Wirt,

     I agree with your statement that multilevel pricing allows a user to
     upgrade at their own pace.  However, using hardware tier levels to
     determine software pricing schemes is NOT an appropriate strategy, IMHO.

     For example, I manage a rather powerful (KS959/300) computer.  I cannot
     convince my management to spend over $10,000 upfront to buy an unknown
     software package to enhance our business.  However, I could probably get
     $2,500 approved for a 1-2 concurrent-user license (Yes, I know most package
     providers give 30-day demos, but many packages need much more time than
     that to really shake down).  Then, if the package works out as projected, I
     would be in the market for a X number of seat upgrade at X dollars per seat
     (In my 15+ years of computing I have never come across a "business person"
     that understood increased license fees for no increased number of users
     using a particular package).  Or, I may be so clever as to have a 10-user
     license service the needs of my 400+ concurrent users on the system.

     What I am getting at is that your package, now hosted on a more powerful
     machine does NOT usually mean that I will use your package by a
     proportionately higher number of concurrent users on this system.  Besides,
     whenever a user license increases, the corresponding maintenance contract
     increases.  Almost any "business person" can understand the correlation of
     increased support contracts over a larger number of concurrent users
     (although grudgingly so, I must add).

     The arena that the HP3000 now operates in is full of user-based pricing.
     This platform competes with the UNIX, NT, Netware, etc. platforms that gear
     most, if not all, of their pricing to concurrent usage.  I firmly believe
     that HP and all third-party vendors must get onboard with this "new"
     pricing scheme.  Otherwise, the HP3000 and its package providers will go
     the way of the dinosaurs since they are unable or unwilling to adapt to the
     ways of business in the 90's and beyond.

     Wirt, I do agree with you on the point that HP must release a 2-user HP3000
     box that can be used by developers and/or upgrade release testing for under
     $10,000.  I do not think that HP realizes just how many of these units that
     they could probably sell!

     Just my two cents' worth!!

     John Hornberger
     Sr. Systems Programmer
     General Signal Services

     **Note:  The above comments are mine and reflect in no way on my employer!

______________________________ Reply Separator _________________________________
Subject: Re: Re[2]: [HP3000-L] Desperately seeking Susan (980/400 or
Author:  [log in to unmask] at Internet2
Date:    1/24/97 1:19 AM


Several people wanted a vendor who prices their software product in a tiered
manner to defend their pricing scheme. I'm actually pleased to do so.

We price QueryCalc on a tiered scheme. The reasons are: (i) we think it's the
fairest possible way to price the product. And (ii), we very much want to
attract the small, first-time customer to QueryCalc and to the HP3000.

In one sense, QueryCalc isn't truly tier-priced. It only has one price:
$12,500. We simply offer deep discounts to the smaller machine users. But, if
we are successful at making their machine usage successful and productive,
the small customers tend to increase the intensity of their machine's usage,
and thus ultimately their machine size. As they do, they move forwards
towards paying the full price for QueryCalc. However, tiered pricing allows
them to move at their own speeds, upgrading only when necessary, in a
pay-as-you-go process.

     (Big Snip)

In furtherance of my advocacy of tiered-pricing, I strongly believe that it
would be in HP's best interest to offer reasonably powerful systems at or
below the $10,000 price point. I also strongly believe that it is in HP's
best interest to offer developers systems at the lowest prices possible, to
encourage the design and development of IMAGE-based database systems. Tiered
pricing for QC is a principal constituent component of our attempt to do
everything we possibly can to get business people to choose the truly
appropriate path, the one that will truly work best to their long-term
interests and profitabilities. This is not simple marketing nonsense with me.
I deeply believe this to be true.

Wirt Atmar
AICS Research, Inc.
University Park, NM

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