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Re: Costs of Electronic Resources

In response to Dianne Nicholson and the moderator:

>... Can we discuss the modes of
>charging for electronic resources and hear from producers about how they
>create their pricing mechanisms?  Thanks to Dianne for starting this

My company provides electronic publications in the legal market in Sydney
Australia. Our products are all intranet based. That is, we supply our
customers with a copy of our HTML database which they keep locally on their
network server. We then use email to send attachments to our program at the
clients site to update their copy of the database weekly or even daily, if

We provide a high frequency update service for users on corporate intranets.

As a new company with no baggage, I considered long and hard various
options for licensing.

I had a predisposition against the concurrent user model because it
requires us to run software on the client site to enforce. My experience in
the market indicated that without this, some customers would underestimate
the number of concurrent users if left to their own devices. We would not
survive if that happened on any scale. In addition, it is almost impossible
to budget for prices based on concurrent users until you have a long
history of the pattern of use in various organisations. As a new entrant
with no realistic way to assess likely concurrent use in large firms, I
could not set a budget.

I needed a simpler and more objective standard than concurrent user pricing.

This is how I went about choosing a pricing model:

1. I looked at the market I could access and worked out how much I needed
from the products as a whole to service our expectations and obligations;

2. I looked at the prices being charged by competitors and decided where I
could fit into the market in a competitive sense.

3. An underlying proposition is that viewed broadly, large organisations
should pay more than small organisations. Even though our cost of delivery
is much the same, a difference is needed because in our case, with a fairly
small market, an average price would be too high for small firms to
justify. In addition, the service is inherently more valuable to a larger
firm than a smaller firm.

4. I worked out approximate price levels I could expect various size firms
to pay for site licenses and then set about devising a model to produce the
required fees. In the end I adopted this:

	Base fee or a single user (eg $2,000).

	PLUS, for network use, an incremental fee (eg $40) for each
machine which provides permanent access to the service. Law firms etc may
take out a site licence on the basis of the number of licensed lawyers and
provide unlimited access to all persons, including para legals etc at no
extra charge.  In the case of libraries who provide terminals for general
access. I have so far applied the same incremental fee even though I
sometimes think this may be too generous. Overall I see it as swings and

We allow dial up access (home to work) from persons who are otherwise
within the licensed group at no additional charge.

The effect of our pricing is that the average cost per user at each site is
much lower for large organisations. This reflects the fact that there is a
minimum cost of providing the service and support. To supply smaller
organisations we need to offer the service over the internet so it is more
affordable for casual or infrequent use.

I apologise if this is a bit long but it is an interesting and difficult

Peter Meyer
Managing Director
Desktop Law Pty Ltd
                   DESKTOP LAW - Legal publication services
Desktop Law Pty Limited                                  Ph:   +61 2 9922 3096
PO Box 244, Lindfield, NSW 2070                          Fax:  +61 2 9929 8396
Peter W Meyer                                  
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