We started, about two years ago, using a "license key" which does exactly what you're describing. It works well and wasn't too difficult to implement.

>Just wondering if anyone (besides us) uses activation codes and what your thoughts on them are?
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>Our purpose for using an activation code is that it allows us to distribute a full-function demo version of our application that will stop working in 30 days. If they decide to purchase it, we can provide an activation code that will convert the demo into an unlimited version.
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>What is everyone else doing for commercial applications?