Today's Software Pricing Transparency
I saw this in the 7/9/07 issue of Washington Technology ("A Case Full of Money" by David Hubler):
"Because PeopleSoft did not give GSA (General Services Administration) accurate pricing information, it negotiated higher prices for its products and services than it would have obtained if GSA has known the truth"
The article then reported that Oracle (who subsequently bought PeopleSoft) settled out of court for $98.5 million to avoid court action under the False Claims Act.
Software vendors should realize that today's Internet is a great information gathering tool for software buyers. Besides all of the product information out there, one can find all sorts of pricing info too. Info such as market share and pricing data. Look at the anti-trust papers filed in the PSFT/ORCL combination. You can find all sorts of license information there and elsewhere.
I made a career out of scouring divorce proceedings, civil suits, IPOs, anti-trust filings, secondary offerings, etc. Today, I can do this far faster and more efficiently from my laptop with an active Internet connection. Now, the amount, velocity and power of such information is tremendously useful for researchers, analysts, litigators and prospects.
If you sell software, know that:
- your prospects know more about your software pricing than you suspect. The Internet will virtually assure that they'll know even more in the future.
- competitors may know about your software and its pricing than you want them to know. Some of these firms are expert at interviewing your disaffected employees and siphoning out all kinds of great information. Are your employees really happy and are they all under enforceable non-disclosures?
- erroneous data provided to governmental bodies will be detected.
- too much software is a commodity today and people who buy commodities look all over for pricing deals. If you sell via low TCO (versus high ROI), you're really going to find price-conscious buyers.