RE: Tierred pricing (was Tiger tools...)

["Westdorp, Tom" <Tom.Westdorp@xxxxxxxxxxxxxxxxxx>]

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>>
>> >2.  Does the software for a larger machine require more
>> >coding, support etc. to make up for the difference?
>>
>> Depends on the product, but it is not unreasonable to
>> expect more support issues
>> with 1000 concurrent users than with 10.

>Yes, I can see this, but we're talking processor level, not
>users.  User based tiered pricing is the lesser of the two
>evils for the fact you pointed out, but it's not sold as
>such in the iSeries world.  It's based on processor level.

The processor level basis is what's screwed up.  I used to work for a hotel
software company, and they charged by processor group.  Hotel W licenses the
software for $n.  They learn to love the AS/400, and decide to move to
AS/400 based financial software.  This requires getting a bigger box, so the
hotel vendor shows up with its hand out looking for more $n+.  Why?  No more
rooms, no more guests, no more revenue, just a bigger capacity AS/400.  The
financials outfit also demands more money because of the size of the box.
It could run on a p10 alone or a p20 with hotel.  The hotel people can
understand if you price per hotel room, build a new tower and the price of
the hotel software goes up because you're doing twice as many rooms.  The
tiering by processor level is just plain wrong, except for the OS.

The software houses are too lazy to develop their own tiering model, so they
ride on IBM's.  Suppose Code/400 was based on processor level.  If I ran it
on my 720 with 10 pgmrs I'd pay $X, but if I run it on my 830 with the same
10 pgmrs it's $X+.  Still ten pgmrs.

Each piece of software needs it's own tier basis.  Some by hotel room, some
by number of accounts, some by number of seats, etc.  One size doesn't fit
all, nor does one tier structure.

-----Original Message-----
From: Brad Stone [mailto:brad@bvstools.com]
Sent: Tuesday, October 30, 2001 10:49 AM
To: midrange-l@midrange.com
Subject: Re: Tierred pricing (was Tiger tools...)


On Tue, 30 Oct 2001 13:30:32 -0500
 Douglas Handy <dhandy1@bellsouth.net> wrote:
> Brad,
>
> >1.  Besides the fact that it's the "norm", what reasons
> are
> >given for the need to price software on a tierred level?
>
> To make it affordable to a wider range of customers.  If
> priced uniformly, the
> averaged cost would be cost prohibitive for the small
> guy.

Ah yes... but this could also be looked at as "To charge the
guy with the bigger machine more money, becaues they must
have more to spend."

I expected the answer you gave.  :)  I don't buy it, though.
It's the answer you would get from the seller, not the
buyer.  Which leads to the fact that iSeries software is
overpriced to begin with.

>
> >2.  Does the software for a larger machine require more
> >coding, support etc. to make up for the difference?
>
> Depends on the product, but it is not unreasonable to
> expect more support issues
> with 1000 concurrent users than with 10.

Yes, I can see this, but we're talking processor level, not
users.  User based tierred pricing is the lesser of the two
evils for the fact you pointed out, but it's not sold as
such in the iSeries world.  It's based on processor level.

>
> >3.  What other industries tier their pricing for the
> SAME
> >product?  (ie gas costs the same for a ferrari and a
> tempo).
>
> Try government taxation. :)  If the business makes more
> money, Uncle Scam wants
> a bigger share.  Same with King Louie.

Well, I'll give you that one, but the goverment is screwed
up more than IBM is.   :)

>
> BTW, gas *does* cost more for my Northstar engine than
> for a Ford Tempo...

Different octane is different product.  And you don't NEED
92 octane for your Northstar.  I doubt it's compression
level requires it, no matter what your Caddi dealer told
you.  :)

Bradley V. Stone
BVS.Tools
www.bvstools.com
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