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SAM fundamentals

Software License Types Explained: Per User, Per Device, Per Core and Subscription

A plain-language guide to software license types and metrics: per user, per device, per core, concurrent, subscription, usage-based and enterprise-wide.

By the MI Solutions SAM team9 min read2 exhibits

"We have 500 licenses" sounds like a clear statement. It is not. Five hundred licenses counted per user, per device or per processor core describe very different rights, and very different bills. The license metric, the unit a publisher uses to count your use, is one of the most important details in any software contract, and one of the most frequently misunderstood.

This guide explains the common license types, how each is counted, and where each tends to go wrong.

The common license metrics

MetricWhat one license coversTypical productsWhere it goes wrong
Named userOne identified person, on any deviceMicrosoft 365, Salesforce, AdobeLicenses stay assigned to leavers and inactive users
Per deviceOne device, used by anyoneShared kiosks, lab softwareDevices retired or replaced without reassigning
Concurrent userOne simultaneous user, from a poolEngineering and design toolsPools sized for peak, which may happen rarely
Per core or processorCompute capacity of a serverDatabases, middleware, virtualizationVirtual machines that can move across hosts expand the count
Subscription seatA named user for a period, usually SaaSMost SaaS applicationsAuto-renewal at the same volume regardless of use
Usage-basedUnits consumed: calls, storage, creditsCloud services, AI toolsUnexpected consumption spikes
Enterprise-wideEvery employee, or every user in scopeSome Java, analytics and security agreementsPaying for the whole organization when few people use it

Named user

The most common metric in SaaS. One license belongs to one identified person, who can usually use it on several devices. It is simple to count and simple to waste: when people change roles or leave, their licenses often stay assigned. A reclamation process based on last sign-in recovers most of that waste.

Per device

One license covers one device, regardless of how many people use it. Useful for shared workstations, labs and kiosks. The risk is the reverse of named user: devices get replaced, and the license is not moved to the new device.

Concurrent user

A pool of licenses is shared, and the count is the number of people using the product at the same time. Concurrent pools are efficient but often sized for the busiest day of the year. Usage logs show the real peak.

Per core or per processor

Server software, databases, middleware and virtualization platforms are often licensed by compute capacity. The number of licenses depends on the number of physical cores, sometimes adjusted by a factor that depends on the processor type. Virtualization is the main trap: depending on the publisher's rules, moving a virtual machine across a cluster can require licensing every host it could run on.

Subscription seat

A named-user license for a fixed period, the default for SaaS. It renews, often automatically, and often at the same volume, which is why subscription estates accumulate idle seats.

Usage-based

You pay for what you consume: API calls, storage, compute time or AI credits. There is no compliance gap in the traditional sense, but costs can be hard to predict. Zylo's 2025 SaaS Management Index found that 66.5% of IT leaders had experienced unexpected SaaS charges due to consumption-based or AI pricing.

Enterprise-wide

Some agreements count every employee in the organization, regardless of how many actually use the product. Oracle's Java SE Universal Subscription, introduced in 2023, is a well-known example: it is priced per employee, and the definition of employee includes contractors and consultants who support internal operations. This makes cost easy to calculate and potentially very large compared to actual use.

How metric choice changes the bill

Every metric is a trade-off. Some make the bill easy to predict but can charge you for people who never use the product; others follow real use closely but can surprise you at the end of the month.

Exhibit 1
Metrics trade cost predictability for fit to actual useHow common license metrics comparePREDICTABLE, POOR FITPREDICTABLE, GOOD FITUNPREDICTABLE, POOR FITUNPREDICTABLE, GOOD FITFit to actual use →Cost predictability →Enterprise-widePer deviceNamed userSubscription seatConcurrentPer coreUsage-basedPositions are indicative and vary by contract.

Same estate, different metrics

To see how much the metric matters, take one specialist engineering application used by a team of 400 people. Most of them use it a few times a week; at the busiest hour of the busiest day, 150 are using it at once. They work on 560 devices between them.

Exhibit 2
The same usage can cost twice as much under a different metricAnnual cost of one engineering application for a 400-person team, $K, illustrative list prices$0K$250K$500K$750K$1,000K$480KNamed user$560KPer device$405KConcurrent user$900KEnterprise-wide (2,000staff)Illustrative: named user $1,200 × 400; per device $1,000 × 560; concurrent $2,700 × 150 peak; enterprise-wide$450 × 2,000 employees. Real price ratios between metrics vary by publisher.

The concurrent pool is the cheapest here because the peak is well below the headcount. For a tool everyone uses all day, the ranking would reverse. The point is not that one metric is always better, but that the choice should be modeled, not accepted by default.

Questions to ask about any metric

Before you sign, and before every renewal

How MI One helps

Frequently asked questions

Which license metric is cheapest?

It depends on how the software is used. Named-user licensing suits products everyone uses daily; concurrent licensing suits specialist tools used occasionally.

Can we change the metric of an existing contract?

Sometimes, usually at renewal. It is worth modeling the cost under each metric the publisher offers before negotiating.

Are SaaS products always licensed per user?

Most are, but many combine a per-user base with usage-based charges for storage, API calls or AI features.


Sources

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