You might have recently noticed our social media posts tagged with #NoLicense. In this article, we’ll try to explain why it matters and why we believe it is the future of the language industry.
Per-user license models are an archaic approach to translation software and lead to prohibitive pricing.
Per-user licenses are a hindrance for the translation industry, because they lead to unpredictable risks and/or wasteful spending.
For small-to-midsized companies, buying per-user licenses means spending considerable amounts upfront, with unclear ROI.
For larger companies and enterprises, buying per-user licenses means managing a stockpile of licenses, many of which remain idle most of the time.
For any company, it is considerable spending that is not proportional to the value it provides.
Smartcat’s #NoLicense approach allows companies to enjoy the whole set of CAT/TMS features at a fraction of the cost of license-counting translation tools.
The COVID-19 pandemic has shortened the time window to act for companies who want to stay afloat amid the crisis.
Why are per-user licenses a risk for translation businesses?
Most industry tools, whether CAT or TMS, have historically been monetizing on “per-user seats”. It means that if you want to use some software just by yourself and a couple of linguists, it could cost, say, $20 per month. If you want to add a couple more people as project managers and a couple dozen linguists for different languages, it quickly becomes $500+. And the cost continues to increase as you add more users. In theory, the logic is clear: You pay little when you start and more as you grow.
However, in practice it doesn’t work so well. First, because these days even small LSPs can — or at least should be able to — handle big projects. Such projects are not paid upfront though, so you cannot just take the $10,000 from your customer and spend $2,000 of it to buy the needed TMS/CAT licenses. Instead, you’ll need to pay from your own pocket — and hope that the deal works out so you can make up for these expenses in a month or so, assuming “Net 30” terms.
Then again, many smaller LSPs can’t afford to spend $2000 out of the blue, so they come up with all kinds of “workarounds”: For example, they purchase a one-manager license and “share” it among several people — which means none of them can work at the same time or the system will detect this and penalize them. The same goes for linguist licenses. This infamous “Concurrent Access Licensing” approach has been the bane of many companies’ existences.
What if we already have the licenses we need?
The same occurs in reverse: If you have already purchased a lot of licenses, and then the amount of orders suddenly drops — which has happened for many during the COVID-19 crisis, for example, — you’re left with a “dead weight.” You have $2000 worth of licenses — which are usually renewed annually — and no work while time chips away at the money you’ve spent. It’s wasted spending, and waste is the source of all inefficiency in business.
For larger translation companies, this situation is almost perpetual: Hundreds of paid but unused licenses just sit there and use up your money — money that could have been spent on developing the business or paying better rates to linguists.
So, to sum up, per-user licensing in the translation industry leads to either financial risks or business waste — both in unpredictable amounts:
Per-user licensing in the translation industry leads to either financial risks or business waste — both in unpredictable amounts.
So what’s the way out? We say just get rid of them!
What is “#NoLicense” software?
Very simple: It is software that does not charge for “seats”, or per-user licenses.
As far as we know, Smartcat is the only such software in the translation industry to date. It’s important to note that it’s not something we’ve just thought up and introduced. On the contrary, not charging per user was one of the tenets of Smartcat’s philosophy from the very beginning.
How did the idea cross our minds? Because we were on the receiving end of all these licensing schemes as early as ten years ago. Back then, Ivan Smolnikov was the CEO of a large multilingual vendor, and he felt ripped off with the way translation software vendors charged his company. (If you want to know more of the backstory, you can read this article we wrote three years ago, basically on the same topic.)
While Smartcat has been professing the same principles for eight years now, it’s inspiring to see that more and more companies are on board with the idea. Back in the day, many companies and freelancers alike would tell us that we were cuckoo. They were sure we would sink into oblivion in a year or two.
Fast-forward to today, and we have translation companies lining up to get a Smartcat account. (Not literally, there is no actual line, and everyone is free to sign up at any time 🙂.) The fact that we manage to make money despite not selling per-user licenses no longer surprises anyone: Our marketplace, subscriptions, and payment automation solutions have proven to have enough value to ensure our profitability.
Time for some spring cleaning
Just a few months ago, even companies that did understand the benefits of the #NoLicense approach were hesitant to actually change things for themselves. They knew they were overcharged — but they had the money to spend and more important things to do than invest in optimization.
Once the coronavirus struck, these less-than-optimal conditions started revealing gaping holes in their P&L statements. Suddenly, saving thousands of bucks a year in licenses did become a priority. That’s why we’re seeing an almost two-fold increase in traffic on our website. That’s why, when we organize a conference, people turn up and make it the largest industry conference in the last few months.
Well, better late than never. It’s important to understand that while you are paying for licenses — whether used or unused — other companies are steadily finding their way out of the crisis by carefully managing their cash flows. And once the whole COVID-19 thing ends, these companies will no longer be struggling away alongside you — you’ll be lagging behind and hastily looking for ways to catch up with them.
P.S. If you want to make the switch but have residual funds left in your license-charging tool’s agreement, talk to our onboarding team, and we’ll see if we can fix you a migration credit!