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RE: Costs of Electronic Resources

Forwarded message:
From: "Sloan, Bernie" <>
Subject: RE: Costs of Electronic Resources
Date: Wed, 29 Jan 1997 09:16:40 -0600

I'd been hoping that someone would have jumped in on
this thread by now. 

As our moderator notes, the issue of pricing models is an
important one, and it's an issue that I begin spending a lot
of time with at this point each year as I open up discussions
with database vendors for license renewals for the upcoming
fiscal year for the 45 libraries that participate in the Illinois
Library Computer Systems Organization (ILCSO).

Right now I'm opening up discussions with about a half
dozen different vendors, and I am struck by how no two
vendors come even half way close to using similar pricing
models. One uses the price of a paper subscription for the
institution in question and then adds so much per FTE.
Another gathers information on the various institutions
and then assigns each institution to a tier or level, with
a fixed price for that tier. Another gives credits for paper
and CD-ROM versions of the database. Another charges
a flat fee, and then so much per concurrent user. Another
bases its calculations on book budget and FTE, and then
assigns each institution to a tier with a fixed price for that
tier. Yet another asks for a list of institutions and their
satellite branches. We even charge fees. We recoup a
certain (small) percentage of processing fees by charging
back to the users who subscribe to each service. Our
processing fees are based on a flat fee per institution,
plus so much per FTE.

In two of the cases above, the database vendor constructs
a consortial cost quote in a way that we cannot pass along
directly to each institution. In these two cases, we start out
charging a flat fee (the same for each institution) and then
add a charge of so-many-cents per FTE.

When we can, we favor using FTE as at least one element
of the pricing structure, using the argument that FTE is a
good measure of the potential user base. (Note: we only use
student FTE counts, not faculty/staff). We have discovered
though, that you can't simply use FTE. In our consortium we
have a variety of academic libraries, from very small private
liberal arts colleges, to community colleges, to large research
institutions. There is a sort of apples-to-oranges effect. That's
why, in cases where we have had some control over allocating
database fees and processing costs, we use a combination
of a flat fee, plus cost per FTE. The net result is a distribution
of costs that most folks seem to find "fair".

I'd like to hear from others about what they might feel is a "good"
pricing model.

Bernie Sloan

Bernie Sloan                                     
Senior Library Information Systems Consultant
University Office for Planning & Budgeting
University of Illinois
(217) 333-4895 

> From: 	Ann Okerson
>Sent: 	Thursday, January 23, 1997 5:30 AM
>Subject: 	Costs of Electronic Resources
>[MOD. NOTE:  Dianne Nicholson poses a particularly important question.  In
>our Library, we have identified at least 15 diverse pricing models for
>electronic resources, ranging from no price at all to extraordinarily
>creative fee structures based on types of campus subnets to an array of
>consortial prices.  As she suggests, these are hard to compare.  We all
>have our favorite models, for our own reasons; we have ones we dislike (in
>my case, the simultaneous user model which too often seems applied to
>resources where it is illogical to do so). 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
>Forwarded message:
>Date: Wed, 22 Jan 1997 19:12:59 -0800 (PST)
> From: (Dianne Nicholson)
>Subject: costs 
>I would be interested in seeing a discussion on how different libraries
>have negotiated around the calculation of site licence fees.  ie.  I have
>seen some vendors base pricing on # of branches, # of pac workstations,
>population served, and there may be other versions.  This has
>particularily far reaching impact when one is a multi branch system. 
>Is there some concensus on some kind of mixed formula which is fairer?
>Dianne Nicholson
>Okanagan Regional Library
>Kelowna, British Columbia
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