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Just looking for some examples on what other people use as a pricing model for their enterprise software.

Does anyone charge based on # of employees (not # of actual users)? We figure the # of employees is a way to measure the size of the company and the potential benefits our software provides to them.

I know many people base it on users but we'd like them to have the ability to create as many users as they want without us re-adjusting the price. Secondly, it will bring the price down significantly.

I guess we're basing it on "potential users" but I'm worried the customer will say "well we only need it for x number of users". We could not tell the customer what the price is based on but I do like to justify the prices.

Perhaps a bracket system would work?

Any thoughts or advice?

Thanks.

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4 Answers

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Big Tuna, in my experience I have seen this issue handled by offering a per user price along with a "site license" price. This works well if most of your customers that would buy the site license are about the same size. I have seen this strategy used to sell software to public schools.

If you are selling to sites that could vary wildly in size, you could have 2 or 3 levels of site licenses. $x for 50-200 users, $y for 201-1000, and $z for 1000+.

Do you have support offerings? That can be a good way to equalize things as well. You have your base sales price which is the same for a large organization and a small organization, but the large organization will require more support hours, increasing the size of the sale to the larger organization.

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up vote 2 down vote

By definition (enterprise software), your project is probably too large or specific to get simple answers here, so instead, I'll redirect you to two references that may help you.

First is a book that is now my reference in software pricing. I never read anything like that anywhere. The authors are real pricing experts.

The Strategy and Tactics of Pricing (5th Edition)

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The second reference is something I discovered few weeks ago. It's called the Business Model Generation. It has been co-created by 470 strategy practitioners. It's a pure wonder. The book every startup should have in his library.

enter image description here

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up vote 1 down vote

I would never create a price structure that allows for unlimited use.

Often, "enterprise" software vendors will use a two tiered approach:

  • A per-user model that gets ridiculously expensive and difficult to track
  • A per-cpu/per-server model that is expensive, but more sane.

Both of those approaches work when users are the unit of value for the customer. For other types of services, the metric might be tied to performance (24 hr service vs. 3 day), response time (ie. service contracts), storage, etc.

The bigger the vendor or more critical the product is to the customer's business, the more onerous the pricing/contract terms become.

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up vote 1 down vote

A lot of HR-focused enterprise/business systems charge based on the number of users. For comparison, I would check out ADP, WorkDay, and Silk Road. Last time I called them, they all did per-user licensing but that was a year ago.

Having been on the other side (purchasing manager + application owner), we eschewed vendors who did not offer an unlimited license because we had a rapidly growing business. Some vendors, like ADP, have the ability to charge whatever they want and they do, but if you're just coming to market you may want to stay flexible so that you can capture smaller companies (10,000 employees or less).

When you charge on a per-user basis, you're basically marketing yourself as an interim solution until your customer outgrows you. The exception being guys like ADP who can just do whatever they want and you basically have to take it.

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