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This message is in MIME format. Since your mail reader does not understand this format, some or all of this message may not be legible. -- [ Picked text/plain from multipart/alternative ] Most tier-based pricing strategies are implemented based on the recognition of revenue based on the POTENTIAL processing power of the machine that the software is running on. There can be a very wide range of processor and interactive CPW capability within a given software tier. For example, at the P50 level, the min processor CPW is 3660, interactive CPW is 120, and number of processors is 8. The max processor CPW is 20200, interactive CPW is 20200, and number of processors is 24. So, I price my software towards the middle of the capacity range and realize that I may leave a bit on the table on the smaller, low-end machine deals, but it will be made up on the larger, high-end deals. As someone has already said, a simple average cost across the board may be a hindrance, but an average cost within the tiers is more reasonable (and palatable to the customer). Yes, the software is the same, but it is more valuable to a customer that runs it on a 24-way 840 with 10,000 users than to a customer that runs it on an 8-way 740 with only 200 users. I can by little 6hp Poulan push mower to cut my grass for $200.00. I can also by a $2,000.00 John Deere riding mower to do the same job. BUT, the John Deere has the POTENTIAL of doing a whole lot more, so I pay for it up front. If I use the capacity, good for me. If I don't, then perhaps I overspent on my hardware and should pay more attention on my next purchase. This really is a never-ending quagmire, especially since no one seems to know the exact "formula" behind IBM's logic for hardware price calculation as it relates to tier and CPW... what ever it is, it most certainly is not a linear relationship. Steven Martinson Product Marketing Manager, iSeries and AS/400 PentaSafe Security Technologies, Inc. http://www.pentasafe.com Toll Free: 1.888.400.2834, x9585 Direct Dial: 1.713.860.9585 -----Original Message----- From: Shannon O'Donnell [mailto:orion@auburnctnet.com] Sent: Tuesday, October 30, 2001 1:25 PM To: MIDRANGE-L@midrange.com Subject: Re: Tiered pricing (was Tiger tools...) I hate to do it :-) but I have to agree with Brad on this one. I've never held a very high opinion of tierd pricing, or vendors who price their product based on that model. The argument that you have to support more users on a larger box is not relevant. Vendors typically charge one price, tier priced, for the software itself, and then charge a secondary (monthly or annual) fee for maintenance. There's no good reason why a vendor couldn't charge a single fee for the product itself, and then charge a sliding fee for the maintenance, based on actual number of users. Wouldn't that be more fair? I know of one example off the top of my head where a vendor (I won't name names, but they are very big in their own niche in the iSeries market) charges for their software based on processor group. The customer that is interested in their product could use their product...but they only have about 10-15 users that will use it on their P40 processor. The cost of the software at that processor group is well over $100K. That price doesn't change if the number of users goes up or down. It's based soley on processor. So a company that has 200 users of that product is getting a much better value than this other company with only 15 users. Where's the equity in that pricing model? In my humble opinion...and only my opinion...tiered pricing is nothing more than a license to steal. If I was selling a product, I'd have a hard time selling it based on tiered pricing, and still being able to look myself in the mirror the next day. My 2 cents. ----- Original Message ----- From: "Carl Galgano" <cgalgano2@ediconsulting.com> To: <midrange-l@midrange.com> Sent: Tuesday, October 30, 2001 1:09 PM Subject: RE: Tiered pricing (was Tiger tools...) > Brad: > Isn't tiered pricing similar to user based pricing in some respects? Bigger > system = more users? I am not saying I like it at all. I need to buy CM1 > for a P30 and was quoted something like 35K, to one stinking RJE > connection...... the customer almost passed out.... so I will buy it for a > P05 box and move the files between the systems and save over 25K. Does this > break the ethical code that was implied in our other discussion about > TigerTools. In effect, it is the same thing, isn't it? > I also think tiered software pricing holds back hardware sales. > cjg > > > Carl J. Galgano > EDI Consulting Services, Inc. > 550 Kennesaw Avenue, Suite 800 > Marietta, GA 30060 > (770) 422-2995 - voice > (419) 730-8212 - fax > mailto:cgalgano@ediconsulting.com > http://www.ediconsulting.com > AS400 EDI, Networking, E-Commerce and Communications Consulting and > Implementation > http://www.icecreamovernight.com > Premium Ice Cream Brands shipped Overnight > FREE AS/400 Timesharing Service - > http://www.ediconsulting.com/timeshare.html > "You ain't gonna learn what you don't want to know" - rw > > -----Original Message----- > From: midrange-l-admin@midrange.com > [mailto:midrange-l-admin@midrange.com]On Behalf Of Brad Stone > Sent: Tuesday, October 30, 2001 1:29 PM > To: midrange-l@midrange.com > Subject: Tierred pricing (was Tiger tools...) > > > A lot of interesting points are being discussed here, but > I'd like some simple answers as it seems tierred pricing > always comes up. > > 1. Besides the fact that it's the "norm", what reasons are > given for the need to price software on a tierred level? > > 2. Does the software for a larger machine require more > coding, support etc. to make up for the difference? > > 3. What other industries tier their pricing for the SAME > product? (ie gas costs the same for a ferrari and a tempo). > > Brad > www.bvstools.com > _______________________________________________ > This is the Midrange Systems Technical Discussion (MIDRANGE-L) mailing list > To post a message email: MIDRANGE-L@midrange.com > To subscribe, unsubscribe, or change list options, > visit: http://lists.midrange.com/cgi-bin/listinfo/midrange-l > or email: MIDRANGE-L-request@midrange.com > Before posting, please take a moment to review the archives > at http://archive.midrange.com/midrange-l. > > _______________________________________________ > This is the Midrange Systems Technical Discussion (MIDRANGE-L) mailing list > To post a message email: MIDRANGE-L@midrange.com > To subscribe, unsubscribe, or change list options, > visit: http://lists.midrange.com/cgi-bin/listinfo/midrange-l > or email: MIDRANGE-L-request@midrange.com > Before posting, please take a moment to review the archives > at http://archive.midrange.com/midrange-l. > > > _______________________________________________ This is the Midrange Systems Technical Discussion (MIDRANGE-L) mailing list To post a message email: MIDRANGE-L@midrange.com To subscribe, unsubscribe, or change list options, visit: http://lists.midrange.com/cgi-bin/listinfo/midrange-l or email: MIDRANGE-L-request@midrange.com Before posting, please take a moment to review the archives at http://archive.midrange.com/midrange-l.
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