Software licensing: Ready for hardball?

• Per processor Fees based on number of processors used to run the software (Microsoft, Computer Associates)
• Per megahertz Similar to per-processor-based pricing (Sybase)
• Mips Price based on how many millions of instructions per second the processor running the application is able to execute; used in the mainframe environment (IBM)
• Per seat Considers how many desktops have software installed on them (Microsoft, Symantec)

Source: Robert Frances Group

• IT executives experiencing problems persuading vendors to negotiate software prices should try to find cost savings in areas such as service and support; ask for free training and manuals or other documentation sets, access to higher-level support channels, and additional on-site personnel.
• Understand a vendor's pricing model before working with its sales representatives; ask sales representatives to use vendor-provided, PC-based financial models to compare old and new pricing models.
• Continue to use traditional negotiating tactics such as lengthening the contract term, bundling software offerings with other software or server procurements, or opening the bidding to competitive software suppliers.
• Remember that it is difficult to obtain consistent pricing for purchases destined for countries outside the United States; make it clear to the vendor early in any negotiation that the agreement must be for the software's use worldwide; then, negotiate an enterprisewide agreement that covers the purchase, usage and maintenance of the software at all sites worldwide; negotiate exchange rate clauses to insulate your enterprise from fluctuations in currency exchange rates before the purchase is executed.

Source: Robert Frances Group