that platforms like Orb aim to provide.

FAQs

Can I enforce feature access without license keys?

Yes, you can enforce feature access without license keys by using modern entitlement management systems that control access based on a user's subscription status and plan.

What’s the difference between billing and license logic?

Billing logic calculates the amount a customer owes based on their subscription and usage, while license logic determines what features and resources a customer is entitled to access based on their plan.

How do usage-based products handle license enforcement?

Usage-based products handle license enforcement by metering consumption of specific resources or features and automatically applying limits or triggering billing events based on predefined thresholds.

How Orb simplifies license enforcement and monetization

You've already learned how modern software license management has evolved to become a driver of SaaS revenue. Orb is at the forefront of this evolution, offering a done-for-you billing platform that goes beyond simple invoicing. Here’s how Orb helps SaaS businesses:

• Agile monetization strategy implementation: Orb RevGraph and Orb SQL Editor help business teams to quickly define and deploy pricing models, including usage-based and tiered structures, without requiring extensive engineering resources.
  
  This agility allows for quick experimentation and fine-tuning of monetization strategies to align with customer value and market demands.
• Precise usage metering for enforcement: By ingesting all raw event data into Orb RevGraph, the platform provides accurate, real-time tracking of customer usage across various dimensions. Orb not only processes all raw event data, but it also does not drop events, no matter the scale or complexity of incoming data.
  
  Such granular metering forms the foundation for enforcing usage-based pricing and preventing overuse, making sure that customers adhere to their purchased entitlements.
• Dynamic entitlement management through pricing logic: Orb's architecture, which separates pricing logic from the underlying product code, enables the dynamic management of entitlements based on a customer's subscription plan and usage.
  
  As customers upgrade, downgrade, or consume more resources, Orb's billing engine automatically reflects these changes, effectively enforcing the terms of their software license.
• Support for diverse pricing and packaging: Orb's support for usage-based, subscription, and hybrid pricing models allows SaaS teams to create diverse offerings. This enables them to gate features and access based on different plan levels and usage thresholds, effectively enforcing the entitlements associated with each offering.
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• Real-time visibility and control: The platform provides real-time usage monitoring and customer dashboards that match invoice data. Transparency allows both the SaaS provider and the customer to understand consumption patterns and guarantee accurate billing and adherence to license terms.
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• Risk-free experimentation for monetization: Orb Simulations allows product and growth teams to test new pricing and packaging strategies using real data before deploying them live.
  
  Orb Simulation’s capability extends to experimenting with different entitlement models and understanding their potential impact on revenue and customer adoption, reducing the risks associated with changes to license enforcement.

Ready to improve your billing and license management? Learn more about Orb and our flexible pricing options to find a plan that works for you.