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Software pricing - again
Dear oh dear Mr Carter - you really do miss the point about the market. It simply is not true that software pricing is largely dependent on the platform - it MAY be true in relation to maintenance and it MAY have a part to play in relation to TCO, but it certainly is not the major factor and hasn't been so for some years now.
If it was true that all software is the same then you would have a point but the truth is that all software is not the same - not by a long stretch. That's why we have a global industry estimated at $18 billion and hundreds (if not thousands) of players...and in all the years (21+) I've been consulting in this area, I have NEVER seen anyone who put price as their first question on an ITT/RFI.
But...that's not to say that software companies cannot develop innovative pricing models - it's just that it hasn't been done to any extent where users get excited enough for it to become a disruptive force in the market place. That may change - watch this space - as they say.
To our friend from Oracle...
as we all know in the sector, it is alleged that you can get 50 users of Oracle financials for free if you buy the database. Sorry, not free - for £1. But then allegedly, many companies have spent literally millions on implementation (and then sometimes failed)... maybe you get what you pay for!
But as Dennis says, there are many software suppliers and much richness in diversity, and long may it live... unless Larry gets his way!
Am I missing something?
Neither of the comments made by Dennis Howlett and David Turner seem to me even to address the points I made about software pricing, let alone to refute them.
The fact is that the price of a software package is determined largely by the cost of the hardware and operating system it runs on. Buyers should not assume that because one package is more expensive than another, it is necessarily any better.
Isn't it funny how journalists...
like to point out that software just costs the price of cutting a CD. Do they go into Starbucks and argue that the cost of one more cup of coffee is just a few pence, so that's what they'll pay for it?
Dennis is absolutely right; and the exclusive focus on up front licence cost has led hundreds of organisations into all sorts of disasters - highly costly implementations that never deliver; products that don't get properly supported; products that don't have the investment in R&D to keep up with changes in legislation and technology, as so on...
The reality is that the finance function today is under greater pressure than ever before, with increasing legislation, pressure to keep the cost of admiinistration down, and the need to support the business like never before. Developing and supporting software to support this complexity is not easy and is not cheap. But a pure focus on licence price won't take that into account.
Interestingly, picking up on Dennis' point on alternative licensing, we offer all sorts of innovative pricing but find that almost all buyers end up wanting 'traditional' cost per user/seat pricing.
Dave Turner, CODA
Software pricing
Sorry David but I completely disagree. Licencing is a lot more complex than a combination of 'what the market will bear' and the cost of development. Software is a lot more than debits on the left and credits on the right. It is now a case that all but the smallest SME customers want much more than a transaction recording engine - you could do that with virtually anything. Today's products are incredibly complex with highly sophisticated capability that delivers value well beyond the finance department. Also, a number of players have developed best practice process solutions that meet industry specific requirements. These cost money, require domain expertise and carry a rightful premium that is more than offset by the value delivered. And that's before we get to discuss scalability and reliability...
Hsving said that, there is a strong case for alternative licencing models that would be more attractive to buyers but the case for that has yet to be made in earnest.