Comparing Freeware, Open Source, Shareware and Proprietary Software

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Software license types

There are at least four classes of software license in use:

1. Proprietary commercial license

2. Shareware

3. Freeware

4. Open source

Proprietary commercial license

This is the traditional route to license software. You pay a supplier for a copy of the software which these days may be supplied on physical media (disks) or downloaded over the Internet. In return for your money you get permission to use the software on one or sometimes more machines and a degree of technical support. Examples of this type of software include Microsoft Office and Microsoft Windows.


Shareware is usually available as a free download for you to try before you buy. This may be a cut-down version, though many authors argue that this is against the spirit of shareware. If you wish to user the software in the longer term, you are expected to purchase a license. This often also brings a degree of support not available during the free trial period. In some cases, the software is disabled or restricted after a designated time period to enforce the purchase. Examples of shareware include the CoffeeCup applications (see for example )


Freeware is made available for use without charge. Intellectual property is retained by the developer. Sometimes free use is restricted, so that for example, software may be free to use for non-commercial or educational purposes, but a license is required for commercial use. A free version may also be offered as a cut down version of a more advanced version for which a commercial license is required. The rationale here is that users will go on to pay for the more complete version of the software. Audacity is an application that is provided as freeware (see for example

Open source

Open source is a special type of freeware where the source code is released as well as the application itself, both without charge. There are not usually restrictions on the purpose for which the application is used. The commonest licensing arrangement for open source is GPL, the General Public License. This is based on four freedoms:

1. the freedom to use the software for any purpose,

2. the freedom to change the software to suit your needs,

3. the freedom to share the software with your friends and neighbors, and

4. the freedom to share the changes you make.

The problem with GPL is that if you wish to use a component which is licensed under GPL, then what you produce must also provide the same free access. This may sometimes be commercially problematic.

An example of open source is the Drupal content management system (see for example


There are different ways in which you can obtain and pay for software. Make sure that you consider the terms and conditions of your license. Does the licensing method cover your intended purpose and if so, does it involve you in additional costs? What are the other costs likely to be? Consider training, time and opportunity costs. All of these are likely to exceed licensing costs unless the initial cost of your software license is very high, and will be explored in later articles in this series.

This post is part of the series: Open source and other types of software

This series explores the different types of software licenses available, The first article explains different principal types of software licence, Later articles compare different types to consider what is better in different circumstances.

  1. What Kind of Software Is Best for You?