Last Updated: September 2021

As the first step of their app development process, developers and business users creating apps need to decide on which License to use. The license defines the relationship with Salesforce. The two main types of Salesforce licenses are ISVforce licenses and OEM licenses.

What is Salesforce ISV License?

Developers who seek to distribute apps through the AppExchange need an ISVforce license, known as the ISV license in short. ISV stands for Independent Software Vendor.

Salesforce assigns ISV licenses for application-specific or embedded software. The developer offers the software for sale or download through the AppExchange. The ISV license is an essential requirement to sell through the Salesforce App Exchange.

An ISV licensed app is generally an add-on app for existing Salesforce users, mostly to augment the Sales or Service Cloud. It delivers additional features or functionality, filling up the gaps or white space in the ecosystem. Salesforce users may top up their portfolio of apps by buying such apps, to enhance their Salesforce experience.

What is Salesforce OEM License?

OEM or Original Equipment Manufacturer licenses apply when the custom app developed using Salesforce comes bundled with hardware. Salesforce OEM licenses are also known as Lightning Platform Embedded licenses

Salesforce assigns OEM licenses to developers who build custom software. These licenses specify the developer’s contract with Salesforce. The license terms detail the rights and privileges end users get. These apps do not rely on Sales Cloud or Service Cloud functionality, and exist independently.

Salesforce OEM licenses suit apps are meant for industry verticals such as healthcare, manufacturing, or finance. Examples include software bundled with digital cameras, ERP app, and accounting solutions.

Developers may sell Salesforce OEM software to equipment manufacturers, outside the AppExchange. Users cannot buy OEM products through the AppExchange checkout. They have to contact developers directly.

OEM licensed software ties to hardware. Developers may use these software only on the installed system. They have no legal right to install the software in other systems, even if the original hardware is no longer in use.

Users who purchase these licenses from partners may use it only to access the partner’s app. Salesforce restricts end users from developing or extending apps by creating custom objects. They may access other apps sold with OEM license though.

AppExchange OEM Edition

The AppExchange OEM edition allows developers to sell apps through the AppExchange. They may sell to customers the same way they sell ISVforce apps. This license does away with the need for an independent contract with Salesforce. As such, it offers more freedom and flexibility.

The AppExchange OEM edition license offers developers a proven and secure platform. They may use the Salesforce platform to develop and sell on-demand apps, distinct from the run-of-the-mill ISV apps. Developers who use this platform may focus on product innovation. They no longer have to worry about the infrastructure or sales. They have the freedom to fix their delivery channels, but cannot use the AppExchange checkout.

The AppExchange OEM edition offer developers:

• A common user interface, single security, and data sharing model
• Option for customization and integration using the AppExchange Builder, AppExchange API, and AppExchange Database.
• Up to five custom tabs
• Up to fifty custom objects
• Salesforce service delivery platform, with its reputation for transparency, reliability, and security.

However, as it is with the case of ISV licenses, these offerings are not rigid. Salesforce offers flexibility with various OEM license models. The actual configuration covered by the license would depend on negotiations. The negotiations is based on many factors, such as:

• Industry/vertical market size
• Opportunity potential
• Dependency on CRM standard objects vs 100% Force.com platform app
• Potential for OEM to augment existing license types and features.

Licenses and Permissions

Among the different types of Salesforce licenses, developers prefer both ISVforce and OEM licenses. The ISV Force license allows developers to upload their apps on the AppExchange. The OEM license allows developers to create custom apps using the Force.com platform.

Customers of ISV apps are existing Salesforce users, who purchase from the app exchange. As such they will already have licensed Salesforce CRM running. Buyers of OEM software may need new Salesforce licenses to access the Salesforce features in the new app.

Licenses for ISVforce Apps

Customers install ISVforce apps into existing orgs. As such, the app uses the Salesforce features available to the customer using the app. For instance, if the app augments the Sales Cloud, the app may use the customer’s Lead, Campaign, Opportunity, and Case objects. Customers however will need to purchase licenses for optional features used by the app, if they do not have the license for those features. Also, if the app depends on functionality available only with specific licenses, customers will have to purchase the required license to use the pp. A case in point is Customer Communities.

Licenses for OEM Embedded Apps

Developers may sell OEM Embedded apps to either existing Salesforce customers or customers who are new to Salesforce. For existing Salesforce customers, the license requirement for using OEM apps is the same as the license requirement for ISVforce apps.

Developers have to supply new customers, who do not have any existing Salesforce license, an org with the app installed. Customers who buy OEM embedded apps in effect buy one or more AppExchange Application licenses along with it.

Salesforce allows OEM embedded apps to access the Salesforce Lightning Platform. These apps may access standard and custom objects, workflow, reporting, and security. They also have access to some Sales and Services Cloud objects, such as Leads, Campaigns, and Opportunities. But the end-users of these apps cannot access these features.

The functionality of the org depends on the Salesforce edition, user licenses, and permission set licenses purchased and included by the developer. The developer chooses an edition upfront. Next, they purchase the needed licenses for the edition, to access different features within an edition. Feature or permission set licenses are add-ons, to access features not part of the base edition.

End-User Licenses

Salesforce offers the following licenses to holders of new and existing partners who develop apps. App developers may sell these licenses to their end customers on behalf of Salesforce.

• OEM Embedded License: This mimics the full Lightning Platform license offered by force.com. But this license comes with contractual restrictions. It restricts the license holder from using Create, Read, Update, and Delete on Leads, Opportunities, Cases, Solutions, Contracts, and Campaigns.
  
  
• Customer Community: This is similar to a high-volume customer portal license. This license suits business-to-consumer communities that have several external users.
  
  
• Customer Community Plus: This license is an upgrade to the Customer Community License. It offers extra storage and access to more features, such as Roles and Sharing, compared to the Customer Community License.

Salesforce has discontinued the following licenses. As such new ISV license partners cannot avail of these licenses. However, they may still purchase it from existing partners, who have the right to resell it.

• Partner Community: The Partner Community License mimics the Salesforce standard Gold Partner license. It suits business-to-business communities, such as a partner community.
  
  
• ISV Portal: The Salesforce ISV Portal license allows the license holder to manage their portals. It offers a basic data sharing option to users but comes with several restrictions as well. The license restricts the users from logging in only through Lightning platform websites. Users are also restricted from manual sharing to other users and use the license to participate in other user groups. This license type best suits large user volumes, of over 100,000+.
  
  
• ISV Portal with Sharing: This is similar to the ISV Portal license, but offers full sharing capabilities. Users may share any data, with any user. Users can still log in only through the Lightning Platform Sites. This license best suits apps where user volume projections are less than 100,000 and when developers prefer granular security access for the app.

Customers who use OEM embedded apps need any of the following three types of user licenses:

• Lightning Platform: This basic license, also known as the Salesforce platform license, allows users to use the force.com platform.
  
  
• Customer Community: The customer community license allows users to interact with their data. For instance, if an end-user initiates a support ticket, the community license allows them to run and see the status of the support ticket. This license is optional and needed only if the user requires the extra visibility and functionality that comes with the license.
  
  
• Customer Community Plus: The Customer community plus license allows customers to generate reports. This is another optional license, needed only if the end-user wants a role within the application. For instance, if the employees of the enterprise want to see the support tickets submitted within their specific org, they need the Customer Community Plus license.

It is not possible to avail the AppExchange OEM edition for CRM applications such as Salesforce SFA and Salesforce Service & Support.

Which License to Choose?

Why Choose ISVforce?

ISVforce licenses licenses suit developers who want to market their apps to existing Salesforce users. The ISVforce license helps them to bring their application to the target market through the AppExchange. ISVforce licensed apps in the app marketplace typically augment the Sales or Service Cloud offering.

The ISVforce license allows customers to develop or extend the licensed app using custom objects. This brings greater flexibility and scalability. OEM Embedded partnerships do not allow customers to extend the app further using custom objects. These licenses are very inflexible and restrictive.

Why Choose Salesforce OEM Licenses?

Salesforce OEM licenses are very restrictive, but highly powerful at the same time. Developers may sell these apps anywhere. Developers with ISVforce licenses may sell only to existing Salesforce customers.

Existing Salesforce customers may search, purchase, and install OEM Embedded applications from the AppExchange, the same way they purchase and install ISVfrce licensed apps. But developers with OEM embedded licenses can also create a new Salesforce org using the force.com platform and connect with their customers without using Salesforce directly. Customers of OEM apps need not necessarily use the Salesforce platform to use these apps.

Salesforce does not allow developers to replicate Salesforce product functionality within an OEM Embedded app. For instance, an OEM embedded app cannot have the same functionality as the Lead and Opportunity objects of the Sales and Service Cloud. Developers who replicate such functions violate the agreement with Salesforce.

Data and File Storage

Another difference between the different types of Salesforce licenses is in the data and file storage capabilities. The data and file storage for ISV apps depends on the capacity already available with the Salesforce user who purchases the app.

For Salesforce OEM software, Salesforce allocates each enterprise a per-user limit multiplied by the number of users in the enterprise. The data storage limit per user is 20 MB of data storage and 2 GB of file storage. There is also an additional allocation per enterprise. These limits, however, varies, depending on negotiations. Each enterprise with an OEM licensed software gets 1 GB plus 5 MB for each Gold partner license, subject to a minimum of 10 GB data. For instance, consider an enterprise with 20 licensed users. The enterprise receives 20 users x 20 MB = 400 MB plus 10 GB, or a total of 10.4 GB total data storage. An enterprise with Salesforce OEM software and 100 users receive 12 GB of storage. 100 users multiplied by 20 MB per user gives the enterprise 2 GB, and the OEM embedded license gives a further 10 GB.

Salesforce enforces the limit by aggregating the data storage available for the entire enterprise, and not on a per-user basis. The limit calculation is based on the API calls made to the org in 24 hours. When an org exceeds a limit, all users in the org faced a temporary block from making additional calls. The block removes automatically when usage for the preceding 24 hours drops below the limit.

Monetization

The two main types of Salesforce licenses – ISVForce and Salesforce OEM licenses – allow for monetization.

The AppExchange allows developers to charge any amount from users. Developers may also offer their apps for free download. Salesforce extracts a revenue share from developers who charge users to download apps. As a rule of thumb, Salesforce takes 15% of the payment, for apps sold to existing Salesforce users, and 25% of the payment, for apps sold to non-Salesforce users. These rates are however negotiable. The developer may negotiate the Salesforce’s percentage cut with the ISV Account Executive.

Consider the admin of an enterprise that has Salesforce Enterprise Edition CRM running. He may browse the AppExchange and download an ISVforce licensed app to enhance the functionality of the CRM. He may purchase five licenses, each costing $10 per month, for the use of five employees. The ISV partner gets $42.5/month and Salesforce gets the remaining $7.5 per month. Or the developer may negotiate with Salesforce and make the sharing ratio $45 for the user and $5 for Salesforce.

Developers of OEM apps pay a license fee of $25 per user per month to Salesforce for availing of the AppExchange OEM Edition. This again is open for negotiation. They may set any price for their product, and charge it from end-users. Thu the OEM embedded licensed app offers scope for huge profits.

Consider an enterprise that purchases 100 licenses of an app with an OEM license, developed using Salesforce OEM edition. The developer may offer the enterprise two full Salesforce licenses and 98 Salesforce platform licenses, and also 100 site-license of one or more managed packages that constitute the OEM partner’s “application”. The total cost for the customer varies based on the combination of licenses set by the developer. Developers usually set a combination based on their contract with Salesforce. But regardless of the amount charged from the customer, the developer pays Salesforce $25 per user per month or the agreed-upon fixed amount for the Platform licenses purchased by the developer. The standard rule of thumb is 75% for the developer and 25% for Salesforce. But this is only indicative. The actual amount depends on the developers’ negotiation skills with Salesforce, and the amount the customer is willing to pay the developer for the app.

Both ISVforce and OEM licenses are handy, depending on the circumstances. Developers who seek to build functionalities that enhance the Sales or Service Cloud would do well to build an ISVforce app. Developers who build new functionality beyond the Sales and Service Cloud functionality should build an OEM Embedded app. From the user perspective, apps with ISVforce allow users to get more from their existing platform, whereas an app with an OEM license works only for the specific intended use of the app.

The correct license also depends on the architecture of the app. Apps meant for general users require an ISVforce license, whereas custom build apps for specific users require an OEM license. OEM apps work on a stand-alone basis, whereas ISVforce apps require the Sales or Service Cloud. A Salesforce Partner may use both types of Salesforce licenses simultaneously, for different products.

The post Which SalesForce License Should You Opt for? ISVForce or OEM appeared first on Suyati Technologies.