Nominated vs Concurrent licenses
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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.
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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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?
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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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
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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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
Actually, fixed and floating makes a whole lot of sense. Here's why: 2 fixed licenses = 2 users. That's a maximum of two people calling on support issues. 2 floating licenses = 40 users (in your case). That's a significant difference in the time needed to support your software. That's just one of the reasons a floating license is typically more expensive. Now, if you're willing to designate one person at the customer's company as the official contact for support, then maybe you can get a price break on the floating licenses. However, the number of potential issues is still increased. That one person now is calling for up to 40 people. We own software like this (AutoDesk). I can tell you it's a huge pain in the rear for that person to act as a middle-man between the user and product support. Either way you're still paying. [edit] Sure a company can offer just floating licenses, but why not offer a fixed license at a lower price knowing that the support costs will be cheaper? Once again, this adds value to the customer. This in turn leads to more sales. [/edit] -Sean ---- Shag a Lizard
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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
I am against stupid licensing as much as you and Daniel are. I just think that a flexible but simple system can be thought up. 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...