Pricing of products based on Floating Licenses

Hello Everone,

I think we need a reality check concerning pricing for products that use a floating license instead of activation. In discussing the issues internally, I got different opinions:

- Some think that a floating license should be slightly more expensive that a single activation product key- Some people think that a floating license should be 10x the price of a single activation product key- Nobody thinks that the price should be equal or lower than a single activation product key

The rational behind an increased price is that a floating license is more flexible that a single product key while also requiring more support during installation and use. The rational behind a 10x price tag is that FL would target large enterprises that want to share the product over virtual infrastructure and would be willing to pay the price to do so. So the value associated with that added flexibility as well as target customers is where difference of opinion gets wide.

From my experience:- FL can be as useful for small companies as for large one- We should not dismiss small companies that require a single floating user for example- Price should be set a bit higher for FL (20%?)- Larger companies do share more and more using terminal services-like or sessions-based infrastructure- Larger companie software budget is not necessarily growing, but still need to get the software to all users. That's why they implement virtual environment in the first place (to save money).

What does the community think? How do you price your products that use floating license compared to activation and what reasoning made you arrive at that pricing?

Thank you all for sharing your thoughts.

Hey Francois,

The industry tends to charge more for floating licenses (a.k.a. "site licenses", a.k.a. "volume licenses") than they do for per-machine or "single" licenses.

A few examples come to mind (I'll limit myself to talking about companies that aren't yet LimeLM customers): PTC Pro/Engineer, Matlab, and Microsoft Volume Licensing.

In each of these cases "single computer" licenses can be bought easily from their stores or from their resellers. Also, in each of these cases the "volume / floating" license end-costs are a good deal more than single license costs. Unfortunately there's not a whole lost of open data on any of these companies pricing models.

- Price should be set a bit higher for FL (20%?)

About a decade ago I discussed the costs of Pro/Engineer & Matlab with someone who did the purchasing for the local University's Mathematics & Engineering departments. He was in charge of buying licenses to cover nearly a thousand computers throughout a few buildings. And of course, like any University, there wasn't a ready stream of money to just go buy a thousand individual licenses and install a copy on each computer. So he opted for the middle ground of buying around 100 "seats" of licenses (or 100 "slots" in our TurboFloat parlance).

Each of these "seats" cost -- if memory serves -- around 2x the cost of what it would've cost him to buy "individual" licenses for 100 separate computers. And of course that was the lower "education institution" price. The corporate price for floating licenses was more -- unfortunately I don't know how much more because the prices weren't and aren't readily available.

Microsoft tends to go in a different direction. They offer "volume licenses" cheaper than the individual licenses, but they require you buy a minimum of 5 licenses to qualify. Also, complicating things a bit, Microsoft offers volume licensing that can be installer per-machine or using floating licensing. Here's what little public information I could dig out about their program:

Is there a mininum number of licenses that must be purchased under a Volume License Agreement?

Yes. The minimum number of licenses required for a Volume License Agreement is five (5). However, the five licenses can be made up of any combination of products. Quantities of less than five can also be purchased economically by making up the additional license using an inexpensive "make up" product SKU.

Once the initial Volume License Agreement is in place, additional licenses can be added to the Agreement in quantities of less than five. For example, if a company purchases five Office 2010 Professional Plus licenses under a new agreement, three months later the same company can purchase one additional Office 2010 Professional Plus license under the same agreement. The minimum license number therefore only applies to the initial Volume License agreement.

So, different companies have different methods of pricing, but all tend to agree that a higher price is in order (either through higher pricing or through a greater "minimum" order).

I hope that's of some use to you.

Hi Wyatt,

Yes, you certainly do provide insight. I must admit to severely lacking in marketing experience so the more info we get the clearer it will become, hopefully. I was wondering if any of LimeLM users shared or would share their experience also?

We also started some research online for products offering floating licenses and so far we have found three and the pricing is between 40% and 50% higher than the single user, which is more in-line with what I was thinking.

Thanks Wyatt.