For Windows and Linux managers, buying IBM i third-party software can be confusing. IBM i software pricing has many similarities with pricing models in other environments, but there are some IBM specific practices that affect pricing.
To make the most of their buying experience, here are two areas that Windows and Linux managers should understand about how vendors price IBM i third-party software.
Different pricing structures
IBM i third-party software packages have several pricing models that aren’t present in Windows- or Linux-based software. Some IBM i software pricing models you may run into include:
- Processor group (p-group) pricing – The software price is based on the processor category that your machine belongs to. P-groups designate increasingly powerful IBM Power system hardware starting at P-5 going up to P-50. The higher the P-group, the more powerful the machine…and the more expensive third-party software can become. Once the most popular way to price IBM i software, P-group pricing is still used but it is giving way to other pricing models.
- Commercial Processing Workload (CPW) pricing – CPW is an IBM-specific way of measuring machine performance against a typical workload in a commercial environment. Different IBM Power hardware configurations are measured and assigned different CPW numbers. The higher the CPW, the more powerful the machine and again, the more expensive IBM i software becomes when using this pricing model. CPW is strictly an IBM Power systems measurement and it isn’t used outside the IBM i and AIX worlds.
- CPU pricing – Similar to P-group pricing, some vendors charge by how many CPUs you’re running on a specific machine. Adding a CPU or moving your software to a more powerful machine can trigger a “revenue event” (aka price increase).
- User pricing – Some IBM i software vendors go with user-based pricing, where the software is priced in different tiers according to the number of people using it. Sometimes the vendor will have named user pricing, sometimes not. One advantage is that user pricing isn’t machine dependent; you don’t get hit with a software transfer fee when you move the software to a more powerful machine. One disadvantage is that as your organization becomes more profitable and starts adding more users, you’ll pay more to purchase software.
- Metered pricing – Some vendors and managed service providers (MSPs) are starting to use metered pricing, where you pay by how much you use the software. This model is gaining traction in cloud-based environments as MSPs are starting to bill customers for actual usage.
These are some common ways IBM i third-party software vendors price their software that may be confusing to Windows and Linux managers. Fortunately, these models aren’t used by all IBM i software vendors. There are many vendors including DRVTech, who believe in simpler pricing models that focus on straight-forward pricing, level software maintenance fees, easy hardware upgrade fees, and modular pricing. Look for those qualities in your vendor’s pricing model to help insure a fair price.
Yearly software maintenance
Like most vendors, IBM i third-party vendors charge yearly software maintenance to defray the continued cost of development, to provide technical support, and to allow you to access software upgrades.
IBM i third-party software maintenance costs generally run around 20 percent a year of the original purchase price, meaning you can expect to pay for the package a second time over five years. But be careful. Vendors sometimes hike their yearly maintenance charges to keep up with inflation, to match 20% of the price they are currently selling their software at, or to improve their cash flow.
Small yearly adjustments constitute a stealth price increase and you should check your yearly maintenance bills to insure the vendor isn’t unnecessarily over-charging you for software maintenance.
Many vendors including DRVTech, freeze a customer’s annual maintenance cost and keep it at that level for as long as the customer owns the software. I consider this a best pricing practice and encourage you to find vendors who provide this maintenance option.
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