OEM vs ISV Apps for SalesForce
The tremendous popularity of SalesForce and the vast potential it unlocks throws open a good opportunity for developers to publish their apps in SalesForce and monetize their effort. Leveraging the SalesForce platform to publish apps however require licenses.

At the broad level, apps sold through the SalesForce app exchange have ISV licenses. Developers however also have the option to sell directly to customers, and such apps generally have OEM licenses. It is not possible to purchase OEM products through the AppExchange Checkout. Beyond this, the terms of these licenses lay down the developer’s contract with SalesForce and what end users receive if they download the app.

What is ISV License?

An independent software vendor (ISV) is any company or developer who builds any application-specific or embedded software, and offers it for sale or download.
SalesForce offers developers a ISVforce license for selling their apps through the AppExchange. Such ISVforce licensed app, sold on the AppExchange, is meant as an add-on app for existing SalesForce users. SalesForce users may purchase and download such apps from the AppExchange, and top up their portfolio of apps, to enhance their SalesForce experience.

For developers to obtain an ISVforce license for their app, the basic requirement is to submit the code to detailed scrutiny. This review basically looks into the security angle of the apps, and ensures that the apps confirm to the laid down standards. There is no charge for this process for free apps, but commercial apps are charged anywhere between $300 and $2,700, and the process takes around two months to complete.
Developers may charge whatever amount they deem necessary from users downloading the app, and they may also offer it as a free app. SalesForce mandates a revenue share between the developer and SalesForce, and as a rule of thumb, SalesForce takes a cut of 15% when the developer sells to existing SalesForce users, and a cut of 25% when the sale is to a non-SalesForce user. These figures are however not set in stone, and much of the rates are open for negotiation with the developer’s ISV Account Executive.

For instance, the admin of an organization which has deployed SalesForce Enterprise-Edition CRM may download an app with ISVforce license from the AppExchange and purchase five licenses, each costing $5/user/month, for five users of the enterprise. The ISV partner thus gets $25/month less whatever percentage SalesForce takes as per the agreement, for developing the app.

For full details of SalesForce’s ISV license, follow this link

What is OEM License?

OEM stands for “original equipment manufacturer” and in general, OEM software is standard software that comes bundled with the hardware or “original equipment.” Examples include the third-party software that features by default inside the digital camera, printer or other devices. Such OEM software is tied to its hardware, licensed only for the system on which it is installed. It may not be installed on other systems, even if the original hardware is no longer in use.

The Force.com Embedded Partner Program offers several types of OEM licenses:

• OEM Embedded License: This is a full Force.com license, but with contractual restrictions. It prevents functions such as Create, Read, Update, Delete, on Leads, Opportunities, Products, Cases, Solutions, Campaigns, and Contracts.
• ISV Portal License: This Customer Portal Manage Custom license comes with limited data sharing options. Users are restricted from logging in through any means other than Force.com websites, and prevented from manual sharing to user and participation in sharing groups. This license is best when the developer expects more than 100,000 user volume for the app. These licenses cannot be used to access only the application or functionality for which it is sold.
• ISV Portal with Sharing: This is the same as the ISV Portal license, but with full sharing capability. This license suits apps with projected user volumes under 100,000, and when the app requires granular security access.
• Customer Community: The Customer Community license is similar to the ISV Portal license, and when there is a need for setting up business-to-consumer communities with large numbers of external users, there is a Partner Community License as well.
SalesForce has of late also launched a new AppExchange OEM Edition, which is the industry’s first on-demand platform OEM offering. SalesForce partners availing the AppExchange OEM Edition license get to develop, market and sell apps running on the AppExchange on-demand platform directly to customers, without requiring a separate contract with SalesForce.com. In essence, this license offers more freedom and flexibility for developers who have built their apps using the SalesForce infrastructure.

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, which has established a reputation for transparency, reliability and security.

However, as it is with the case of ISV licenses, these offerings are not rigid. SalesForce is flexible to offer various OEM license models, and the actual configuration covered by the license would depend on negotiations. The negotiations are 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

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

The AppExchange OEM Edition nevertheless offers developers a proven and secure platform, which allows them to focus on their product innovation without having to worry about the infrastructure. It allows developers to leverage the SalesForce platform to develop and sell on-demand applications, distinct from the run-of-the-mill CRM apps. They have the freedom to fix their own delivery channels, but cannot use the AppExchange Checkout.

SalesForce partners need to pay a license fee of $25 per user per month to SalesForce for availing the AppExchange OEM Edition. This again, is open for negotiation. They are free to set the price for end users.
For instance, an enterprise may wish to buy 100 licenses of an app with OEM license, developed using SalesForce OEM edition. The enterprise may get 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 cost for this combination may vary considerably, as set by the developer, which in turn would invariably be heavily influenced by the developer’s contract with SalesForce. Whatever the amount, the developer pays SalesForce, $25 per user per month or whatever is the agreed-upon fixed amount for the purchased Platform licenses, and keeps the rest.

What is the Difference?

In essence, an ISVforce license allows developers to upload their apps on the AppExchange and for users to download such apps and enhance their SalesForce experience. An OEM app license, on the other hand allows developers to use the Force.com Platform to develop a full custom application. 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.
It is possible for a SalesForce Partner to leverage both these models simultaneously, with different products.