>>
>>Monthly
>>34 users @ $25 / month = $10,200 / year
>>
>>One-off
>>5 users for $2,400
>>29 users @ $200 each = $5,800
>>Total 1st year $8,200
>>Optional subsequent years support $1,640 / year
>>
>>The one-off option is less expensive even in the first year, subsequent years are gravy for your client.
>>
>>Looks like you're pricing the one-off option too low or the monthly too high - they're inconsistent. Either the monthly should be roughly the amount to lease finance the one-off cost, or the one-off cost should be the principal amount of a lease finance at $monthly rate.
>>
>>Don't be afraid to charge for your software. A business person will be thinking, "If I hire a new employee and they use the software, I can net $X per month". In many cases that $X will be a lot more than $25/month; if your software makes employees $25/month more effective, it pays for itself.
>
>Hi Al,
>
>sorry, I should have been more clear. I am aware of the discrepancy in the pricing and will adjust to suit. What I want to know is how do people approach the pricing in this situation? Do you use a tiered approach like I've been using or is there some other alternative?

Tiered approach: yes.
I am with Al that your first reduction is too large: server troubles should be handled 95% even within the first step license, making that a large step reduction like 33%. From there then decrease each 5 license pack by 10% until you hit a flat after 3 or 4 reductions, perhaps adding a 50 license pack and a 100 license pack - less trouble for you. Perhaps calculate mainainance as small flat step plus smaller percentage of first bill ;-)