I will leave it to other SW vendors to address your issue about how they increase the price of renewal maintenance and upgrades.

I have never seen a company use the CPI as a way to justify price increases. And I have probably dealt with a couple of hundred companies directly and a thousand more indirectly...

My sense is virtually no company (except perhaps in commodity businesses) uses the CPI anymore. (Not even the car companies who used the CPI back in the '60s and '70s)

You would be better off raising prices for software and pegging maintenance and upgrades to the (rising, current) prices.

Think about how you reinforce the value your software offers. Does pegging higher prices to the CPI do it?

Hope this helps.

Jim Geisman

[COLOR=DarkRed][B][URL="http://www.softwarepricing.com"]Software Pricing Partners, Inc.[/URL] [COLOR=Black]+508-647-0330[/COLOR][/B][/COLOR]

Crabby, yes, and not without reason. I hate most of the systems that I use, but what if your business has different values and is very value-concious? There's something missing here.

If CPI is 3.5/4% and I look back at this in 5 years time - I am effectively losing a fair whack of my profit, assuming most of my costs are fixed (and rising).

Problem:
- if software doesn't deliver value they won't renew
- if it does I can't maintain my profitability

There's not much upside here. Software is a commodity, but the real costs are in keeping software relevant, updating it for new tech, etc, support. And sometimes this is more expensive than creating software in the first place.

Now, show me another business that won't increase prices over the next 5-10 years. Of course the real problem is this: software companies have ridden the wave now and created the problem.

We create great software, and I do not want to see my profitability eroded by an industry that hasn't delivered. Point is, if you can't charge, you can't deliver. In summary:
- if they don't buy more licenses, you get trapped into an agreement that becomes less profitable by the year, and probably more onerous
- if they do, they will certainly initiate the "bulk" purchase order. Lets just make sure when we get there we are on a good base price, cause we'll get negotiated down anyway.