License Utilization
What Is License Utilization?
License Utilization refers to the percentage of active users compared to the total number of licenses purchased by a customer account.
Formula: License Utilization (%) = (Number of Active Users / Total Licenses Purchased) × 100
For example, if a customer has 100 seats and only 60 are active, the utilization rate is 60%.
Utilization can be tracked:
- Per account or department
- By role or use case (e.g., admin vs. contributor)
- Across time to monitor onboarding or adoption trends
It's especially relevant in seat-based pricing models or platform licenses sold by volume.
Why License Utilization Matters in SaaS CX
In B2B SaaS, license utilization is one of the clearest indicators of whether your product is becoming essential—or expendable.
Predicts Renewal Risk: Unused seats often lead to budget scrutiny and potential downsizing at renewal.
Signals Expansion Readiness: High utilization + feature stickiness = a strong case for upsells or license expansions.
Highlights Onboarding Gaps: Low early-stage utilization often traces back to unclear setup guidance or missing enablement.
Guides Success Interventions: CS teams can segment accounts by utilization rate to prioritize outreach, playbooks, and QBR talking points.
How to Measure and Improve License Utilization
License Utilization tracks how actively purchased software licenses are being used. It helps SaaS teams identify underused seats, drive adoption, and improve renewal outcomes.
How to Measure License Utilization
1. Define What “Active” Means
Set clear criteria:
- Logins over the past 30 days
- Feature usage thresholds
- Interaction with core workflows
2. Track Over Time
Monitor usage trends at key milestones:
- 30/60/90 days post-purchase
- Pre-renewal review periods
3. Visualize Utilization by Cohort
Group accounts by industry, size, or plan tier to identify patterns in underuse or overuse.
Example Metric
License Utilization (%) = (Number of Active Users ÷ Number of Purchased Licenses) × 100
If 60 of 100 purchased seats are active:
License Utilization = (60 ÷ 100) × 100 = 60%
How to Improve License Utilization
- Strengthen Onboarding: Deliver in-product walkthroughs and guided tours.
- Enable Users: Run email nudges, training sessions, and feature spotlight campaigns.
- Find Internal Champions: Equip power users to promote adoption within their teams.
- Set Alerts: Flag accounts with declining usage before renewals.
License Utilization connects product usage with revenue outcomes. It’s a wake-up call for CX and CS teams—because underused licenses don’t just threaten renewals, they highlight where your product hasn’t yet earned its place. Great SaaS companies don’t just sell licenses—they ensure every seat delivers value.