MS Software Assurance Program - Here's some numbers

Ok, just did the math for us and thought I'd pass it along. Also, see below
for the response I received from MS when I presented them with "My" numbers
...

We purchased a block of MS-Office-2000-Premium licenses for $ 379.00 each.
List price was $ 622.00 for the "Retail Boxed Product". Needless to say, at
the time I was playing two different vendors against each other on pricing
and ended up with a good deal. ( Yes, these are legal licenses not "Fake"
ones. )

Today I received a quote for Software Assurance for this product. Mind you,
you CAN'T get SA for MS-Office-2000-Premium. MS doesn't offer it. So, my
quote was for MS-Office-Pro w/frontpage on one SKU and MS-Publisher on a 2nd
SKU.

Total price for SA works out to $ 339.23 for a TWO year maintenance
contract.

So let's see ... $ 339.23 / $ 379.00 = 89.51 % of PO price or 44.75 % PER
YEAR !!!

And we thought EPICOR's maintenance contracts were fun.

Of course, as you will read below, MS likes to play the game that the SA
maintenance percentages aren't that bad since as a percentage of LIST price
the numbers aren't so bad.

Then again, when was the last time you paid list price for something ? ( You
didn't did you? :-) )

For us, this all translates into ... If we plan on upgrading our Office-2000
software up to Office-XA within the next two years then the SA program would
allow us to "Purchase" Office-XA for approximately 10% less then we paid for
Office-2000.

Of course, for us, it will probably be 3 or 4 years before I have PC's that
are fast enough to run XA ...

Ok, I'll admit to finding this all somewhat amusing while at the same time
just a bit perplexing ...

On a final note. If you are new to process of negotiating pricing for
software packages, if there is a "maintenance" contract normally associated
with the software you are purchasing do two things. First, find out if the
percentages are based on price paid or "list" price. If the vendor tries to
sell you the "list" price concept ... get up and walk away from the table.
Dropping the percentage down to a percentage of price paid should be the
first thing they give you IN WRITING. ( I also like companies that do the
"List" price thing based on the "Current List" price which they can then
increase every year if they choose to. ) Secondly, LOCK in the percentage
number or put a clause in the PO that says that the dollar value you pay for
maintenance CANNOT increase more then 3-4 % per year. Unfortunately, none
of this applies when you are dealing with MS. They're in their own
universe.

Todd Anderson

From hear down is 100% Microsoft - enjoy -

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The cost for SA on most products is approximately 25% of the full
license cost per year, which is consistent with the pricing in the
license model we had prior to the introduction of Software Assurance.

Microsoft prices for new licenses are often lower than the prices for
new licenses from competitive software vendor products. Therefore, the
yearly maintanance cost, when expressed as a percentage of the new
license cost is higher than that of competitive product pricing, when in
fact the TCO for the Microsoft solution is often lower than that of the
competitive solution. We can compare specific solutions side by side
and do the math if you would like.

Based on our conversation yesterday, I believe your company had taken
advantage of the promotion through which customers could get Office
Premium for the price of Office Professional. The full cost of Office
Premium was $622, and Office Professional was $466, which was I assume,
the price you paid. If you compare the SA Enrollment cost of $379 to
the Office Premium price of $622, the percentage is 60% for two years.
(Most of the upgrades are in the 50% ballpark, or 25% per year.) All
this is based on Microsoft pricing; the same math on reseller pricing
may show a different percentage.

Also, based on what I understand about the typical usage in your
organization, Office Premium is possibly more than what your users need.
You also have the option of enroll your Office Premium licenses into SA
for Office Professional (without Frontpage) for $263. The sku for this
items is: 269-05823, Office Pro Win32 English SA OLP NL, $263.