Dennis Howlett writes a thought-provoking piece on proprietary maintenance revenue, challenging the value that software vendors provide or, rather, the generic way in which it is provided. Howlett proposes a way to customize maintenance fees to the actual value provided by a vendor:
In software terms, we already know that (differentiation for customers) happens through software implementation, configurations and customizations that are a core part of delivering to customer needs. There is no reason why the same principles can’t be applied to the maintenance element of the business relationship. If you stand back and put aside the notions of the last 30+ years, it is blindingly obvious.
It is obvious for example that in the early stages, customers will consume a considerable amount of resource(s) as they learn and become familiar with the product. They should therefore pay an economic price that reflects the services they consume. However, the software vendors need (to) do three things in order to soften the impact and reduce the long term burden…
I’ll leave it to you to read Howlett’s post to discover the three things, but even in the short blurb above Howlett unwittingly calls out a fundamental difficulty in open-source software revenue models, one that Savio Rodrigues has been banging on for a while, and one that NBC iVillage CTO Jon Williams has also called out:
Open-source vendors begin making money from their customer base precisely at the point that the customer base is least apt to renew.
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