Mixed fixed and percentage pricing?
Most support offerings are priced using either a percentage of the license price or fixed pricing. But there’s no law that says you cannot mix the two. A typical example would be a high-end offering that includes account management, let’s call it Platinum, that could be priced as (for instance) 20% of license PLUS 75K, where 75K represents a portion of an account manager’s time.
Caveat number 1: By using fixed pricing you may well be leaving money on the table since fixed pricing does not scale. So if a very large client selects Platinum you would need to assign more than 75K’s worth of an account manager to it while you are only taking in the 75K. Not good.
Caveat number 2: While a “percentage plus fixed” pricing scheme is not terribly complicated it’s not as straightforward as a pure percentage or pure fixed price, so you expose yourself to unintentional (and, perhaps, intentional) pricing errors that create bad feelings with customers during the initial transaction and renewals. This is not good since you want to treat your Platinum customers with great care. I’m a great fan of simplicity and mixed schemes are never the simplest.
Caveat number 3: If you are watching VSOE compliance (and you should) you may be told by your Finance team that mixed pricing schemes are not compliant. That’s not an entirely true statement, since VSOE mandates consistency of pricing across comparable customers, regardless of the pricing scheme, but certainly the existence of a mixed pricing scheme makes it more difficult to establish VSOE for Platinum, so there is indeed a technical reason to avoid mixed pricing.
Bottom line: use a mixed pricing scheme where it makes sense — that is when it doesn’t unwittingly create a situation where your largest customers are getting too much for too little.
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