[6d0debc071]

Something I'm not sure that you've thought of that might be one way to think about how some people assess part of the value:

Just as a hypothetical boundary case: Why should I pay you to do nothing forever? That's effectively the question that gets run in my head when I look at SAAS.

That sound quite insulting, so - just to point out again: Boundary case! I don't think you actually are doing nothing forever. However, if they're effectively employing you, and perhaps have a fairly static need. What do they need to employ you to do?

For a lot of new software it's meanest competitor is its last version. The version that comes out four years down the line is not that much better, generally speaking. People talk about companies upgrading, but a lot of them don't - at least not on the sort of time-table that would justify SAAS. In that sense you'd have to sell me on the future of the software or on the idea that my needs are going to change rapidly so I'll need software to change rapidly with them. If you're going to be making it significantly better year on year then I'd probably go with SAAS. If I'd pay for the software on a SAAS plan, before I'd upgrade normally though, then it seems like a bad deal.

It strikes me that in a relatively static environment the thing to talk up is going to be what you can do for them in terms of support. And they're going to have to compare the costs of supporting the software themselves to the risk that they take on in using your solution (your company going under, etc.) Much of which is very difficult to quantify and is made a greater concern by our tendency to be fairly risk-averse.

[njx]

We provide annual subscription for our software (http://www.infocaptor.com) but the price for subscription is significantly lower than if the customer decides to go the perpetual route with optional upgrade path. Some do ask for perpetual license and most of them are happy with the annual subscription as it behaves like an installment plan.

In either case, the customer hosts the software internally within their intranet/firewall.

So offering two price points perpetual and subscription will let the customer see the value and help them make better decision. You have to constantly make an effort to show value in your software at the pricing you offer.

[6d0debc071]

I don't see what that has to do with what I said.

Assessing it on its own merits however:

The software just is worth X to me - what I can do with it - and you're trying to guess the price, and perhaps more importantly the surrounding conditions on which I'll accept. What it's worth to me is the upper boundary, I ought never to pay more than that - what it's worth to you is the lower boundary, you ought never to accept less than that (probably what it cost you to get vs your leverage advantage - most likely scarcity) - and what's in between we can deal over. If you have two estimates, one really large and one really low, for what's essentially the same thing, that implies to me that you just don't know what a fair price for what your software does is.

If I know that you consider something to be absolutely cheaper then I also know that your bargaining position is likely dramatically wider than you might like to convince me it is. I know you can go much lower than you do.

As a strategy, having two prices wouldn't work on me. It's too fishy. Perpetual being bad doesn't make subscription good. It just means you value someone choosing sub and are prepared to offer them a substantial discount to get them to do it. Or to put it another way: Why are the permanent terms so much less advantageous to you that you're prepared to charge 'significantly [more]' for them before you agree? My instinct says there's a trick there - you wouldn't be trying to get me to go with the cheaper option so strongly unless there was some long-term advantage for you in doing so, data lock-in perhaps, or the knowledge that people don't, in practice, upgrade as much as you hope.

Why do you value someone choosing sub? If you're trying to get the best of a cost/risk balance in doing so, then it seems like your interests are inherently opposed to theirs.