Date: Wed, 10 Mar 1999 22:51:36 +0000
Reply-To: John Whittington <medisci@POWERNET.COM>
Sender: "SAS(r) Discussion" <SAS-L@UGA.CC.UGA.EDU>
From: John Whittington <medisci@POWERNET.COM>
Subject: Re: Licensing Costs Again; WAS: Yet more thoughts on SAS for Linux
Content-Type: text/plain; charset="iso-8859-1"
At 15:02 10/03/99 -0700, Mark S Dehaan wrote:
>wrt the first point, usually the purchaser of software pays for
>the improvements he/she is receiving IN the pkg he is receiving.
>Therefore, they can consider if the upgrade is worthwhile. This
>is not what is happening at SAS. ...... That is
>where I object most strongly!
Mark, I still think you're making a pretty artificial distinction - indeed,
a distinction which would actually be non-existant if R&D costs remained
constant ('in real terms') over the years. Then, the only people to have
actually potentially 'lost out' would have been the very first licensees -
since they had to pay for the development of two versions, the one they jhad
licensed and the next one being developed. Ever since then, each licensee
has, in effect, only paid for the R&D of one release - and it is pretty
arbitrary as to whether one calls that the release they have, or the next one.
>wrt the second point, if we could pick and choose when to
>purchase upgrades then the fairness/choice aspect of paying for
>development costs would be good.
Precisely.
>But since SAS's paradigm
>is we pay for future enhancements, picking and choosing when
>to upgrade would allow users to skip paying their portion of R&D.
>This might be unfairly burdening yearly purchasers with the
>R&D cost.
In the hypothetical world I was postulating, I don't think there would be
such a thing as 'yearly purchasers'. All licences would be 'perpetual'
(although techical support, if required as an 'extra', would be paid for
annually). that being the case, I'm not sure it would be a case of 'unfair
burdening' at all. If organisations chose to upgrade (and pay for another
luicence fee) immediately a new release became available, it would surely be
reasonable (not an 'unfair burden') that, over a period of time, they would
pay more than a comparable organisation that did not upgrade so often?
Think of car leasing. Would you expect to pay the same for a deal that gave
you a new car every 12 months as for a deal in which you kept each car until
it was 5 years old?
>This is partly why SAS charges higher
>fees for the first year of licensing I think
Maybe - but there are also the admin costs of setting up an account and,
probably far more important, an expectation of far heavier usage of tech
support during the first year.
> I think. This is also why SAS has the Gov't Contract
>option of purchasing a perpetual,non-expiring license
>for the current version of SAS at a huge cost, and then charging
>a much more modest annual fee for "remaining current"
>( getting future upgrades). I think this is an attempt to turn
>the R&D fee to the more traditional up-front cost. I would
>prefer this approach, but the upfront,first year cost is
>too much for most of my customers who can't predict
>too many years in the future.
In the final analysis, with a given market size and a given set of profit
expectations on the part of SI, it really shouldn't make any great
difference what concept of pricing they decide upon - the bottom line figure
of what a particular customer will pay is bound to be roughly the same.
.... i.e., in simplistic terms (forgetting inflation, cashflow, notional
interest etc.) $100,000 for a 1-year licence, $500,000 for a 5-year
licence, and £250,000 for a 'perpetual' licence in a market where SI knew
that, on average, people would upgrade about once every 2.5 years would oil
boil down to the same thing - same cost to 'average' customers, and same
long-term turnover and profit for SI.
.. that's how I see it, anyway.
Regards,
John
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