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Doug Nebeker ("Doug")
I'm looking for the best practice how to answer a quote for an existing customer that wants to upgrade from license A to license B.
This is the situation:
9 months ago, my customer purchased a perpetual node-locked license. This means he paid X for a perpetual license (he will pay and 0.2X for support & subscription starting from the 2nd year).
Now my customer wants to upgrade to a perpetual *floating* license, at the cost of 4X (one floating license = one node-locked license). Since he's already used the license for 9 months, I'm trying to think how to calculate this proportions.
I'm OK with this upgrading, yet I'm trying to figure out how to calculate this upgrading. Is there any known formula?
It's not a calculation, it's a decision. You could calculate until you are blue in the face, taking pro rata costs of the software and the maintenance. You are going to get an answer somewhere between 3x and 4x. I usually just pick a number on the generous side - say 3.2x. But it's your decision.
Omg, i think it's be hard and i answer i dont know much a bouth this.
Monday, November 10, 2014
If you want math behind your decision, take the difference and recalculate support renewal date based on the value of support that has already been used.
In your case, assuming that support for the 4X license costs 4 * 0.2X = 0.8X/year:
- 9 months spent on their current support plan that you value at 0.2X/year is 0.15X
- (0.8 - 0.15) / 0.8 * 365 = 296.6 days
So the customer should pay 3X and get 297 days of support and updates instead of one year. If they pay at the 9 months mark, that is.
You can also do the above with a twist: tell the customer they'll get a full year of support if they pay quickly, say, by the end of the month or in less than 30 days. Don't forget to mention value explicitly (in the above example, 0.15X).
(Why not ask the customer to pay 3.15X and give them a year of support? Most likely, they won't pay immediately, hence invalidating your calculations.)
Tuesday, November 11, 2014
+1 Scott. treat it like a simple exchange where they pat the difference. I would probably waive the admin fee if the time was less than 30 days but they clearly knew what they were doing and trying to save money. So I would charge an admin fee as well to cover your time.
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