What Is Proprietary Software? Meaning & Examples

Proprietary software is any application or software that belongs exclusively to a creator and has restrictions on its use and dissemination. The vendor or creator puts these restrictions in place and explicitly states that the software is the owner's property and may only be used under restricted circumstances. End users are also required to buy a license before usage. Although, despite the license, the user cannot modify or sell the software.

Proprietary software is often expensive, and since its users have limited control over it, it is not always the preferred choice of most people. Instead, most developers prefer to develop their software.

If you want to get started on Proprietary software, this article will serve as a guide because it contains the basics of proprietary software. It will explain the definition of proprietary software in simple terms, its features, disadvantages and disadvantages, types, examples of proprietary software, and the primary difference between open source software and proprietary software.

Examples of Proprietary Software

The easiest way to understand proprietary software is to look at tools many people and businesses already use every day.

Common examples of proprietary software include Microsoft Windows, macOS, Microsoft Office, Adobe Photoshop, AutoCAD, Salesforce, Oracle Database, QuickBooks, Zoom, and Slack.

These products are proprietary because the companies behind them own the source code, control the updates, manage the licensing, and decide how users can access or use the software.

For example, Microsoft owns Windows and Office. Adobe owns Photoshop. Salesforce owns its CRM platform. Intuit owns QuickBooks. Users can pay to access these tools, but they do not own the software itself or have the right to freely modify, copy, or resell it.

This does not mean proprietary software is bad. In many cases, businesses choose proprietary software because it is reliable, well-supported, secure, and ready to use. The important thing is to understand what you are paying for and how much control you have.

What Is Proprietary Software?

Wikipedia defines Proprietary software as any software that the free and open-source software community considers to be non-free because its creator, publisher, or other rightsholder or rightsholder partner exercises a legal monopoly under contemporary copyright and intellectual property law to prevent the recipient from freely sharing or altering the software, and—in some cases, as is the case with some patent-encumbered and EULA-bound software—from using the software on their own, thereby restricting the recipient's freedom.

This definition may not be easy for a non-specialist to understand. So let's break this definition of proprietary software in simple terms.

In simple words, proprietary software is software that belongs exclusively to a creator and has restrictions on its use and dissemination because the publisher or creator has the legal copyright and intellectual property law preventing anyone from using the software as they like.

Such recipients of the software cannot modify or sell the software. They only get to buy a license (a prerequisite before usage) and use it under predefined conditions. The ownership right of the software still belongs to the creator. They also have the right to revoke your license if you do not comply with their usage rules. You also cannot resell or modify the software because you do not own it.

Proprietary software can otherwise be known as Commercial source software, Closed source software, or Non-free software.

Some proprietary tools are also sold as ready-made business software. If you want to understand how this works in practice, see our guide to off-the-shelf software with examples.

Features of Proprietary Software

Every proprietary software has certain restrictions that limit the freedom of its users. Some of these restrictions include:

1. The program's building blocks are its source code. It is software created in a higher-level programming language so that humans can read it. The source code explains how the software operates and how programmers can instruct a computer to carry out various tasks when developers or coders examine it.

2. You must have a license before you can use it.

3. Users cannot continue circulating the software.

4. A certain amount of people can only use the software.

5. There is a limitation to the system or environment the software needs.

6. In some cases, the conditions of proprietary licenses may include provisions requiring arbitration for disputes and enforcing them under contract law.

The Rights of Proprietary Software Owners

Every owner or creator of proprietary software has certain exclusive rights that they enjoy. These rights include:

1. Software Usage

Owners of commercial source software have total control over how users of their software incorporate it after purchasing a proprietary license. As a result, the software developer has the freedom to limit the usefulness of the software or prohibit specific uses from being made of it.

Software developers often restrict recipients' usage through a serial number, product key, product activation, or any other means they deem fit.

2. Software distribution and transferring

Users of proprietary software are frequently prohibited from redistributing, sharing, or moving the license. Even if users decide they no longer need their proprietary license, they cannot transfer it. Additionally, it prohibits you from making a duplicate of the program and selling or distributing it.

3. Source code modification

The source code is the building block of the software. As such, users cannot inspect or modify it. Owners or Creators are also not required to provide the software's source code.

4. Software compatibility

The compatibility of any proprietary software with other programs and operating systems is entirely under the authority of its creators. As a result, businesses that must ensure their proprietary software is compatible with other programs may encounter problems without compatibility.

5. Hardware compatibility

License agreements for non-free software frequently limit integrating those programs with hardware. Hence, it can be challenging for businesses that need to use proprietary software with particular kinds of hardware because such programs might not operate or function properly when used with those devices.

An excellent example is the macOS which can only run on Apple devices.

Advantages of Proprietary Software

Proprietary software has many benefits that make it useful for individuals, startups, and businesses. Although users do not own the source code, they often get a product that is stable, supported, and easier to use.

Here are the main advantages of proprietary software.

1. Better User Experience

Most proprietary software companies depend on paying customers. Because of this, they usually invest heavily in design, usability, onboarding, and customer experience.

This makes many proprietary tools easier for non-technical users to understand.

For example, a business owner may choose QuickBooks because it is easier to manage invoices and reports without hiring a developer. A designer may choose Adobe Photoshop because the interface, tools, and workflow are already built for professional creative work.

2. Dedicated Customer Support

One major advantage of proprietary software is access to customer support.

If something goes wrong, users can usually contact the vendor through email, phone, live chat, help centers, or dedicated support teams. This is especially useful for businesses that cannot afford long downtime or technical uncertainty.

Instead of depending only on public forums or community support, the user has a clear place to ask for help.

3. Regular Updates and Improvements

Proprietary software vendors are responsible for improving their products. They usually release updates, fix bugs, improve security, and add new features over time.

This helps businesses stay current without managing every technical improvement themselves.

For example, a CRM provider may add new reporting tools, automation features, or security updates without the business needing to rebuild the system.

4. Stronger Product Stability

Many proprietary software products go through structured testing before they are released to users. Since the vendor controls the source code and development process, they can manage quality, performance, and compatibility more closely.

This can make proprietary software more stable for businesses that need reliable tools for daily operations.

A company using accounting, payroll, database, or communication software needs the system to work consistently. Stability is one reason many businesses are willing to pay for proprietary tools.

5. Clear Ownership and Accountability

With proprietary software, there is usually a clear owner responsible for the product.

The vendor controls the roadmap, support, updates, documentation, and licensing. This can make it easier for businesses to know who to contact when there is a problem or when they need guidance.

For businesses that prefer a single accountable provider, this can be a major benefit.

6. Industry-Specific Features

Some proprietary software products are built for specific industries or business functions.

For example, there are proprietary tools for healthcare, finance, construction, legal services, logistics, retail, and professional services. These products often include features that are already designed around common industry workflows.

This can save time compared to building everything from scratch.

7. Security and Compliance Support

Many proprietary software vendors invest in security, access control, data protection, compliance, and regular monitoring.

This does not automatically make every proprietary tool secure, but it can be an advantage when the vendor has strong security standards and a reliable support team.

For businesses handling customer data, financial records, or sensitive internal information, vendor-backed security can be an important factor.

8. Faster Setup Than Building from Scratch

Proprietary software is usually faster to adopt than custom software.

A business can subscribe, configure the tool, train the team, and start using it within days or weeks. This makes it useful when the business needs a practical solution quickly.

However, speed should not be the only factor. If the software does not fit your workflow or creates too many limitations, a custom or bespoke system may be better in the long run.

Disadvantages of Proprietary Software

Proprietary software can be useful, but it also has some limitations businesses should consider before choosing it.

The biggest disadvantage is limited control. Since the vendor owns the software, users cannot freely change the source code, add custom features, or adjust the system beyond what the vendor allows.

There is also the risk of vendor lock-in. If your business depends heavily on one proprietary tool, switching later can be difficult, expensive, or disruptive.

Cost can also increase over time. Subscription fees, licence renewals, user seats, add-ons, and premium support can become expensive as the business grows.

Another limitation is dependency on the vendor’s roadmap. If the vendor removes a feature, changes pricing, delays an update, or stops supporting the product, your business may have little control over the outcome.

For this reason, proprietary software works best when the product fits your needs clearly and the vendor is reliable. If your workflow is unique or the software is central to your competitive advantage, a custom or bespoke solution may be a better long-term option.

Popular Examples of Proprietary Software

Many of the most widely used software applications are proprietary software. However, we have limited this list to the top famous proprietary software examples based on usage. They include:

1. Password Software. Examples include LastPass, Keeper Password Manager and, Digital Vault, NordPass.

2. Antivirus Software. Examples include McAfee, Norton, and Bitdefender.

3. Remote Working Software. Examples comprise of ZohoAssist, Remote PC

4. Asset Management Software. Examples include AssetCloud, AssetManage

5. Business tools Software. Examples are Insightly, Templafy, LiquidPlanner

Here are ten other general examples of proprietary software without any specifics of its intended usage

1. Microsoft Windows

2. Google Earth

3. MacOS

4. Microsoft Office Productivity Suite

5. WinRAR

6. Adobe Photoshop

7. Skype

8. PS 3 OS

9. PowerPoint

10. iTunes

Some well-known proprietary software creators include:

1. Microsoft

2. Adobe

3. Borland

4. Oracle

5. IBM

6. Sun Microsystems

7. Macromedia

Proprietary software license

The actual cost of proprietary software is in the licensing process. In addition to paying for the software, a firm must buy licenses for each installed computer. So if proprietary software is installed throughout a company's whole network, license fees might be exceedingly expensive.

Another distinguishing feature of proprietary software licensing is that while the end-user license agreement (EULA) permits the usage of one or more copies of the software, the publisher retains ownership of those copies. (hence the use of the term "proprietary").

The exclusivity feature of proprietary software licenses also denotes that the software publisher has retained certain rights to the product. Therefore, it is common practice for EULAs to include clauses that specify how the program may be used, such as the number of permitted installations or the terms of distribution.

The real consequence of this type of licensing is that the end-user must agree to the software license if the software publisher retains ownership of the product. In other words, the end-user cannot use the product if they do not accept the license. The Microsoft Windows license is an excellent example of this proprietary software license.

As is customary with proprietary software licenses, the license also contains a long list of prohibited actions, including reverse engineering, using the software concurrently by many users, and publishing benchmarks or performance tests.

There are various licensing models, ranging from essential perpetual and floating licenses (commonly referred to as concurrent licenses) to more complex models like the metered license. The most common licensing configurations involve a single user (user, client, or node) or a user at a sufficient quantity discount level, while some manufacturers gather existing licenses.

Licensing for software frequently involves maintenance as well. This is either included or optional, usually with a one-year term, but frequently needs to be purchased along with the software.

The licensee may be granted access to minor upgrades (V.1.1 => 1.2), as well as occasionally substantial updates (V.1.2 => 2.0), according to the maintenance agreement (contract) provision.

Update insurance or upgrade assurance are common names for this choice. If the maintenance contract does not cover it, the customer must purchase an upgrade for a big update. In addition, some manufacturers charge a reinstatement (reinstallation) cost retrospectively every month for a maintenance renewal in the scenario that the current maintenance has ended.

Technical help can occasionally also be part of maintenance. When it does, the levels of technical support, which are typically referred to as gold, silver, and bronze, can differ based on the communication channel (for example, email versus telephone assistance), availability (for instance, 5x8, five days a week, 8 hours a day), and response time. (e.g. three hours). As an incident pack, support is also licensed on a per-incident basis. (e.g. five support incidents per year)

Open Source Software

Open Source Software is any software with openly accessible source code that anyone may review, alter, and improve.

As discussed earlier, source code is the building block of a program. It refers to that section of software most users do not see and which allows programmers to edit or alter how their application or program works. They often do this by adding features or fixing components that do not always function properly.

Some examples of Open Source Software include MySQL, Linux, Android, and Apache Server.

Differences between Open-Source Software and Proprietary Software

The primary difference between Open-Source Software and Proprietary software is that in open-source, the source code is freely downloadable because it comes with the software and can be modified by users to provide new features and functionalities. While in Closed Source software, the source code is not publicly available, and only the software creators have the right to modify the application.

Also, Open- source can be set up on any computer. However, closed-source software requires a valid license before usage.

Still deciding whether proprietary software is enough, or whether your business needs a custom or off-the-shelf solution? See the full guide to custom vs. off-the-shelf vs. proprietary software to compare the options and choose the right path for your business.

Conclusion

Proprietary software is the best option if you desire a third-party program. This is because it is more data secured and is often built with specific consideration for all end users.

Also, although proprietary software may be more expensive upfront, it usually saves you money, time and resources in the long run because every software is trustworthy, well-tested, and capable of performing the required task. Schedule a free consultation to discuss which is appropriate for your business.