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Pricing a license for server usage?


We sell a technical desktop application that does some analysis and number crunching. Most of the functionality is exposed by a scripting layer and it can be used on the command line for integrating into a users workflow.  We sell a regular license for a single user to use the product for a few hundred bucks.

Our application can be integrated into a back-end for a server application via the scripting framework. We are not sure how to price a license for this usage.  A serer application could have thousands of users and our application will be feeding data to some part of the server application.

Does anybody have experience of this kind of licensing, or can anybody point me towards an existing product that offers regular desktop user licenses but also server type licenses for the same product.

maxr Send private email
Thursday, October 22, 2015
I do not have first hand experience with this type of licensing, but some thoughts to share…

I would discourage the use of site- or company-licenses, which allow some sort of flat-rate usage of your software. I would use a licensing model that makes bigger customers pay more than smaller customers.

In the past, this kind of pricing for server applications was often based on the number of CPUs the software is running on. But with ever more powerful CPUs available nowadays, this licensing model is outdated.

Depending on what your software does, it might make sense to price the license based on the number of users. But that is hard to track in a server context, where your product might operate completely agnostic of the actual user that triggered the script using it. If you license based on the potential number users on the server, this might be unfair for customers that have a huge number of users on their server but only very few of them using your software.

The best way to license is probably be based on the number of transactions your software processes on the server, as some of the big SaaS-Providers do. If a customer uses your software to process 1000 transactions per month with your software, he will pay significantly more than a customer who has only 10 transactions per month.

With this licensing model, you need to decide whether the customer pays his license based on a fixed quota of transactions he thinks he needs, of if you charge them monthly for their actual usage of your product.
Obviously the difficult part here is to track actual usage for billing purposes and enforcement of proper licensing. The latter in both cases.
PhilS Send private email
Sunday, October 25, 2015
Are you providing a server application that does what the desktop app does?  Or are you saying that someone could build up a server application using the scripting functionality of the desktop app?

For the former, your pricing should be per seat, just like your desktop version - because what's the difference other than the interface?

Obviously give bulk discounts.

If I were you, I would be doing the former, but hosting it too - that way you get to charge a monthly per user fee.
Bob Frances Send private email
Sunday, October 25, 2015
I'd suggest giving some thought to your overall pricing model, from a strategic long-term perspective:  in other words, don't just ask the question about your server license pricing strategy, but ask yourself if you might need channel pricing down the road, or other needs in the future that you can anticipate.  Then you need to put together a pricing model that drives the customer behavior that you desire.  Would you prefer company customers to opt for a server or hosted pricing model, or would you prefer them to just continue to buy X number of desktop licenses?  But make sure one does not cannibalize the other in a way that is disadvantageous to your long-term goals.  Enterprise license pricing is a bit of an art... it's really about the value that the market will bear - what is it worth to them?  It might be substantially more than just the value of the individual desktop licenses, especially if you include some type of enterprise support or training.  Again, the question is whether you want to go that direction...  Here's an article on software pricing that might be useful: http://www.software-marketing-advisor.com/software-pricing.html

Joanna Lees Castro Send private email
Friday, October 30, 2015
Thanks for the responses, I have found them to be very useful. I am going to digest this for a while and determine the best plan of action.
maxr Send private email
Thursday, November 05, 2015

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