That seems pricey to me, too. I would do two things.

First take a look at Microsoft's SPLA (Service Provider License Agreement) pricing relative to a dedicated license. SPLAs are described here.

If you call MS, you can get a general idea of the pricing. I recall it being quoted as $X/month and was something in the order of 25% of the single license price.


Second, I would have the vendor give you a SaaS price (from which the hosting fees can be deducted). The quoted price should be a $amount per month not a percentage of your revenues.

HTH

Jim Geisman

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

1500 of your prospects looks a lucrative market for you to go after but 20% is too steep a cost that you can commit to your database partner. Few things that I wanted to add here...

1. I am not sure as to how your database partner can look at 20% when they do not really know 20% of what, as your pricing is not yet done.
2. There are a whole bunch of things that you need to consider when you host your software and start serving the long tail of your market and they include hardware and network infrastructure management, license management, billing, security and analytics. On top of this, you will commit to an SLA whenever you sign up a new customer
3. Your pricing needs to factor all these expenses and ensure that you are actually in a position to service your long tail.
4. This brings us to the fact that SaaS is more a business and marketing issue than being a technology issue.
5. It would be ideal for you to consider some SaaS hosting specialists and possibly you should engage consultants who can do the SaaS pricing for you. This way you would be able to negotiate better with your database partner as well.

Thanks and Good luck with your moving to SaaS.

Sabapathy Narayanan
Aspire Systems
http://www.aspiresys.com
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