RE: oracle EE pricing

  • From: "Goulet, Richard" <Richard.Goulet@xxxxxxxxxxx>
  • To: <nigel.cl.thomas@xxxxxxxxxxxxxx>, "Oracle-L Freelists" <oracle-l@xxxxxxxxxxxxx>
  • Date: Mon, 18 Jan 2010 09:14:32 -0500

Nigel,
 
    Well that's probably good for an economist (which I don't think you
are), but in reality it just follows the old proverb, re-written for the
times:
 
    There comes a time when you just shoot the investors and get on with
the project.
 

Dick Goulet 
Senior Oracle DBA/NA Team Lead 
PAREXEL International 

 

________________________________

From: Nigel Thomas [mailto:nigel.cl.thomas@xxxxxxxxxxxxxx] 
Sent: Monday, January 18, 2010 9:07 AM
To: Goulet, Richard; Oracle-L Freelists
Subject: Re: oracle EE pricing


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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