Personal Use vs. Commercial Use License for Digital Products

by Legal Goodness June 10, 2024

Intellectual Property Terms and Conditions

When it comes to licensing digital products, as a business owner you want to understand licensing. You may already be aware that there are 2 types of licenses typically offered for digital products (personal use and commercial use).

But let's get into the specifics of each so that you know which type is applicable when selling your digital products.

What is a License?

When customers buy your digital product – be it software, e-books, stock photos, or any other digital asset – they’re not actually buying the product itself.

Instead, they’re buying a license to use it under certain conditions. Think of it like leasing a car or renting a home, where something is being used but there is no transfer in ownership.

A license allows you, the owner, to provide a non-exclusive right to a customer to use your digital product in a specific way (personal or commercial use) and for a certain amount of time (i.e. perpetual or 1 year, for example).

Personal Use (think hobbies & fun)

A personal license is useful for customers who will use your digital product in a non-commercial way. But there are some parameters.

Individual Use Only

A personal use license is designed for a single person. Your customer can enjoy your product on their personal device.

No Business Use

A personal use license may not be used for commercial purposes to generate income.

For example, a customer purchasing your software to learn French for their trip to Paris is personal use. However, they cannot purchase the software and sell access to the content as part of their own French language course.

Device Restrictions

Typically, the license allows installation on a couple of personal devices, such as a laptop and a tablet.

Commercial Use (think business, making $$)

A commercial license is granted to a business or an individual for commercial purposes, allowing the use of the product in professional, business, or profit-generating activities.

Employee Usage

Depending on the terms, a commercial license might cover multiple users within an organization, allowing installations on several devices.

Enhanced Support

Commercial licenses often include premium support and regular updates, helping businesses maintain smooth operations.

Limits on Reproduction

Commercial license often offer tiers for reproduction. You may allow a licensee the ability to use 500 reproductions of the same design for 1 price and 10,000 reproductions for a higher price.

You can also offer tiers for where the content will be shown. Perhaps you allow print media at one price, but charge more for video production.

The choice is yours.

Example of commercial use

Your graphic design app gives business owners a license to create logos, brochures, and more for their clients. The business owners do not own the software but your license grants them access to use the product.

Which License Should I Offer

Know who’s buying your product and how they intend to use it. This will help you tailor your licenses to meet their needs.

Outline the terms and conditions of each license on your sales page and in your license terms. Consider offering both personal and commercial licenses to cater to different customer segments.

Make it easy for customers to choose the right license by providing clear, concise descriptions and examples. A comparison chart on your website makes it easier for your customers to understand the differences.

Choosing between a personal and commercial license depends on the intended use of the digital product. Personal licenses are suitable for individual use cases, while commercial licenses are necessary for business and professional environments.