What's the rationale of not simply disclosing the license fees for a commercial libary or tool?

Question

Some companies selling software or libraries simply put their licensing model on their web page and be done with it. (Many also contain a disclaimer that there are volume discounts and special arrangements possible.)

Other companies (most notably those placing themselves in the "enterprise" market) don't disclose their fees, some don't even disclose their licensing model! When you are interested in their product and contact sales, you then discover that their price calculation is simply a per site / per developer / per core / per whatever thing and they could just as well have put that info on their webpage.

Can fellow programmers give me an insight as to why I have to exchange 3 emails and 2 phone calls with a sales representative to find out if a product even remotely fits into our development price tag? I have found that me (and some of my co-workers) are extremely reluctant to even evaluate a product that doesn't disclose it's costs up front, so I cannot understand why anyone would do that for "simple" products - that is for libraries and software that really doesn't have negotiated license fees.

Note again: I'm talking about single-installation software or libraries that are licensed per-site or per-developer and not about stuff that requires complicated licensing agreements.

Answer 1

It's quite simple.

1. It initiates contact between a potential customer and sales.
2. They can then vary their price as they please based on any criteria you care to mention, without affecting the price expectations of other potential future clients.

Answer 2

They want prospective clients to make contact with sales people. The prices in these cases are so criminally open ended as well that they don't want other customers to know that they gave a STEEP discount to Oracle where they screwed IBM.

Developer aversion to these types of pricing models is typically because it is extremely painful being on the phone with sales people as they will try to take up as much of your time as humanly possible. They will want to perform demonstrations and prototypes when the developer is just concerned with the technical aspects and support of the product.

This is known by sales people and it is okay by them if developers are turned away by it because that is not who they are targeting anyway. They typically like to target application managers and sell them the idea. Once the idea is sold on them they can typically push the technical evaluation portion on the engineers which by that time means that the sale is almost official barring some extreme incompatibility issue.

Answer 3

Words cannot describe how much I hate such a sales model. I too simply bypass any product where the costs are not made available without dealing with a salesperson.

A few reasons I see that companies do this:

• They are dirtbags, and want to milk every last penny they can from you. And the best way to do that is via a high-pressure salesman.

• They know they cant compete at their prices, so they rely on high-pressure sales to close the deal instead, figuring if they can 'get a hold of you' they'd have a better chance.

• They are backwards and refuse to embrace technology. Thats not the way they sold stuff in the 1970's, and by golly, thats not how they do it now. I wouldnt trust technology from people like that.

The thing is, this approach is just bad marketing. The more difficult you make it for people to give you money, the more potential sales you lose. I've seen it first hand for companies I've done work for. But they dont change.

There are of course services/products that cant provide a fixed price because every case is customized. But I think when thats the case, its pretty clear. But using the forced sales pitch approach for something like a development library is total BS.

Answer 4

Many times the reason is they do not have a set licencing scheme. For microsoft it is easy they have a built in customer base. For someone new or smaller in the market it is not that easy. It is much easier to cut a deal to a smaller firm if you do not have your price out there for the big guys. It also allows them to filter out their clients they do not want. A bad client has unreasonable expectations and demands alot of time. You can price higher for those clients and at least recoup expenses.

There is also the factor that if you see a part of the licensing up front that scares you then you may run away with out any investigation of the product. Once you have put the work in to do the research and are ready to pull the trigger you are less likely to balk at that part when you already have time invested.

There are few truely one size fits all solutions for enterprise. Most of these solutions come with a certian amount of customization. It is difficult to provide a one size fits all price for a product that requires customization per client. Some clients may use the out of the box version. Others may need extensive customization. Those customizations have Development and support costs that the out of the box solution does not.

Answer 5

"Contact us for licensing information" means "The license you want will cost you exactly the amount you can spend without going bankrupt".

The goal is to have a sales manager carefully feel you up and estimate how much you're worth, then charge you the maximum price you can cough up. The advantage is that this usually works; the downside is that you lose customers who won't bother calling you.

Answer 6

It depends on the strategy of the company.

If you have decided to appeal to customers as the lowest-cost option, you will blare the price all over your web site - just like a discount market.

If you are instead selling on the quality, feature set, configurability, custom set-up/services etc. of your offering you may well decide to charge more than the low-cost alternative, and aim to convince customers that yours is nevertheless the better choice as your overall value and ROI are higher. However, you don't want them to dismiss you as an option upfront before you have a chance to establish your superior value, so that is what you lead with on your web site - just like higher-end bricks and mortar stores.

If you are the lowest-cost option AND you don't advertise your price.... then you're just dumb :-)

Dominic