There are many ways to mitigate the risk of paying too much for software licenses—but you can't expect vendors to help you much on this front. Even as many software offerings have drifted towards commodity status, it seems that many vendors are working hard to bolster license revenue by making fee structures ever more complex and non-standard. Many of these license structures heavily favor the vendor interests and tend to inflate costs beyond what is necessary and reasonable. For example:
- Some use-based licenses add a premium for peak periods, complicating cost calculations and potentially producing unexpectedly high fees
- Enterprise licenses base pricing on tiered or target numbers of users, rather than the actual install base. In such scenarios, companies can end up paying for unused seats.
- Vendors offer discounts for prepaying years of maintenance fees (e.g., three years) at today’s “lower” prices and usually based on projected levels of use. In reality, software fees generally fall over time, due to competitive pressures and increasingly cheap base technologies. As a result, locking in fee rates can commit companies to paying fees that are, over time, higher than rack rate.
The worst part about these structures is that customers feel they have no choice and must accept disadvantageous license and use-auditing structures in order to continue using software products.
