Thursday, March 26, 2009

The cable company doesn't charge you $10,000 for the box

Seat-based software licensing has to stop

As I told a colleague at CMS Watch, the cable company (very wisely) does not charge you $10,000 for a cable box. Instead, they give you the cable box (and even install it for free, on site). Then they charge you a nominal monthly fee (if $100 a month, plus or minus $60, can be called nominal) for content. After 8 years, you've paid the cable company $10,000. But you've paid them in a manner that's acceptable to you. And in the meantime, you're free to switch to something else, or cancel.

IMHO, the way to price enterprise software going forward is to charge a monthly subscription fee for support. That's right: give away the software for free. Charge only for support. And maybe charge something here and there for high-value specialty add-ons (your connector-du-jour), but mainly for support. To account for scalability, maybe set fees on a per-server or per-installed-instance basis (but certainly not on a per-CPU or per-core basis). Install an instance of XYZ CMS on one box, pay one monthly fee. That's how it should be.

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