As I said, with widgets everyone agrees the right price is some markup on manufacturing costs. With software it is very tough to find a pricing model that customer perceive as fair. Believe me, vendors want to! No one comes up with a pricing model based on "boy, this'll really get our sales guys and gals an earful from customers." The more that customers perceive the pricing model as fair, the easier the sale.
Charles -----Original Message----- From: IBM Mainframe Discussion List [mailto:ibm-m...@bama.ua.edu] On Behalf Of McKown, John Sent: Monday, August 16, 2010 2:56 PM To: IBM-MAIN@bama.ua.edu Subject: Re: DB/2 V7 on Z/os V1.11 I understand and somewhat agree with your logic. What hurts us is that we upgrade a CPU so that we can run more of software that is written in-house. And now some vendors want a lump sum "upgrade" fee as well as an increased monthly license fee. Despite the fact that we aren't using their particular software more. What I personally dislike is the lump sum "upgrade" payment. I, personally, can understand the license fee increase (monthly) because I __might__ use the software more (especially something like CA-7, CA-11, or CA-1). Yes, I'm particularly thinking of one vendor who will remain nameless. Upgrade your MSUs and they want a lump sum "upgrade" fee. Curiously, if you downgrade your MSUs (as we are doing), they don't give a refund. -- John McKown Systems Engineer IV IT Administrative Services Group HealthMarkets® 9151 Boulevard 26 . N. Richland Hills . TX 76010 (817) 255-3225 phone . (817)-691-6183 cell john.mck...@healthmarkets.com . www.HealthMarkets.com Confidentiality Notice: This e-mail message may contain confidential or proprietary information. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message. HealthMarkets® is the brand name for products underwritten and issued by the insurance subsidiaries of HealthMarkets, Inc. -The Chesapeake Life Insurance Company®, Mid-West National Life Insurance Company of TennesseeSM and The MEGA Life and Health Insurance Company.SM > -----Original Message----- > From: IBM Mainframe Discussion List > [mailto:ibm-m...@bama.ua.edu] On Behalf Of Charles Mills > Sent: Monday, August 16, 2010 1:42 PM > To: IBM-MAIN@bama.ua.edu > Subject: Re: DB/2 V7 on Z/os V1.11 > > Anyone who thinks that owning a software company is a license to print > money: you're free to start one of your own. Ask Dave Salt or > any of the > other software entrepreneurs who hang out here just how obscene their > profits are. > > Everyone rails against capacity pricing, but what's the > alternative? When I > started selling Outbound in 1988 my first plan was to charge everyone > $24,000 no matter how big their processor was. Didn't work. We priced > ourselves out of the market for the smaller shops, and left ourselves > without the resources to compete with the $100,000 products > at the bigger > shops. Yes, the best thing would be pricing on a "business" metric > (transactions, basically) rather that a "computer" metric > (MIPS, etc.) but > IBM has not made it easy to do that. > > We did in fact go to exactly what Gil suggests. We stopped > saying that a > Group 80 machine was more than a Group 18 machine. Instead, > we said "the > product is $60,000 ... oh, you have a Group 18 machine? > Great, you get a 75% > discount." People loved it. I don't know why every vendor > doesn't do it that > way. > > When you are selling a tangible product like widgets, it's > easy for the > customers to understand that it costs you $1 to make each > widget so you sell > it for $2. It's harder for people to grasp your pricing when > it costs you $1 > million to engineer a product, and then 1¢ each time people > download it. > What's a fair price? Okay, we won't charge for upgrades and > we won't charge > for bigger CPUs and we won't charge for multiple CPUs. > Exactly what WOULD > you have us charge for so we can pay those darned programmers, not to > mention the landlord, the power company, and the tax man? > > Charles > > -----Original Message----- > From: IBM Mainframe Discussion List > [mailto:ibm-m...@bama.ua.edu] On Behalf > Of Paul Gilmartin > Sent: Monday, August 16, 2010 12:57 PM > To: IBM-MAIN@bama.ua.edu > Subject: Re: DB/2 V7 on Z/os V1.11 > > On Mon, 16 Aug 2010 02:24:30 -0500, Brian Westerman wrote: > > >That's another problem that people point out when they > contact me. I can't > >believe some of the prices that companies charge for their > "upgrades". I > >still have a problem understanding why it should cost more > to run a product > >on a faster machine than on a slower one. I think someone > in IBM marketing > >thought that it might take more people resources (or maybe > smarter/more > >expensive ones) to support the same software on a fast machine. > > > Take the opposite perspective, that you're getting a discount for the > slower machine rather than paying a premium for the faster. And > regardless, it makes more sense than the specialty engines where you > pay less to run on the (sometimes) faster processor. > > And why should it cost more to run a product on several systems than > on one system? > > The vendors do their best to make a profit while being fair (except > > ---------------------------------------------------------------------- > For IBM-MAIN subscribe / signoff / archive access instructions, > send email to lists...@bama.ua.edu with the message: GET IBM-MAIN INFO > Search the archives at http://bama.ua.edu/archives/ibm-main.html > > ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to lists...@bama.ua.edu with the message: GET IBM-MAIN INFO Search the archives at http://bama.ua.edu/archives/ibm-main.html ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to lists...@bama.ua.edu with the message: GET IBM-MAIN INFO Search the archives at http://bama.ua.edu/archives/ibm-main.html
