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Fixed renewal rate for customers when buying new license

ACME is looking to evaluate a new application platform and invite HCL, Microsoft, SAP to do a presentation and POC. Since there is a strong competitor, each company will no doubt try to give the best discount they could. Let's say that after evaluation ACME chooses company X in part because they can give a 50% discount for a three year license. Implementation is underway, product is installed and customer is happy.

Roll forward on year 5, on their anniversary ACME got a renewal quote with 50% of their buying price. Management is surprised because this is double what they pay last year. Furious negotiation is made, but Company X are not willing to match last years pricing.

At this point, what usually happen is either

  • ACME pay the renewal but management is heavily dissatisfied and start looking for alternative platform
  • Management refused to pay and order IT to start evaluating alternative platform

Either way, this is a loss for company X

Can HCL avoid this scenario ?

Tinus Riyanto - Prisma Global Solusi

PS : I understand that all company wanted to recoup the money they "loss" when they give discount but doing it this way will hurt the trust and relationship and it will take a few years (if ever) before said customer is willing to do business with the same company again. I can even guarantee that the above scenario has caused many customer to move away from Notes/Domino

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  • Jul 19 2019
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  • Admin
    Thomas Hampel commented
    10 Jan 01:41pm

    HCL has a policy of price transparency with customers. HCL does have a policy for year to year price increases commensurate with the investment being made into the products. The above situation is some of the examples that we have seen other software vendors follow. HCL's intention is not to gouge customer and ensure we are transparent in our future maintenance and support costs.

    In addition, HCL is providing customer the option of acquiring term licenses, allowing customers to have predictable future pricing.

  • Admin
    Thomas Hampel commented
    19 Dec, 2019 08:31pm

    Moving to General