Re: oracle EE pricing

  • From: Nigel Thomas <nigel.cl.thomas@xxxxxxxxxxxxxx>
  • To: Richard.Goulet@xxxxxxxxxxx, Oracle-L Freelists <oracle-l@xxxxxxxxxxxxx>
  • Date: Mon, 18 Jan 2010 14:06:50 +0000

Dick wrote:
> why [does] Oracle place the cost of it's software as high as it does...?

Dick:

It's a revenue maximisation thing and depends on the "price elasticity of
demand <http://en.wikipedia.org/wiki/Price_elasticity_of_demand>". Put the
cost up a little, and most of the existing customers will pay the extra, but
a small % will give up and move (and the number of new customers will
decline slightly). The supplier aims to minimise the churn in various ways
(some benign, some rather less so):

   - provide fantastic service/support
   - make the product better faster than the competition in some way (eg
   faster; support more data, etc)
   - bake in non-standard features so it's hard to switch
   - encourage the availability of a skills pool in the market

Potential hurners have to decide: shall I pay just a little extra or is it
worth the one off cost of rewriting my apps so I can move to
DB2/MySQL/whatever. Oracle has to try to choose the tipping point where they
get the best net result.

Some businesses will spend extra to have inherently portable apps (which
often then run like dogs, as often mentioned on this list - but that's
another story).

Now, the remaining questions are just:

   1. how do the sums work out for your business (will you stay or will you
   go now) - that varies by organisation
   2. how do the sums work out for Oracle (ie, have they got the pricing
   right) - that's impossible for us to know, and pretty hard even for Oracle
   to be sure of

Cynical, but true. It's harder for Oracle to do this than (say) Amazon or a
telco who can tailor their pricing from day to day or region to region to
see what works best, then rapidly roll out to the wider market . Oracle's
(list) price has to be pretty stable and transparent (not least for
antitrust reasons)....

Regards Nigel

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