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Watch the replay: http://ecast.opensystemsmedia.com/377 Software pricing has always been controversial. As the evidence mounts that open source does not control costs, it has become even more critical. How much is software worth? Who should pay for it? What's fair? Should vendors charge per floating license? Per user? For support only? Runtime royalties? Many business models have evolved over time. Successful policies must accomplish one key goal: the revenue must cover the costs–and then some–of providing the software. However, nobody seems to be upfront and reveal The Dirty Little Secret of Software Pricing. And not understanding that secret costs people, companies, and governments a lot of money. As a long-term vendor of embedded infrastructure software, we feel it's time everyone knew. You see, the secret is (shhhhh!) . . .
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Your systems. Working as one.Your systems. Working as one.
The Dirty Little Secret of Software Pricing
Stan Schneider, CEO
Quotation: John Q. Customer
• Dev seat: $5,339• Floating dev seat: $7,849• Support & maint 20% per seat• Runtimes (per core)
1-100 $559100-1000 $3251000-10000 $22410000+ $145
Fair Questions!
• How much does software cost?• How much is software worth? • Who should pay for it? • What’s fair? • Should vendors charge per floating license?
Per user? For support only? Runtime royalties?
• Where did that price come from, anyway???
Business Model Requirement
The Dirty Little Secret
Software pricing makes no sense. Vendors make it all up. The real goal is to charge in proportion
to how much money you have. Period.
VendorRealCost
CustomerIncrementalExpectations
A Fundamental Conflict
Slippery Slope of
Justification
The gap between the vendor’s real software cost and the customer’s incremental desires cannot be bridged. Justification attempts fail.
How to Justify the Gap?
• Cost to the vendor• Value to you
Vendor-Cost Justifications
Real Cost Analysis
• Valid Costs– Figure out what to build– Develop & maintain code– Match applications to usage– Build awareness– Help users– Operate an organization
• No/Little Cost– Production– Shipping– Restricting your use
Can’t Charge for Real Costs!
Support Cost
Incremental Justification: Everyone must pay for support, because large teams generate more
support load
Reality: Large teams with local experts lower support costs
License Cost
Incremental Justification: Providing you with a licenses costs money
Reality: That piece of paper is just something to count
Usage Cost
Incremental Justification: We charge you for what you use
Reality: It doesn’t cost anything to ship you everything
T&M Cost
Incremental Justification: We charge only support and services hours
Reality: Hours don’t reward excellence or prevent suprises
Sidebar: Controlling Costs
The sole imperative to control software cost is to establish a stable team working on a single code base
User-Value Justifications
Software Delivers Real Value!
Connext Tools
RTI Connext™: Edge to Enterprise
RTI DataBus™
ConnextMicro
Pub/Sub API(DDS subset)
Small Device Apps
ConnextDDS
Pub/Sub API(Full DDS)
DDS Apps
ConnextMessaging
Messaging API(DDS++ & JMS)
General-Purpose Real-Time Apps
ConnextIntegrator
Adapters
DiverseApps/Systems
Administration
Monitoring
Recording
Replay
Persistence
Logging
Visualization
API Usage Value
Incremental Justification: We charge per developer using our API, because the software
brings value to that developer’s code
Reality: The value is really to the project
Runtime Value
Incremental Justification: We charge per CPU, because that shares the risk
Reality: The bigger risk is estimating shipments
Support Value
Incremental Justification: You only pay if you get value from support
Reality: Support is a small part of the value received
Bundle Value
Incremental Justification: We charge per “product”, because you get more value with
more product
Reality: You need what you need
So…What Makes Sense?
The Secret (Almost) Makes Sense!
• Values are better metrics than costs• The real value is reducing risk
– Bigger investment => more risk– More risk => more real value
Vendors should charge in proportion to how much you are investing in your project
The Real Key: Simple, Open & Fair
• Pricing should be Simple– Base pricing on a single project metric
• Pricing should be Open– So you know what you may pay
• Pricing should be Fair– Map charges to your investment– Charge support only to those using it
Why Do Vendors Justify?
RTI Pricing: Simple, Open, & Fair
• Charge only for developers• Support: $4k/name• Open Community Source Connext DDS: Free
– Windows, Linux, Full source– Latest version– Support: $160/hr
Connext DDSConnext Tools
Connext MessagingConnext Tools
Connext Professional
Connext MessagingConnext Integrator
Connext Tools
$1,995/yr $2,595/yr $2,995/yr@mid volume
RTI Model Summary
• Free, full source & binary DDS for community– No cost, no hassle, no strings– Latest version– Share source & binaries– Professional T&M support
• Low-cost commercial product for projects– Tools, advanced functionality, warranty, platforms– Simple, open, per-developer pricing– No royalties or deployment fees
No Bull
About RTI
• Market Leader– Over 70% DDS mw market share1
– Largest embedded middleware vendor2
• Standards Leader– Active in 15 standards efforts– OMG Board of Directors– DDS authors
• Real-Time Pedigree– Founded by Stanford researchers– High-performance control, tools history
• Maturity Leader– 600+ designs– 400,000+ licensed copies– TRL 9 1Embedded Market Forecasters
2VDC Analyst Report
2008
Global Support and Distribution
