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How Should I Price a Python Module License for Major Banks?

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How Should I Price a Python Module License for Major Banks?

#1

Post by mafellows »

I have an opportunity to license a Python module to several major banking institutions—some of the largest in the world. Typically, we offer this software as a web app, but these banks need a local module to run within their own environments.

Here's the situation:

- Product: A Python module that performs complex analysis on source code and generates a risk assessment. - Usage: It will be integrated into their CI/CD pipelines, and developers can also run it manually. - User Base: About 50 users per institution, mostly small, specialized teams. - Updates: We'll provide quarterly updates as we continue to develop the tool.

I'm trying to figure out how to price this. I don't want to set a price that's either prohibitively expensive or too low, especially since I haven't licensed source code to clients of this scale before.

For those with experience in this area:

- How did you approach pricing in similar situations? - Are there industry standards or benchmarks for licensing software modules to large banks? - What factors should I consider when negotiating pricing and terms with these institutions?

Any insights or advice would be greatly appreciated!

Re: How Should I Price a Python Module License for Major Banks?

#2

Post by eschneider »

You want to (among other things) think about these things:

1) What's the value of the software to the bank? 2) What other options do they have and what are the costs? 3) Is this a one-time license or something ongoing? 4) What level of support are they going to want/need and what will it cost to provide.

Re: How Should I Price a Python Module License for Major Banks?

#3

Post by quintes »

I can think of these questions

1. Who are competitors in this space and what do they charge for business or enterprise?

2. Why do these banks pick your solution over others?

3. What is a reasonable price point including your own costs that make this desirable for them and feasible for you?

4. Pricing model, will you bill like a SaaS or a yearly subscription? What about users leaving, adds and changes?

Re: How Should I Price a Python Module License for Major Banks?

#4

Post by mafellows »

quintes wrote: post #3

I can think of these questions 1. Who are competitors in this space and what do they charge for business or enterprise? 2. Why do these banks pick your solution over others? 3. What is a reasonable price point including your own costs that make this desirable for them and feasible for you? 4. Pricing model, will you bill like a SaaS or a yearly subscription? What about users leaving, adds and changes?

1. Not many competitors, but each competitor offers about a $500/mo plan that allows ~10 users. 2. We have greater accuracy and detail in our analysis. This has been proven with sample data and they agree that this is true. 3. $500/mo seems too much on the low-end for this. I'm not sure what "high" would be for a bank.. $5k, $10k? 4. I would like to bill this as an annual contract with monthly, quarterly, or annual payments. Current SaaS users are billed monthly or annually. Since they'll be self-hosting this, they will be responsible for user management and access. I will not have access to their internal systems.

The root of the pricing problem is we charge based on usage. If they self-host, we won't be measuring that usage as the tool will run without network connectivity.

Re: How Should I Price a Python Module License for Major Banks?

#5

Post by mafellows »

eschneider wrote: post #2

You want to (among other things) think about these things: 1) What's the value of the software to the bank? 2) What other options do they have and what are the costs? 3) Is this a one-time license or something ongoing? 4) What level of support are they going to want/need and what will it cost to provide.

1) There is certainly value, but I would consider this a vitamin, not a painkiller. 2) Options if they were to pick something off the shelf would be $500/mo minimum. Quality is slightly less than what they're getting with us. 3) Annual contract, we would provide updates at a tbd interval. 4) We definitely have an opportunity to price in additional support. Whether they choose to use it or not, it would make the license price seem more reasonable.

Re: How Should I Price a Python Module License for Major Banks?

#7

Post by quintes »

mafellows wrote: post #4
quintes wrote: post #3

I can think of these questions 1. Who are competitors in this space and what do they charge for business or enterprise? 2. Why do these banks pick your solution over others? 3. What is a reasonable price point including your own costs that make this desirable for them and feasible for you? 4. Pricing model, will you bill like a SaaS or a yearly subscription? What about users leaving, adds and changes?

1. Not many competitors, but each competitor offers about a $500/mo plan that allows ~10 users. 2. We have greater accuracy and detail in our analysis. This has been proven with sample data and they agree that this is true. 3. $500/mo seems too much on the low-end for this. I'm not sure what "high" would be for a bank.. $5k, $10k? 4. I would like to bill this as an annual contract with monthly, quarterly, or annual p…

Price for competitive value, start where you think, but - tier it to bundle of users at least, so as more users are added any additional effort on your part has financial cover

- think about support, customer success, installation, upgrades and ensure your including that

- test the number with them. Negotiate.

Caveat - this is limited advice use at own risk etc etc

Re: How Should I Price a Python Module License for Major Banks?

#8

Post by brudgers »

Two engineers @ $150k/year for redundancy

  $300k
2x cost multiplier

  $600k
100% markup

  $1200k
16% discount for 5 year contract

  $5000k @ $1000k/year
Plus expenses marked up with overhead and profit in order to travel to their site.

It is not your job to save customers/clients money on your services. Charge enough so it is worth staying in business. That’s what banks want. If you aren’t making a bunch of money, you are a greater risk for theft. Good luck.

Re: How Should I Price a Python Module License for Major Banks?

#9

Post by giantg2 »

quintes wrote: post #3

I can think of these questions 1. Who are competitors in this space and what do they charge for business or enterprise? 2. Why do these banks pick your solution over others? 3. What is a reasonable price point including your own costs that make this desirable for them and feasible for you? 4. Pricing model, will you bill like a SaaS or a yearly subscription? What about users leaving, adds and changes?

Also, what is the financial risk the software is reducing or eliminating? If it massively reduces risk, it could adjust the price higher. These banks wouldn't bat an eye at $100k/yr if it has the chance to reduce a million screw-up byba sufficient amount.

Re: How Should I Price a Python Module License for Major Banks?

#10

Post by paulcole »

giantg2 wrote: post #9
quintes wrote: post #3

I can think of these questions 1. Who are competitors in this space and what do they charge for business or enterprise? 2. Why do these banks pick your solution over others? 3. What is a reasonable price point including your own costs that make this desirable for them and feasible for you? 4. Pricing model, will you bill like a SaaS or a yearly subscription? What about users leaving, adds and changes?

Also, what is the financial risk the software is reducing or eliminating? If it massively reduces risk, it could adjust the price higher. These banks wouldn't bat an eye at $100k/yr if it has the chance to reduce a million screw-up byba sufficient amount.

How many people at a bank can approve a $100k purchase order vs. a $1,000 purchase order?
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