Secret Licensing and Pricing Models

By Eric Cadman, Director of Business Development at Bayshore Solutions

Have you ever invested a large amount of time evaluating many different solutions, looking to make an official recommendation, and then find what you believe to be “THE best tool” that will potentially solve all of your problems – only to end up with heartburn over the cost? You’re not alone. One of the most common potential drawbacks to leveraging a particular solution, platform, or tool is the license fee. Often times there are many versions of the platform that range in price and options. If you are seriously considering a feature-rich, robust platform, but are having a hard time “selling” the license investment to your management, CEO, and Board, then look no further.

Here is your guide to unpublished, unadvertised, ultra-flexible pricing models that exist, but are typically only available if you ask. You won’t always find these options on the vendor’s website. One of the many benefits of working with a Digital Agency partner is that they can negotiate these terms on your behalf.

One-Time Investment or Annual Renewal

Officially, many times these are the ONLY published licensing options. It’s either a one-time, upfront payment model in exchange for the license, or an annual fee that automatically renews on your one-year anniversary. Vendor websites will often list these as the only payment option and discussions with the sales contacts will reinforce this.

Per-User Pricing Model

Popular with software offerings in the 1990’s, before SaaS… This secret, pay-per-user model IS sometimes available under certain circumstances for many licenses. Traditionally, there are different pricing tiers depending on the number of users. For example, between 20 and 25 users pay $X.  More users costs more money.

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Software as a Service models are very popular and flexible options. Even if the solution is not advertised as a SaaS model, many times vendors will allow a license to be sold under this model. This typically involves monthly payments, essentially leasing the software license indefinitely. This model foregoes a large, upfront one-time license payment in favor of much smaller monthly installments.

Value Pricing/Upgrade Later

Some robust solutions will offer a variety of features that many users may not need or require out of the gate. You may anticipate growing and expanding the use of the tool, but are not ready for the attributes offered in the top tier. Working through an agency, you may be able to negotiate value options that require less of an investment. The secret is that some solutions are sold understanding this roadblock and have established paths, expecting to be fully upgradable later.

Multi-Year Discount

Alright, this isn’t really part of the flexible licensing options, but it is included because it potentially provides a significant discount to ongoing maintenance and support fees. These fees vary by user depending on the amount of support required and the fees are normally due annually. Negotiating through your Digital Agency, you may be able to secure a significant discount on these fees by committing to a multi-year engagement or paying upfront. Need flexibility for budgeting reasons? A monthly payment plan can be set up as well.

The common theme here is you should never drop consideration for a solution, platform, or tool due to price. Vendors, along with their Digital Agency partners, are committed to finding a way to help you win, together. Simply let your Digital Agency partner know what your pricing requirements are, and let them negotiate on your behalf. I think you’ll be pleasantly surprised!

If you do not have a Digital Agency Partner, or are thinking about moving to a Digital Agency with deep vendor negotiation experience, consider Bayshore Solutions. Bayshore Solutions is celebrating 20 years of driving digital success for our clients. We are an award-winning, nationally recognized, full-service digital agency.

Contact us today to help you with your next major solution, platform, or tool implementation process.

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