OK, off the policy/opinion track for a moment, and on to more technical stuff. Most of you will probably consider this topic rather dry, but it is something that lots of folks in the tech industry do think about (and should think about).
Just to quickly summarize, the article speaks briefly to the various types of metrics that can be used to price software, and the complexities that have arisen given things such as multi-CPU computers, multi-core CPUs, virtualization technology and clustering technology. Anyway, the article is a bit of a sales piece as it concludes that the answer to all the complexity is, of course, how the author’s company is doing it:
Subscription pricing models have become increasingly popular in the past few years. Open source software companies typically charge for support on an annual basis, rather than for one-time software licenses. But those contracts are still often based on the number of processors involved, leaving CIOs in the same bind. For our part, we at Sun want to simplify pricing and planning even more: Subscriptions for software are still actually subscriptions for support, as Sun’s software is now free and open-source. But pricing is based on the number of employees a company has. To simplify how to determine what that number is, we base it on what the company reports annually to the Securities and Exchange Commission (SEC).
Nothing super new but worth a bit of a read, particularly if you’re a software developer thinking about pricing models.
My $0.02: This works fine for established, cashflow positive businesses, but of course smaller shops very often look at big upfront initial license payments as a type of financing – moving to a subscription model does of course impact this. Yes, I know, sort of stating the obvious. Then again, that does bring up the interesting question of capitalizing subscription/maintenance payments… But that’s a topic for another day…
The Software Licensing Debate, Round 2 – Weigh In – weighin – CIO