Re: Tiered pricing (was Tiger tools...)

[Lou Forlini <lforlini@xxxxxxxxxxxxxxxxx>]

At 1:25 PM -0600 10/30/01, Shannon O'Donnell wrote:
>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?

    Given that a lot of vendors include the first year of maintenance
in the  purchase price, wouldn't that be the reason why the initial
cost should still be tiered?

>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?

    Part of the problem is that IBM did try to go with user-based
pricing, but no one seems to be remembering it.  Although it sounded
good at the time (to IBM), it was a disaster both from a public
relations point of view and from the implementation requirements.  I
remember when IBM was encouraging vendors to change to the user-based
pricing model.  The examples they showed of how to check for
compliance were so convoluted and had so many API calls, it doubled
the startup time of my application.  It's just too easy to make one
simple call and get the machine type, instead.  (BTW, we stuck with
flat pricing for our direct sales, but some of our international
resellers refused to carry the product unless there was a way to
price by machine model).

>In my humble opinion...and only my opinion...tiered pricing is nothing more
>than a license to steal.

    IBM leads the way, most vendors just follow.  Like someone else
mentioned in this thread, we too have had our products looked down on
by larger installations because it was "too cheap" so it couldn't
possibly do the job.  Go figure.

    Regards,

    - Lou Forlini
      Software Engineer
      System Support Products, Inc.