Tuesday, September 05, 2006

Software maintenance pricing strategies

A few weeks ago I did an item on the variance in upgrade pricing, to see who suckers you in with lower license purchase fees but plans to make money out of you later once you are committed. At the time I said that I would do an item on maintenance fees, but researching that has turned out to be far harder.

First, it turns out to not be as popular way of offering upgrades as I thought. Most of the companies that I write about regularly do not offer any kind of maintenance program. You can't plan a budget in advance, you must wait for the upgrade and then react. Some companies do offer leasing schemes, where you lose the right to use the software if you stop paying. -- dare I say it, I will cover this another time!

Second, when they are offered, the prices are often hidden from public view. Prices are listed as "call for quote" etc. When more people are clicking on the adverts on this site, I might spend that kind of time on an article!

Here is some data gleaned from unreliable sources (from customers that might be under special arrangements). Annual maintenance fee as a percentage of initial purchase price:

Maple 40% (from UK site Chest).
MathCAD 26% (also from Chest).
Matlab 20-25% depending on the source.
Mathematica 25% from their site.
Origin 25% (minimum of 2 years, or 3 years for groups) from their site.

I couldn't find any maintenance schemes from the usual products that I look at. (Expect updates as readers correct me!)

So with the exception of Maple, the values are much more consistent than upgrade prices were. Comparing with that data, it seems like there is some correlation between those who offered lower upgrade prices and the availability of a maintenance scheme.

There wasn't much variation either in what was offered. Upgrades and technical support were standard. There were some "exclusive websites", access to beta versions and discounts off further purchases etc. Mathematica had a couple of significant extras- a home use licenses and a webMathematica licenses. Origin included a custom webinar of 2 hours (only for group licenses), which could potentially be a valuable benefit if they provide the right presenters.

There were a lot of dubious "benefits" - like "custom communications" (read more email!). My favourite is that paying Mathworks maintenance fee will give you "Ability to purchase additional products for your license". Really, see for yourself (it's item 6)!

Maplesoft seemed a bit confused on the subject. There are two conflicting pages about their EMP maintenance scheme, here and here. The former refers to the benefit of "exclusive access" to a website that is in fact public. The newer page contradicts itself by giving the benefit of a new exclusive web area, before listing it again further down the page as a future feature!

No comments: