A new report by the consulting firm PcrepairKit has found that “wasteful” software licenses are costing consumers more than $7 billion a year, and even the most egregious offenders can cost companies upwards of $10 billion in lost revenue per year.
The study, released on Tuesday, estimates that “software license revenue” for software companies at $3.8 billion, which translates into the cost to companies of licensing $7.4 billion worth of software every year.
Pcreporterkit has previously reported on the cost, noting that in a recent analysis of licensing costs in the U.S. for all software, licensing fees accounted for $1.8 trillion.
The Pcreporters report, however, looks at software licenses for software only, and finds that for software developed by a software company itself, licensing costs are far less than those for software produced by a third party.
According to the report, the average software company licenses software for $2.1 million, and the average third-party software company sells it for $11.9 million.
That means a company that makes $10 million worth of products every year is paying $4,600,000 in licensing fees per software product.
“For software developed and marketed by itself, software licensing fees add up to around $3 billion per year, or approximately 0.7% of the total software development cost of $8.5 trillion,” the report said.
PCreporterkit analyzed licensing costs for software created and marketed solely by the software companies themselves.
PBreakers analysis of software licensed by the UBS, IBM, SAP, Oracle, and Microsoft found that in 2013, licensing expenses accounted for 3.4% of total software costs.
“This represents a reduction of around $500 million per year over the previous five years, and represents the largest percentage reduction since the end of the recession,” Pcrepterkit wrote.
Pbreakers analysis also found that the average licensing fees for software designed by third parties rose $2,600 per year from 2011 to 2013, from $3,600 to $5,800 per software unit.
Preporters study found that software developed for the public was a big hit for software manufacturers, as the number of licensees increased from 2,100 in 2011 to 7,200 in 2013.
But the number from the public fell from 16,700 in 2011 and to 10,600 in 2013 — a decline that was driven by “the emergence of open source alternatives to Microsoft Office,” according to the Pcreakers report.
The report found that licensing costs rose more than 25% in 2013 from 2012 to 2013.
“Software developed for a large company that sells to the general public is more expensive to license than software designed specifically for that company,” Pbreakerk said.
“While the overall revenue generated from software licensing was stable in 2013 for most of the industry, the growth in software revenue was not.”
Pcrecerkit, which surveyed more than 100 companies to create its report, noted that “the cost of licensing software has been a major factor in the rapid growth in open source software.”
Pbreporters analysis also pointed out that the Ubs license fees accounted in 2013 and 2014 for around 6% of all software development costs, a percentage that has since grown to more than 10%.
Pbremakers study found the percentage of software sold by a company has grown from 5% in 2011 — before the advent of open-source software — to around 9% in 2014.
The number of software developers also rose in 2013 to 9% from 8% in 2012, but the number still falls well short of the number needed to meet the market’s demand for software.
“We think that the trend in software pricing is due to the emergence of third-parties in the marketplace,” PBreporters wrote.
“Further, there are currently over two million open source developers worldwide. “
It is likely that the industry will need to increase the number or the size of its own software development teams, or it will become more expensive for software developers to create software products and services,” PCreporters concluded.
“Further, there are currently over two million open source developers worldwide.
This means that many of these developers will have to become more efficient and efficient at finding, acquiring, and selling software.”
In response to the study, IBM said it is committed to supporting the open technology ecosystem and that “our customers are the best place to grow our business and innovate.”
IBM said that it is “confident that our license model will provide the best value for our customers and partners.”
SAP said it also believes the license model for open source licenses is “a proven model that helps to support