RE: FTE-based pricing

[<Toby.GREEN@oecd.org>]

We've been thinking about usage-based pricing for some time as a 
means to meet the needs of smaller institutions who can't afford 
to pay the same as larger institutions. We don't think FTE-based 
pricing is the solution because determining the size of a user 
population does not necessarily help determine a fair price 
because you might get very high usage from a small population - 
or vice versa.

The challenge is to come up with a pricing model that fixes a 
price for a subscription period (because no-one can afford to 
sign a blank cheque) but at the same time reflects the actual 
usage of a resource in the long run.

We think the solution comes more readily if one thinks about the 
long run rather than just about one subscription period.

Our thoughts are gelling around this idea:

1. establish an entry price, that everyone would pay. This would 
guarantee a certain level of income for the publisher and would 
be affordable even for the smallest institution. It's possible 
that this entry level price could be tiered to institution size.

2. when discussing a new sale, the publisher and librarian would 
agree on a likely level of usage - based on free trial access and 
experience of other cases - and use this to agree the 
subscription price for the first year. (The publisher would 
probably have a price list tiered by usage level.)

3. After six months, the publisher and librarian would review the 
usage level and agree the first renewal price. At this time new 
content acquired by the publisher could be offered into the 
package (and vice versa if they've lost content!)

4. Six months into year 2, the publisher and librarian would 
review the usage level again, and agree the second renewal price.

5. and so on. Once usage levels have settled down, the review 
process could be more automatic.

By having an entry price the publisher has some guaranteed income 
and the librarian is making a level of ongoing commitment. 
Reviewing six months ahead of renewal would give the librarian 
time to manage their budget. Publishers and librarians may agree 
that price rises and falls would be capped from one year to the 
next - to help prevent budget problems on either side. Over time, 
the relationship would develop so that unexpected spikes and 
troughs of usage would be ignored, because the goal is to work 
together over the long-term.

Of course, defining 'usage' would become critical and Counter 
will be helpful in doing this, as will systems like MPS's 
PublisherStats.

Toby Green
Head of Dissemination and Marketing
OECD Publishing
Public Affairs and Communications Directorate
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