>>Hi,
>>
>>I have an off-the-shelf package that I developed for sale. I have two options for licensing it.
>>
>>1. a monthly one of US$25 per user per month
>>
>>2. a one off charge with optional annual support from the second year. For the first 5 users US$2,400 and then $1,000 for the next 5 users. Annual support is 20% of their licence.
>>
>>A client who has been using the system for some months now on the monthly plan is expanding and wants to consider the second option for 34 licences (and of course wants a discount). I had never anticipated selling more than 10 licences per customer.
>>
>>Needless to say I prefer the monthly payment as that means I have regular income.
>>
>>How would you suggest I approach this larger number of licences?
>
>Frank:
>
>As I do the math, 34 users under the monthly option would cost your user $10,200 every year for the rest of time, where under the one time option the same number of users would require a single payment of $8,400 forever, with a possibility of maintenance the second year.
>
>If I were the user, that decision would be easy- single payment.
>
>Is my math correct?
>
>PS.. Congratulations. Your product seems to be a valuable one.
Thanks Bill,
my issue is not with the actual pricing (I'll work out the numbers and adjust to suit) but more with how to approach offering a discount for more licences. Do people use a tiered approach? Any other options?
For example, I could offer an increased discount for every 5 more licences like this:
# lic. Price Discount Cost
5 2400 0 $2,400.00
10 2280 0.050 $4,680.00
15 2220 0.075 $6,900.00
20 2160 0.100 $9,060.00
25 2100 0.125 $11,160.00
30 2040 0.150 $13,200.00
35 1980 0.175 $15,180.00
40 1920 0.200 $17,100.00
45 1860 0.225 $18,960.00
50 1800 0.250 $20,760.00
55 1740 0.275 $22,500.00
60 1680 0.300 $24,180.00
65 1620 0.325 $25,800.00
70 1560 0.350 $27,360.00
Which is a little complicated as I work out the discount for each tranch of 5 licences and then total everything.
Or I could do it like this, where it is $2400 for a tranch of 5, The cost is worked out at 2400 * number of tranches * discount level (which increases according to the number of tranches).
