RE: FTE-based pricing

["Hamaker, Charles" <cahamake@email.uncc.edu>]

Toby: Two questions

1. Usage for most of our electronic resources tends to take about 
3 years to level off, so there is growth than a period of 
relative stability. This is a generalization, and of course we 
see some other patterns as well. But it seems to take a few years 
to reach some sort of upper level, though some resources continue 
adding significant downloads over time.

2. What about underutilization?  Or decline in usage? What 
happens in that situation?

Thanks for these innovative ideas.

Chuck Hamaker
Associate University Librarian Collections and Technical Services
Atkins Library
University of North Carolina Charlotte
Charlotte, NC 28223
phone 704 687-2825


-----Original Message-----
[mailto:owner-liblicense-l@lists.yale.edu] On Behalf Of
Toby.GREEN@oecd.org
Sent: Tuesday, October 17, 2006 6:15 PM
To: liblicense-l@lists.yale.edu
Subject: RE: FTE-based pricing

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