You need to give some consideration to how you license the software you sell.

There are some important points to consider.

• All license issuing has a cost overhead.  You need a commerical licensing tool, or to write your own.  Plus support costs for issuing new or updated licenses.
• All licenses can be hacked, eventually, even if it requires someone to create binary patches of your code.
• A license will stop most people from trying to cheat anyway
• Licensing may reduce your sales

Because of all that, I recommend structuring your licensing as follows:

• Under $50 - Don't bother, the extra support costs will eat large chunks of your time.  But make sure you build in some ways for people to find out about other (more expensive) products you sell.
• Under $200 - Make it simple and Generous.  E.G.  A person can put it where ever they like.  All websites on a server can use the component.
• Above - Look at "per site", or "per user" licensing.  Give generous discounts as the number of licenses climb.
• Where possible, provide a service, not software.  This means you host the software on your own server, people connect to it and use it.  Monthly membership or lifetime membership fees apply.  But remember that lifetime fees imply a contractual obligation to provide the service, and that you will have ongoing hardware and bandwidth costs to pay.

A lot of people ask me about this.

Or they settle for the obvious:

Write it and sell copies.

But there are some less obvious ways.

1. Write software for other people to sell.  Bespoke software development, or contracting.
2. Initial product idea, laid out in a 1-2 page document.  Ideas are easy to have, and harder to implement.
3. Add in some market research (5-10 pages).  Determine a target market, carry out a product survey, do some keyword research, maybe start a mailing list. 
4. Create a detailed plan, or software specification (10-100 pages).  By creating a plan someone can work from, you greatly increase the value.  This is similar to franchising, but less proven.
5. Create a complete package of everything you need, including all business software, etc already configured or with only a few options required
6. Create the software product required, and include the source files, etc in the package
7. Create the software and sell access as a monthly service. Great for recurring income.
8. Set everything up on a domain, promote it, get it profitable, build affiliates, etc, and establish a track record with it.  Sell it.
9. Create an offline company, and do pretty much the same as above.

Which have I done?

1. Write software for other people.
2. Initial Product Idea
3. Create the software product and sell it
4. Set up a domain and make it profitable.  But I've never sold one
5. I worked for an offline company which was sold.  Four years from the product concept until it was sold for US$26 million.  As a long standing employee, I was given a bonus large enough to put a deposit on my house.

Anyone else got any ideas they would like to add?  Comment away.