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The Five Qualities Of Good Software Pricing

An Evaluation Framework To Test How Potential Buyers Will React To Your Software Licensing Model

July 23, 2008

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Why Read This Report

Poorly designed software pricing can limit sales opportunities, extend sales cycles, restrict upselling, and reduce maintenance renewals. Forrester has identified five qualities of good software pricing from talking with hundreds of software sourcing managers and several leading software pricing VPs. Many software licensing models encounter buyer resistance because they are based on inside-out thinking, stick stubbornly to obsolete metrics, or overemphasize the immediate list price calculation aspect, instead of focusing on defining the license's scope. Product managers can make the sales process easier and preserve upsell potential by designing and publishing a pricing and licensing model that is value-based, simple, fair, and future-proof. Forrester has developed an evaluation framework that will help clients assess the detailed criteria behind these five dimensions to rate their pricing models. This framework will help product managers balance the dimensions' often conflicting demands and create product pricing that potential buyers will embrace.

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Table of Contents

  • Software Buyers Continually Complain About Pricing Models
  • Good Software Pricing Displays Five Qualities
  • Use Forrester's Evaluation Framework To Prioritize Improvements
  • RECOMMENDATIONS

  • Check That Your Pricing Demonstrates Forrester's Five Key Qualities
  • WHAT IT MEANS

  • Innovative Yet Sound Pricing Will Hasten The Demise Of Obsolete Metrics
  • Supplemental Material
  • Related Research Documents

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