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  3. Nominated vs Concurrent licenses

Nominated vs Concurrent licenses

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  • J Juan Carlos Cobas

    Hi, We have recently released a new application with a pricing structure based on quantizied packages of nominated users. For example, consider the following pricing structure: Single user license €100 Multiple user (5 users) €375 Multiple user (10 users) €725 Multiple user (20 users) €1,250 We have found that licenses of nominated users suppose a problem for some of our clients who in some cases prefer multiple concurrent licenses. For example, rather than purchasing a package of a 10 users license, they would prefer to purchase a license of 10 concurrent user license. This means that the number of eventual users would be much higher (for example 100) but only a maximum of 10 users would be allowed to use the program at the same time. So we need to reconsider our pricing structure to cover these situations. Our first impression is that we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Any suggestions would be much appreciated.

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    Daniel Turini
    wrote on last edited by
    #4

    Juan Carlos Cobas wrote: Our first impression is that we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Don't do that! Never, ever, give an option to your customer that seems cheaper and costs more, or he'll feel robbed. Choose one of the two models, i.e., you can sell 5 concurrent users for 700 euros, but do not offer at the same time 5 nominated users for 375, because he'll feel robbed. I don't know what your program does, but I believe you should rethink your whole strategy: once you're dealing with a customer, you should assess the whole potential that customer has to use your product. As a sample, what's the profit of selling a 5-user license of some tool to, e.g., Microsoft? Probably they have the potential to use thousands of units! Notice I'm talking about using, not buying. The concurrent user model will ease the use of your software on the whole company. Anyone inside it can use it! With the nominated license, only a small group will use and that's it. And, if you're smart enough to keep the user for a long time inside your program (e.g., a text editor), and your program does great things, the customer will come back to you, from time to time, asking for more licenses. After a while (never on the first deal), you could sell an unlimited license. The nominated user license is only good when you deal with the SOHO market or the home users. I see dead pixels Yes, even I am blogging now!

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    • D Daniel Turini

      Juan Carlos Cobas wrote: Our first impression is that we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Don't do that! Never, ever, give an option to your customer that seems cheaper and costs more, or he'll feel robbed. Choose one of the two models, i.e., you can sell 5 concurrent users for 700 euros, but do not offer at the same time 5 nominated users for 375, because he'll feel robbed. I don't know what your program does, but I believe you should rethink your whole strategy: once you're dealing with a customer, you should assess the whole potential that customer has to use your product. As a sample, what's the profit of selling a 5-user license of some tool to, e.g., Microsoft? Probably they have the potential to use thousands of units! Notice I'm talking about using, not buying. The concurrent user model will ease the use of your software on the whole company. Anyone inside it can use it! With the nominated license, only a small group will use and that's it. And, if you're smart enough to keep the user for a long time inside your program (e.g., a text editor), and your program does great things, the customer will come back to you, from time to time, asking for more licenses. After a while (never on the first deal), you could sell an unlimited license. The nominated user license is only good when you deal with the SOHO market or the home users. I see dead pixels Yes, even I am blogging now!

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      Paul Watson
      wrote on last edited by
      #5

      Should we be pandering to the lowest common denominator like this? Aren't we hurting our customers by assuming they are all too dimwitted to understand the benefits and differences between the two models? Shouldn't we let them have choice and if a customer does not get it then we educate them? Aren't we hurting smart customers and slowly dumbing everyone down? Why are we letting the handful, because most people are not stupid*, dictate the systems, letting them limit us and other customers? People are capable of understanding and deciding between complex hire-purchase agreements and outright purchasing for cars but we think they can't understand a simple concurrent-user system? A bit of simple education will go a long way to freeing up our business models. (Then again, by limiting their and our choices we invariably choose the higher-yield model and so get richer. Just don't fool yourself why you choose model x rather than offering x and y.) OK, rant over :) * I know many of you beg to differ but you are damned wrong, you just don't give them a chance to think regards, Paul Watson South Africa PMW Photography Gary Wheeler wrote: It's people like you that keep me heading for my big debut on CNN...

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      • J Juan Carlos Cobas

        Hi, We have recently released a new application with a pricing structure based on quantizied packages of nominated users. For example, consider the following pricing structure: Single user license €100 Multiple user (5 users) €375 Multiple user (10 users) €725 Multiple user (20 users) €1,250 We have found that licenses of nominated users suppose a problem for some of our clients who in some cases prefer multiple concurrent licenses. For example, rather than purchasing a package of a 10 users license, they would prefer to purchase a license of 10 concurrent user license. This means that the number of eventual users would be much higher (for example 100) but only a maximum of 10 users would be allowed to use the program at the same time. So we need to reconsider our pricing structure to cover these situations. Our first impression is that we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Any suggestions would be much appreciated.

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        Stuart Dootson
        wrote on last edited by
        #6

        The model you're suggesting is the model followed by a lot of companies (e.g. Mathworks (Matlab, Simulink), Merant (PVCS), Telelogic (DOORS)). Concurrent licenses offer greater flexibility, which is why the higher price is suggested. I'm not 100% sure, but I think named licenses are about half the cost of floating (concurrent) licenses I presume you'll be using something like FlexLm to control licensing? Stuart Dootson 'Java, Basic, who cares - it's all a bunch of tree-hugging hippy cr*p'

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        • P Paul Watson

          Should we be pandering to the lowest common denominator like this? Aren't we hurting our customers by assuming they are all too dimwitted to understand the benefits and differences between the two models? Shouldn't we let them have choice and if a customer does not get it then we educate them? Aren't we hurting smart customers and slowly dumbing everyone down? Why are we letting the handful, because most people are not stupid*, dictate the systems, letting them limit us and other customers? People are capable of understanding and deciding between complex hire-purchase agreements and outright purchasing for cars but we think they can't understand a simple concurrent-user system? A bit of simple education will go a long way to freeing up our business models. (Then again, by limiting their and our choices we invariably choose the higher-yield model and so get richer. Just don't fool yourself why you choose model x rather than offering x and y.) OK, rant over :) * I know many of you beg to differ but you are damned wrong, you just don't give them a chance to think regards, Paul Watson South Africa PMW Photography Gary Wheeler wrote: It's people like you that keep me heading for my big debut on CNN...

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          Stuart Dootson
          wrote on last edited by
          #7

          5 Stuart Dootson 'Java, Basic, who cares - it's all a bunch of tree-hugging hippy cr*p'

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          • P Paul Watson

            Should we be pandering to the lowest common denominator like this? Aren't we hurting our customers by assuming they are all too dimwitted to understand the benefits and differences between the two models? Shouldn't we let them have choice and if a customer does not get it then we educate them? Aren't we hurting smart customers and slowly dumbing everyone down? Why are we letting the handful, because most people are not stupid*, dictate the systems, letting them limit us and other customers? People are capable of understanding and deciding between complex hire-purchase agreements and outright purchasing for cars but we think they can't understand a simple concurrent-user system? A bit of simple education will go a long way to freeing up our business models. (Then again, by limiting their and our choices we invariably choose the higher-yield model and so get richer. Just don't fool yourself why you choose model x rather than offering x and y.) OK, rant over :) * I know many of you beg to differ but you are damned wrong, you just don't give them a chance to think regards, Paul Watson South Africa PMW Photography Gary Wheeler wrote: It's people like you that keep me heading for my big debut on CNN...

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            Daniel Turini
            wrote on last edited by
            #8

            Your business model should be profitable, to preserve both your and your customer's interests. No one wants to buy cheap software from a company that will go bankrupt the next week. The more profit you make, the more you can invest in your software, and more probably competitors will appear. In this way, you should decide how to bill your customers. And them, it's not about what they want: it's all about what's best to you. What does your customer wants is: make your software free (beer). You should not bill as much as your customer is willing to pay. You customer wants to pay nothing. What you should bill is as much as your customer can afford to pay. I see dead pixels Yes, even I am blogging now!

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            • D Daniel Turini

              Your business model should be profitable, to preserve both your and your customer's interests. No one wants to buy cheap software from a company that will go bankrupt the next week. The more profit you make, the more you can invest in your software, and more probably competitors will appear. In this way, you should decide how to bill your customers. And them, it's not about what they want: it's all about what's best to you. What does your customer wants is: make your software free (beer). You should not bill as much as your customer is willing to pay. You customer wants to pay nothing. What you should bill is as much as your customer can afford to pay. I see dead pixels Yes, even I am blogging now!

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              Paul Watson
              wrote on last edited by
              #9

              One size does not fit all no matter what the sock companies want us to think. Limiting your model to one line will eliminate certain customers. Having two models gives your customers options. I agree there is the danger of confusion but that can be dealt with. Your original arguement was that customers will feel robbed because we assume they are too dim to see the benefits of each model. My arguement is that maybe only a handful will feel that and a majority of them can be turned with a bit of education. Daniel Turini wrote: What you should bill is as much as your customer can afford to pay. What is affordable to one customer is not affordable to another. Maximise your customer base by being flexible enough to cater to as many types as you can. Small shops with intensive users don't want the concurrent model while big shops with infrequent users do want it. Why not cater to both? Look, there are companies out there, as Stuart mentions, which do just this and are doing fine. regards, Paul Watson South Africa PMW Photography Gary Wheeler wrote: It's people like you that keep me heading for my big debut on CNN...

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              • J Juan Carlos Cobas

                Hi, We have recently released a new application with a pricing structure based on quantizied packages of nominated users. For example, consider the following pricing structure: Single user license €100 Multiple user (5 users) €375 Multiple user (10 users) €725 Multiple user (20 users) €1,250 We have found that licenses of nominated users suppose a problem for some of our clients who in some cases prefer multiple concurrent licenses. For example, rather than purchasing a package of a 10 users license, they would prefer to purchase a license of 10 concurrent user license. This means that the number of eventual users would be much higher (for example 100) but only a maximum of 10 users would be allowed to use the program at the same time. So we need to reconsider our pricing structure to cover these situations. Our first impression is that we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Any suggestions would be much appreciated.

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                Tom Archer
                wrote on last edited by
                #10

                I agree with Roger here. If I'm a user of your product, I want a nice simple pricing structure; not terms you have to define for me. In fact, the more terms you have to define and clarify, the more I'm likely to think I'm being ripped off. I read about two sentences of this before I decided that I would have no interest whatsoever.

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                • P Paul Watson

                  One size does not fit all no matter what the sock companies want us to think. Limiting your model to one line will eliminate certain customers. Having two models gives your customers options. I agree there is the danger of confusion but that can be dealt with. Your original arguement was that customers will feel robbed because we assume they are too dim to see the benefits of each model. My arguement is that maybe only a handful will feel that and a majority of them can be turned with a bit of education. Daniel Turini wrote: What you should bill is as much as your customer can afford to pay. What is affordable to one customer is not affordable to another. Maximise your customer base by being flexible enough to cater to as many types as you can. Small shops with intensive users don't want the concurrent model while big shops with infrequent users do want it. Why not cater to both? Look, there are companies out there, as Stuart mentions, which do just this and are doing fine. regards, Paul Watson South Africa PMW Photography Gary Wheeler wrote: It's people like you that keep me heading for my big debut on CNN...

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                  Daniel Turini
                  wrote on last edited by
                  #11

                  Just read Roger and Graham posts and you'll understand. In a perfect world, you're right. But feelings have nothing to do with being smart. Roger is someone with a very above-average IQ, but he'd refuse to buy such a product. One can say "hey, if the user feels robbed, you can explain it", but that's not a good way of starting a business relationship. Paul Watson wrote: Small shops with intensive users don't want the concurrent model while big shops with infrequent users do want it. Why not cater to both? Because, as you said, one size does not fit all. Your support staff, your procedures, the features of your program should be different for the enterprise and the home user. So, if the features, service, manuals and support are so different, why not make them different products? Just don't sell the same product in two ways: your potential customer, as Roger, will turn you down, often without offering you a chance to explain your reasons. I see dead pixels Yes, even I am blogging now!

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                  • J Juan Carlos Cobas

                    Hi, We have recently released a new application with a pricing structure based on quantizied packages of nominated users. For example, consider the following pricing structure: Single user license €100 Multiple user (5 users) €375 Multiple user (10 users) €725 Multiple user (20 users) €1,250 We have found that licenses of nominated users suppose a problem for some of our clients who in some cases prefer multiple concurrent licenses. For example, rather than purchasing a package of a 10 users license, they would prefer to purchase a license of 10 concurrent user license. This means that the number of eventual users would be much higher (for example 100) but only a maximum of 10 users would be allowed to use the program at the same time. So we need to reconsider our pricing structure to cover these situations. Our first impression is that we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Any suggestions would be much appreciated.

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                    Member 96
                    wrote on last edited by
                    #12

                    Those are two different classes of customers and it sounds as though in this situation you should really be splitting out into two different products with features more in tune with each class of customers. I see where you are coming from, but it's going to be too confusing for the customers and you are going to spend too much time explaining and trying to work out which is best for those that are in the middle. People are *very* sensitive about pricing issues, they have a nice healthy suspicion in general and it's not going to help if you make it in any way confusing. When people see confusion they move on without looking any deeper and since the price is generally the first thing they look at in any detail before even examining features of the product in detail it's a key area to keep simple as possible. Personally in my opinion if it was my product and I wanted to offer the concurrent option at all then I would make that the only option and boost the price. Once you open that door it's pretty hard to explain to the other guys why they are paying when they don't even use it. (We've always shied away from concurrent user licensing in the past because it's so damn unreliable to track, but maybe hardware is the point where a user never get's a "stuck" session from locking up their computer or losing their network connection etc.)


                    "A preoccupation with the next world pretty clearly signals an inability to cope credibly with this one."

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                    • R Roger Wright

                      Juan Carlos Cobas wrote: we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Ridiculous! I'd refuse to buy the product. "...putting all your eggs in one basket along with your bowling ball and gym clothes only gets you scrambled eggs and an extra laundry day... " - Jeffry J. Brickley

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                      Lost User
                      wrote on last edited by
                      #13

                      Roger Wright wrote: Ridiculous! I'd refuse to buy the product. Really? That's the model used by many companies that sell expensive software (i.e. AutoDesk, ESRI) With single use licenses each machine needs a license. For ten users you need ten licenses = expensive! With concurrent use license a quick analysis may reveal that 5 licenses will suffice for those ten users since no more than 5 are ever using the software at any given time. Even if the concurrent license price is 50% higher than the stand alone, the customer is still paying less overall. I wish more vendors (i.e. Microsoft) offered this - I wouldn't have to buy MS Office for each machine (it's extremely rare that more than 2 of us are using it at any given time, but I've paid for 5 licenses). Cheers, Drew.

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                      • P Paul Watson

                        Should we be pandering to the lowest common denominator like this? Aren't we hurting our customers by assuming they are all too dimwitted to understand the benefits and differences between the two models? Shouldn't we let them have choice and if a customer does not get it then we educate them? Aren't we hurting smart customers and slowly dumbing everyone down? Why are we letting the handful, because most people are not stupid*, dictate the systems, letting them limit us and other customers? People are capable of understanding and deciding between complex hire-purchase agreements and outright purchasing for cars but we think they can't understand a simple concurrent-user system? A bit of simple education will go a long way to freeing up our business models. (Then again, by limiting their and our choices we invariably choose the higher-yield model and so get richer. Just don't fool yourself why you choose model x rather than offering x and y.) OK, rant over :) * I know many of you beg to differ but you are damned wrong, you just don't give them a chance to think regards, Paul Watson South Africa PMW Photography Gary Wheeler wrote: It's people like you that keep me heading for my big debut on CNN...

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                        Shog9 0
                        wrote on last edited by
                        #14

                        Paul, it's not about being stupid. It's about being made to jump through hoops for the sake of a divided customer base. There is a certain company (now part of IBM, name begins with "R" and ends with "ational"), that i detest utterly, though i've had fairly brief experiences with their products. A large portion of this disgust comes from their licensing model, and the steps they required users to take in order to enforce it. I had no problems understanding the terms - but why should i have extra work after buying the software, simply because they've no better way of dividing their market?

                        Ave Shog9, CP-addicti te salutant! - K(arl), The Soapbox

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                        • S Stuart Dootson

                          The model you're suggesting is the model followed by a lot of companies (e.g. Mathworks (Matlab, Simulink), Merant (PVCS), Telelogic (DOORS)). Concurrent licenses offer greater flexibility, which is why the higher price is suggested. I'm not 100% sure, but I think named licenses are about half the cost of floating (concurrent) licenses I presume you'll be using something like FlexLm to control licensing? Stuart Dootson 'Java, Basic, who cares - it's all a bunch of tree-hugging hippy cr*p'

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                          Shog9 0
                          wrote on last edited by
                          #15

                          Stuart Dootson wrote: I presume you'll be using something like FlexLm to control licensing? Heh... i'd forgotten about FlexLM. Thanks, i was running dangerously low on software to hate on this morning.

                          Firefox? CodeProject? GreaseMonkey? A better Life?

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                          • S Shog9 0

                            Stuart Dootson wrote: I presume you'll be using something like FlexLm to control licensing? Heh... i'd forgotten about FlexLM. Thanks, i was running dangerously low on software to hate on this morning.

                            Firefox? CodeProject? GreaseMonkey? A better Life?

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                            Stuart Dootson
                            wrote on last edited by
                            #16

                            Did you know that FlexLM's now owned by Macrovision? Several forms of hate in one company.... Stuart Dootson 'Java, Basic, who cares - it's all a bunch of tree-hugging hippy cr*p'

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                            • L Lost User

                              Roger Wright wrote: Ridiculous! I'd refuse to buy the product. Really? That's the model used by many companies that sell expensive software (i.e. AutoDesk, ESRI) With single use licenses each machine needs a license. For ten users you need ten licenses = expensive! With concurrent use license a quick analysis may reveal that 5 licenses will suffice for those ten users since no more than 5 are ever using the software at any given time. Even if the concurrent license price is 50% higher than the stand alone, the customer is still paying less overall. I wish more vendors (i.e. Microsoft) offered this - I wouldn't have to buy MS Office for each machine (it's extremely rare that more than 2 of us are using it at any given time, but I've paid for 5 licenses). Cheers, Drew.

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                              Shog9 0
                              wrote on last edited by
                              #17

                              I took his response to mean that he would be wary of a product that charges more for concurrent vs. fixed licenses. I agree - such a model implies that they don't expect me to be using the software much, and thus concurrent == many more effective users. Exactly what i *don't* want to here when i'm considering a rather expensive purchase. (and yes, i know this model is common. doesn't make it any more fun)

                              Firefox? CodeProject? GreaseMonkey? A better Life?

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                              • S Stuart Dootson

                                Did you know that FlexLM's now owned by Macrovision? Several forms of hate in one company.... Stuart Dootson 'Java, Basic, who cares - it's all a bunch of tree-hugging hippy cr*p'

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                                Shog9 0
                                wrote on last edited by
                                #18

                                Even Better :rolleyes:

                                Firefox? CodeProject? GreaseMonkey? A better Life?

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                                • S Shog9 0

                                  I took his response to mean that he would be wary of a product that charges more for concurrent vs. fixed licenses. I agree - such a model implies that they don't expect me to be using the software much, and thus concurrent == many more effective users. Exactly what i *don't* want to here when i'm considering a rather expensive purchase. (and yes, i know this model is common. doesn't make it any more fun)

                                  Firefox? CodeProject? GreaseMonkey? A better Life?

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                                  Lost User
                                  wrote on last edited by
                                  #19

                                  Shog9 wrote: ...model implies that they don't expect me to be using the software much There are lot's of software packages out there that are very useful, but aren't in use all the time. MS Office just happens to be one of those here. Every machine has it, but I only use it about 8 hours a week. Same goes for the other employees. If I could have bought 3 concurrent licenses for 1.5x the single use license cost, it still would have amounted to a savings of 10%. So even though the per-license cost is higher, I have 5 workstations with MS office avaiable as needed. My needs are covered and it cost me 10% less. It's simply another option for the consumer - I can still buy 5 single use licenses if I want to. How is having more options a bad thing? Cheers, Drew.

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                                  • R Roger Wright

                                    Juan Carlos Cobas wrote: we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Ridiculous! I'd refuse to buy the product. "...putting all your eggs in one basket along with your bowling ball and gym clothes only gets you scrambled eggs and an extra laundry day... " - Jeffry J. Brickley

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                                    Sean Cundiff
                                    wrote on last edited by
                                    #20

                                    Roger Wright wrote: Ridiculous! I'd refuse to buy the product. Really? Even if it saved you money? I don't think you understand why these two different licensing models are so popular. It's not because the software company is 'forcing' you to accept a particular licensing scheme. In fact this type of licensing structure was 'forced' on the software company by the customers. Just as an example: We use a particular software application at our help desk to track support issues. This software has two types of licenses: fixed and floating. The fixed license can only be used by one person and the system can be accessed at any time. The floating license is a concurrent-use license. The system can only be accessed in read/write mode when the number of concurrent connections is less than the number of available floating licenses, otherwise only read access is granted. A 5-pack of fixed licenses = $8000.00. A 5-pack of floating licenses = $10,000.00. How does this save the customer money? Our help desk has 100 support personnel (in various levels of support). 15 of them need to be able to access the system at any time. The other 85 access the system on an as-needed basis. After researching user access patterns I determined that the appropriate floating license to actual user ratio for our situation was 1 to 9. So, we have: 15 fixed @ $24,000 (three 5-packs) 10 float @ $20,000 (two 5-packs) Total: $44,000 Now, if I were 'forced' by the software company to buy the 'less expensive' fixed licenses the total cost would be: 100 fixed @ $160,000 (twenty 5-packs). Hmm, the 'less expensive' fixed licenses don't seem to be such a good deal anymore, especially since our usage patterns show that only 25 users will be accessing the software at any given time. (Meaning that 75% of the fixed licenses will be unused at any given time and $120,000 is effectively wasted.) On the surface it looks like the floating licenses are more expensive ($2000 per license vs $1600 for the fixed). However on a per user basis our licensing costs are $440 per user, not $1600 per user. Using a combination of the two licensing schemes we've saved $116,000 in licensing fees. Now suppose you're an engineering company (or university) who wants to use Autocad or ESRI or SPSS. Each of those packages have licensing schemes similar to what I detailed above. I think you'll see why they offer similar licensing schemes and why it adds customer value. Now why in the world would

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                                    • J Juan Carlos Cobas

                                      Hi, We have recently released a new application with a pricing structure based on quantizied packages of nominated users. For example, consider the following pricing structure: Single user license €100 Multiple user (5 users) €375 Multiple user (10 users) €725 Multiple user (20 users) €1,250 We have found that licenses of nominated users suppose a problem for some of our clients who in some cases prefer multiple concurrent licenses. For example, rather than purchasing a package of a 10 users license, they would prefer to purchase a license of 10 concurrent user license. This means that the number of eventual users would be much higher (for example 100) but only a maximum of 10 users would be allowed to use the program at the same time. So we need to reconsider our pricing structure to cover these situations. Our first impression is that we should charge a higher price for a multiple user concurrent license than for the corresponding multiple user nominated one. Any suggestions would be much appreciated.

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                                      cmk
                                      wrote on last edited by
                                      #21

                                      The pricing should be the same. Your current pricing structure was developed based on the number of users that would/could be using the program. How does this really change when moving to concurrent licensing ? The same number of users will/may be using the program. How can you justify charging more for the client getting the same end-use functionality ? From a client admin point of view concurrent usually means that all licensing issues are moved to a central license server - MUCH easier for them to admin. I've seen where this factor alone is considered VERY significant in choosing a product. ...cmk Save the whales - collect the whole set

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                                      • S Shog9 0

                                        I took his response to mean that he would be wary of a product that charges more for concurrent vs. fixed licenses. I agree - such a model implies that they don't expect me to be using the software much, and thus concurrent == many more effective users. Exactly what i *don't* want to here when i'm considering a rather expensive purchase. (and yes, i know this model is common. doesn't make it any more fun)

                                        Firefox? CodeProject? GreaseMonkey? A better Life?

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                                        R Offline
                                        Roger Wright
                                        wrote on last edited by
                                        #22

                                        Eggggzactly.:-D "...putting all your eggs in one basket along with your bowling ball and gym clothes only gets you scrambled eggs and an extra laundry day... " - Jeffry J. Brickley

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                                        • S Sean Cundiff

                                          Roger Wright wrote: Ridiculous! I'd refuse to buy the product. Really? Even if it saved you money? I don't think you understand why these two different licensing models are so popular. It's not because the software company is 'forcing' you to accept a particular licensing scheme. In fact this type of licensing structure was 'forced' on the software company by the customers. Just as an example: We use a particular software application at our help desk to track support issues. This software has two types of licenses: fixed and floating. The fixed license can only be used by one person and the system can be accessed at any time. The floating license is a concurrent-use license. The system can only be accessed in read/write mode when the number of concurrent connections is less than the number of available floating licenses, otherwise only read access is granted. A 5-pack of fixed licenses = $8000.00. A 5-pack of floating licenses = $10,000.00. How does this save the customer money? Our help desk has 100 support personnel (in various levels of support). 15 of them need to be able to access the system at any time. The other 85 access the system on an as-needed basis. After researching user access patterns I determined that the appropriate floating license to actual user ratio for our situation was 1 to 9. So, we have: 15 fixed @ $24,000 (three 5-packs) 10 float @ $20,000 (two 5-packs) Total: $44,000 Now, if I were 'forced' by the software company to buy the 'less expensive' fixed licenses the total cost would be: 100 fixed @ $160,000 (twenty 5-packs). Hmm, the 'less expensive' fixed licenses don't seem to be such a good deal anymore, especially since our usage patterns show that only 25 users will be accessing the software at any given time. (Meaning that 75% of the fixed licenses will be unused at any given time and $120,000 is effectively wasted.) On the surface it looks like the floating licenses are more expensive ($2000 per license vs $1600 for the fixed). However on a per user basis our licensing costs are $440 per user, not $1600 per user. Using a combination of the two licensing schemes we've saved $116,000 in licensing fees. Now suppose you're an engineering company (or university) who wants to use Autocad or ESRI or SPSS. Each of those packages have licensing schemes similar to what I detailed above. I think you'll see why they offer similar licensing schemes and why it adds customer value. Now why in the world would

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                                          Roger Wright
                                          wrote on last edited by
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                                          My point is that a fixed license is unacceptable - ever. If I have forty users who need the product, but only two of them ever need it concurrently, then I'm buying two licenses. If that's not an option, or if it costs more than two fixed licenses, I'll buy your competitor's product or write my own. "...putting all your eggs in one basket along with your bowling ball and gym clothes only gets you scrambled eggs and an extra laundry day... " - Jeffry J. Brickley

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