Pricing ACL
in [Lisp]
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From: googlegroups on 16 Dec 2005 07:32 I would prefer not to use a language from a vendor that charges me a per unit cost every time I ship something compiled with their tool. But, I can accept that LISP is theoretically a "special case" and that the runtime shipped with an application built with Allegro is much more substantial than what is usually meant by the term "runtime". That said, this difference is defintely one of the things that alienates people from using lisp. The market has been moving away from that model for 25 years. What I cannot accept at all, and what guarantees that I would never use Allegro to deliver a commercial product, is Franz's insistence on charging a royalty based on my product revenue. I know that the option of doing things this way gives them a lot of flexibility on the bottom of the market. But it's death at the high-end of the market. Let's just say I went to a VC and I convince him that using LISP is a good idea. Now I have to tell him that by using Franz, I'm giving away 13% to 33% of my net margin? (assuming a healthy 30% net margin). I will be quickly shown the door. The issue isn't that Allegro is expensive (it is). The issue isn't that it is not worth it (it can be, and I would use the product in an end-user setting). The issue is that the VC's want to make big bets with big payoffs. They'll fund an awful lot of up-front cost without blinking an eye. They'll even deal with things that increase your per unit costs if you can justify it. But in return, they want you to make big margins as your volume increases and you start to be able charge a premium for your product. But the Franz approach sits there like a leach, not only taking more as my unit sales increase, but taking more as I move my prices up. If I can convince a VC that Allegro is the fastest way into the market, the VC might let me develop a salable prototype using Allegro. But after that he's going to be all over me to rewrite it in something else. And you know what? From his perspective, he's right. The VC business is all about front-loading expense in exchange for a shot at a hefty return at the back-end. A back-loaded pricing structure like Franz's is the opposite of what they want to see their companies agreeing to. But Allegro makes your programmers three times as effective, you say. Your development budget will be 33% of of what it would be without out it. That's great up front, but no longer relevant at the back-end. The VC expects you to manage your long-term development costs by offshoring your non-core development once your organization is big enough to properly manage it. I'd be surprised if you can effectively offshore development in LISP. By the way, this model hurts Franz too. I won't say that I know a couple of firms that have used Allegro as a development tool but actually delivered their product using Lispworks and/or SBCL. But I won't deny it either. Franz has managed to make money in a very tough market. They're not a lot of people buying LISP tools. And maybe this model has let them survive and make money where they otherwise would not have. But being on the wrong side of that VC equation just makes it that much harder to run a business built on their tools. And as the premier commercial provider of LISP tools, this isn't just bad for them. It's bad for LISP. -r p.s. This was originally going to be a two sentence e-mail: You can increase my expenses if I think you're worth it, but keep your f---ing hands off my revenue. The only people who're going to get paid off of my revenue are the ones who bring it in (by selling it). John Thingstad wrote: > On Tue, 13 Dec 2005 22:38:14 +0100, <alex.gman(a)gmail.com> wrote: > > > I wrote this as an email reply to R. Fateman, but I now feel like > > posting it. (BTW, Richard, you probably meant to post your message in > > the first place): > > > > > > All I can say is that "we will ask you for a %-age of your future > > profit once you have your product ready for shipping" is a total deal > > breaker. > > > > I don't want to hire lawyers NOW to negotate with Franz when I'm just > > developing the product, and I don't want to get f*** (pardon my french) > > by Franz if I delay the negotiations until later. Score 1 for other > > alternatives. > > > > If I'm being unclear, image this situation: I'm Franz. You have naively > > developed a product using ACL, Allegro Cache, and other things that > > only I (Franz) can provide. > > You have two choices: pay whatever I ask you, or abandon the product > > (major rewrite included). As a business, I (Franz) will be inclined to > > ask you for just a little less than the cost of a major rewrite. > > > > Now if you are smart, you'll never get into this situation by either > > (1) Never using Franz (LW, CMUCL) or (2) negotating the distribution > > terms in advance (laywers, etc.). For most people (1) seems like a > > better alternative. > > > > This is the response I got from Franz when asking about prising.. > > In addition, Franz Inc. offers two different types of Commercial licenses, > based on how an application is used and > deployed. Stand-Alone Application Systems or Client/Server Systems only > used internally, require a Corporate End User > License. And all applications distributed to customers require a Value > Added Reseller License. How do you plan on > distributing your application? How much do you charge for your > application? Does your application contain compilation > capability? Approximately how many applications will you distribute > annually? > To give you an idea of the royalties, these ones vary between $150 and > $800 for the Corporate End-User license, and > between 4% and 10% for the Value Adder Reseller license. > > Hardly a question of being clueless about what to expect. > > -- > Using Opera's revolutionary e-mail client: http://www.opera.com/mail/
From: Greg Menke on 16 Dec 2005 07:37 Peter Herth <p.herth(a)t-online.de> writes: > Don Geddis wrote: > > > And then way at the end is a column for programming language costs. > > Every > > line shows a few thousand dollars or less (some are free), except Allegro CL, > > where the total cost to the project would be more on the order of millions of > > dollars. > > > > Millions of dollars? How in all worlds do you come to that number? > Allegro certainly isn't a low-cost software, but Franz offers several > license models, so the chance is that you can get a deal that fits your > projects size and requirements. > Of course, with everything you buy, YOU have to decide how to spend your > money. If using Allegro does not give you an advantage compared to lets > say, use Python, then every single buck spend on Allegro is wasted. On > the other side, there are projects, where using Allegro does give an > advantage, up to the point that paying for Allegro saves you a lot of > money. > > Peter Not to mention the CAD and EDA software seat licensing & support costs dwarf the Allegro cost. Unless its a software-only product, in which case we're not talking about engineering... ;) Gregm
From: Pascal Costanza on 16 Dec 2005 08:31 googlegroups(a)reillyhayes.com wrote: > What I cannot accept at all, and what guarantees that I would never use > Allegro to deliver a commercial product, is Franz's insistence on > charging a royalty based on my product revenue. This thread is very boring. a) How do you know that Franz insists on charging such royalties? Have you asked them? b) Why do you think discussing this in c.l.l will change anything? Pascal -- My website: http://p-cos.net Closer to MOP & ContextL: http://common-lisp.net/project/closer/
From: googlegroups on 16 Dec 2005 08:48 >Millions of dollars? How in all worlds do you come to that number? Franz charges a percentage of revenue for commercial software developers. If your revenues are $100 million per year, they are charging you between $4 million and $10 million per year. For comparison, 10 engineers on $50,000 a seat CAD stations comes to half a million a year. That $50,000 looks pretty cheap by comparison, doesn't it? Franz makes money because their pricing scheme is a sucker bet. In accepting Franz's pricing scheme, their customers are betting against their own future success. You know, it isn't a bad business model they've got there. They've got the best kind of rubes in the world: people who assume that because they are smart about one thing (technology) that they're smart about another (business). As I've said before, this only applies to the reseller license. And it doesn't really apply to somebody selling a low-volume/low-cost product that makes their money another way. Actually, I take back what I said before. I would be perfectly happy to develop a loss-leader product with Allegro. Something I sold for $50 bucks a seat but gave me a relationship with clients that I could use to upsell other products at $50,000 seat.
From: Raffael Cavallaro on 16 Dec 2005 09:02
On 2005-12-16 08:31:37 -0500, Pascal Costanza <pc(a)p-cos.net> said: >> > > This thread is very boring. > > a) How do you know that Franz insists on charging such royalties? Have > you asked them? John Thingstad wrote earlier in this thread that Franz had outlined this pricing scheme when he asked. Note that I am not claiming that this is Franz's pricing scheme - I cannot and do not speak for Franz. I'm merely pointing out that John Thingstad wrote that Franz had outlined this pricing scheme here, two days ago: "In addition, Franz Inc. offers two different types of Commercial licenses, based on how an application is used and deployed. Stand-Alone Application Systems or Client/Server Systems only used internally, require a Corporate End User License. And all applications distributed to customers require a Value Added Reseller License. How do you plan on distributing your application? How much do you charge for your application? Does your application contain compilation capability? Approximately how many applications will you distribute annually? To give you an idea of the royalties, these ones vary between $150 and $800 for the Corporate End-User license, and between 4% and 10% for the Value Adder Reseller license." This is where Reilly Hayes is getting his "13% to 33% of my net margin" figure, assuming 30% margin. (13% = 4/30, 33% = 10/30) > > b) Why do you think discussing this in c.l.l will change anything? Here I have to agree with you. I know people like to claim that Franz's pricing model is broken, but how broken would their management be if they took a major business decision based on stuff they had read on c.l.l ;^) |