Value based pricing
Value based pricing uses a scheme where initial costs are low and maintenance / renewal of services is priced relatively high.
An example of a company that uses value based pricing is the SAS institute. According to the strategy "SAS Institute's pricing strategy is designed to foster Win/Win relationships with our customers which lead to building productive longterm partnerships."[. The Institute is not shy about the objectives of their pricing policy. "The strategy is to establish pricing consistent with the value received by SAS software customers, as they implement mission critical applications.".
The SAS Institute pricing model is unique among major software vendors. The other vendors typically sell a software purchase along with a maintenance contract. Their customers buy each new software release and have the option to pay ongoing fees for technical support. The SAS Institute license model has the customer pay a first-year license fee and an annual fee to renew the license. According to SAS, the annual license model provides the customer with a number of valuable benefits: 1. Low cost of entry (typically less than fees paid for entering a purchase/maintenance model). 2. Rapid return on investment (ROI). 3. The most current release. 4. Technical support. 5. The most current documentation. 6. All updates during the license period. 7. Customers' investments are protected by ensuring that they always have the most up-to-date technology.
The customer is never locked in to more than a one-year commitment to SAS. The company must then be perceived by their customers as continually providing excellent technical support and on-going enhancements to the software. If the customers do not perceive they are getting value from SAS, they can go elsewhere
