RE: Tier pricing (was chgsysval QMODEL) -- MIDRANGE-NONTECH


> -----Original Message-----
> From: midrange-nontech-admin@midrange.com 
> [mailto:midrange-nontech-admin@midrange.com] On Behalf Of Mark Villa
> Sent: Friday, January 03, 2003 5:38 PM
> To: midrange-nontech@midrange.com
> Subject: RE: Tier pricing (was chgsysval QMODEL)
> 
> 
> ~~~Is the administrative fee documented in the contracts?  If 
> ~~~so, is the $10K ~~~specifically mentioned? ~~~ ~~~Such a 
> charge to generate a new license key for a user-based 
> ~~~license is ~~~unethical, but it sounds like you're gonna 
> be beating your ~~~heads against a ~~~brick wall.  You might 
> start by demanding an itemized, ~~~detail quote for the ~~~fee.
> 
> Yes, I think there is going to be a lot of fallout soon.
> The train is not sustainable. There is a good thread on this 
> issue in the midrange.com BPCS list archive if you missed it. 
> This vendor has participation on midrange.com so we know it 
> is loud and clear. I have an associate that took employment 
> at an installation with a very old install, that is 
> unsupported. (which was surprise #1) I doubt many have seen 
> this version since Y2K preps. The installation I am 
> referencing has not been on vendor support for more than 
> several years. Now the vendor wants back pay plus the 10K 
> license key fee. I don't want to name numbers but I am sure 
> it is much more than 100K. Now "that" is taking advantage of 
> a situation. Not only is it ridiculous, even a very healthy 
> company would never go for that. The only objective is: 
> Continue normal ops after new CPU on the same tier. This is 
> the equivalent of  a vendor saying "We have you by the XXXXX, 
> sooner or later you are going to have a failure or need an 
> upgrade and call us"

Our standard price for getting back on maintenance if you are not 
On maintenance, is one year in arrears and the next year in advance.

Why?

Because maintenace charges are for the average user, who will have big
problems
once in a long while, and some small problems from time to time, plus
upgrades. 

When a company is off maintenance, and wants to get back on, 90% of the 
time it is because they are having a big problem, and they want help.
This 
is like buying health insurance in the ambulance on the way to the
hospital 
while on life support.

It's likely that the company getting back on maintenance will be costing

us money for the next year or so. We let them back on for good will 
reasons more than any hope of revenue.

In the market we are in, it is customary to stay on maintenance if 
you continue to use the software. We build it into our business plan. 
That means our software cost is lower to the purchaser. We intend to 
make our profit out of the ongoing relationship.

Last year, after 13 years in business, 12 in the midrange market, 
50% of our company revenue was maintenance payments. 25% was upgrades 
sales and cross sales to existing customers. 25% was new product sales. 

(Those aren't very good numbers on new sales, they should really 
be more like 40% to 60%.)

> In my book, the vendor has lost all respect and will never 
> again thrive. 

I suppose there is porice gouging by some vendors, I am not sure from
your
description that this is the case here. If that vendor has to help the 
customer convert off an unsupported version, it may be rather expensive
for them.

There's no question that any responsible vendor will build in 
disincentives for getting off maintenance.

> I am surprised that IBM does not squeeze 
> policy's gone astray such as this. It's bad for IBM, in fact 
> are losing big sales over this. Green Streak had a hidden 
> streak. I sure would like to know what a Jan. 2003 new 
> prospect for this vendor is thinking when they get close to 
> signing on, think they know about the ticking time bomb this 
> thread is referring to?

It sounds like ti was the customer that lit the fuse.

If I was the guy's boss, I'd be looking hard at a person who 
put my company in jeorpardy over a few maintenance dollars in the first
place. 
 
> One more example, concerning a long time well respected 
> AS/400 forms software company. Charging a surprise fee for 
> license key on an upgrade to V5R2, where the new OS level 
> triggered the key mechanism. You have a grace period to 
> decide, the software now contains apparently an undocumented 
> expiration, perhaps a new feature slipped into an upgrade, 
> and it was a surprise.

I'd bitch about that too. 

> Both of these came to my attention in the last few weeks so 
> not ancient history here.
> 
> I ask! Enron-training? Bad economy? not enough H1-B? Mortgage 
> too big? or What?
> 
> Mark Villa in Charleston SC

I offer my comments so people can see how a vendor is thinking, 
not to defend any particular vendor or practice. Hope it is helpful to
all of you.

By the way, I've owned 4 Chrysler Corp minivans. On the one 
previous to the present one, I decided I was tired of going in and 
getting a bill for $600 every time I went for scheduled maintenance. 
So I used a third party, changed oil and filter every 3,000 to 5,000 
miles (Valvoline, why use anything else?) changed the air filter every 
other time, pcv valve when suggested. Drove it 56,000 miles, the 
battery went dead so I traded it in.

Brad Jensen
www.elstore.com
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