VoipNow Licensing Changes Explained

Starting with March 1, 2010 we changed the licensing methodology on VoipNow Platform. VoipNow Core is now more affordable for small customers with the new, dedicated server license for up to 250 concurrent calls. While this is a single server license, it expands to a 4Grid infrastructure able to sustain as many calls as you like. The pay as you grow, infrastructure wide licensing method is still available. In a service provider environment VoipNow Professional is available on pay as you grow licensing and also on dedicated server licensing for a small number of extensions. Perpetual (owned) licenses are available only for business customers.

Our current website should reflect all changes in licensing information. More information about the new licensing can be found here (Service Providers) and here (Direct Business Customers).

Why These Changes?

There are many reasons; I highlighted the most important ones below:

1. No SaaS licensing model

Sadly, although 4PSA developed the first product that accelerated SaaS deployments before most companies even learned the word (this was back in 2003), our old licensing model did not make sense on the SaaS market. Fortunately, the pricing was so low that the license purchase was actually more affordable than many other vendors’ monthly fees.

2. Poor correlation between pricing and costs

Speaking about price, the old price did not reflect the economics behind the product’s development, because VoipNow products are complex and expensive to produce. Even if we are a profitable company, it was obvious that we would not have been able to continue the aggressive investment in research and development no matter the pace of our growing rate. On the funny side, we lost deals in the past because some potential customers did not even consider VoipNow. They took the price as an indicator of the capabilities and quality of the product. No one believed we were so stupid to sell it so cheap. 🙁

4PSA has never changed pricing on VoipNow software until now, despite the inflation and product’s evolution. Before reaching the new licensing and pricing model, we studied the market intensively and discussed with our most important customers. The new licensing is still the most affordable on the market and does not substantially affect our customers’ margins.

I know that we have customers who are going to be very unhappy about this change, however I have to remember everyone that this change is in mutual benefit as it allows us to develop products faster and support customers better. This is vital for the growth of a service provider who is doing application hosting like UC. I felt many times that we could do more to help our customers to grow their business, as we have gained significant experience in the past years. Unfortunately, we could not afford to do this with all customers, due to the economics behind. The new licensing model will allow us to better focus on this.

3. Poor margin on distribution channels

The old licensing model was unfeasible for the new products we are going to introduce. Also with the old licensing, the reseller’s (the channel partner, not the service provider) margin was low. They were unable to properly scale their business and eventually to support our products on the quality standards we liked.

4. Unlimited is really unlimited

When we first introduced VoipNow Professional, it supported around 500 extensions on a server. Now VoipNow Professional is much faster, we have customers with more than 4,000 extensions on a server. With every new release, we improve performance. Back in 2006, VoipNow Professional was a single server product so we thought that unlimited is actually as much as a server can get, which was anyway limited. With the development of VoipNow and the multi-server infrastructures based on 4Grid, unlimited means really no limit. These are the main reasons why unlimited does not exist anymore.

How Is This Going to Affect You?

If you own a VoipNow Professional perpetual license under SUS, this change does not affect you, as long as you keep the license under SUS. Of course, if you need additional capacity, you will have to go with the current licensing.

If the license is not under SUS, you can still use it, but you will not be able to download the upgrades or to use our support services. You will also not be able to reinstate it anymore, so you will have to switch to the new leased licensing.

VoipNow Professional perpetual licenses under SUS are upgradable to any limit except unlimited (for example you can upgrade a license for 10 extensions to 300 extensions) until 30 March 2010.

If you own a perpetual license and you want to convert it to a leased license, we can give you a deposit equal to 50% of the license price when the license in under SUS and 20% when SUS expired. The deposit must be consumed in the first 6 months after conversion.

If you lease a license, the new licensing model is going to be effective starting with April 2010. For the month of March, there is no change in pricing. Sales will let you know about the changes personally.

More Support

I want to point to some interesting stuff with the new licensing that might not be so obvious:

– We have two licensing models. On the first one, you do not have any commitments and you get standard pricing and standard support levels, no matter how many customers you have. However, if you are willing to sign a commitment agreement with us (the commitment is quite low, but it shows that you are serious about your business) you will get better pricing and prices lower as business grows. You also get Expert Support level and even free programming services.

– When you get the commitment licensing option, you can opt for the All You Can Eat (AYKE) program for the first year. Under this program you can get all VoipNow Platform components for a flat fee. We introduced this option to better motivate our customers to proceed with quick implementation, marketing and sales actions.

– Also on the commitment licensing option, you can attend to at least four hours of free training per year (and up to 3 days), which is quite valuable for your business.

– With the commitment licensing option you get minimum 2 hours of consulting so you can build your service plans and position them properly on the market.

In the following weeks, I will focus on identifying the aspects where our customers need more help. During the last week at Parallels Summit 2010, after discussing with lots of service providers of all sizes, I have already spotted some areas where we can do better. This is still work in progress.

Finally, I want to thank you for your patience getting through this huge article. I am sure you understand that all changes described above were designed to allow our businesses to grow more in the future.

I also want to let you know that we created an email address called licensechange@4psa.com. You can send us your ideas, questions or concerns. Although it’s unlikely to make changes to the new licensing, we are ready to adjust parameters based on specific business constraints.

1 Comment

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  • hmmm…i look at it this way, 4PSA has to remain competitive, so i am sure that you have done much research prior changing the licensing model. This however forces me to change my whole business strategy….which is currently giving me sleepless nights. I feel about 90 days of warning was appropriate….nevertheless…

    I hope that the long term extra income will allow 4PSA to release newer and better products and keep us ahead of the pack in UC, and allow 4PSA to release customer requests and patched even quicker…
    I am concerned about this statement though, which I hope I have not misunderstood:

    “If the license is not under SUS, you can still use it, but you will not be able to download the upgrades or to use our support services.
    >>by “upgrades”, i hope you are not including ‘bug fix patches’ under the same umbrella.

    You will also not be able to reinstate it anymore, so you will have to switch to the new leased licensing.
    >>reinstate what? SUS? If a licence was paid for as “owned”, there should be a ‘support’ extension option. Cannot force to change to Leased…or did I get this one wrong?

    Anyway, i support the license strategy as I am sure the cash injection is for our own benefit. You get what you pay for. This also ensures that the SP is not selling too low and have a short business life. Try and sell on features instead of price!

    Mohammad Patel 14 years ago Reply

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