International Software Pricing Is a Mess

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Many of the big software companies have different prices for different areas of the world, based on many factors -- including support costs, localization, competition, and the region's economy. This model worked for many years since local support was perceived as important as the software itself. But large corporations and government agencies usually need less support as their IT staff is capable and experienced. The cost of additional licenses is considerable; shopping for better pricing in different regions could save corporations millions.

Another issue is used license reselling. Back in July, the Court of Justice of the European Union ruled against Oracle in a lawsuit brought by the German used-software reseller UsedSoft, stating:

Even if the licence prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.

Now UsedSoft claims they can save corporations millions by acquiring previously purchased software licenses from companies or government agencies that no longer need them.

With many corporations downsizing in Europe, a new market for those licenses has opened. Corporations such as Oracle, Microsoft, SAP, and others are trying unsuccessfully to stop those license transfers, since existing customers want to recover the cost of licenses they no longer need and other corporations that need more licenses can save between 30 percent to 50 percent buying those. As the Court ruling states:

Where the copyright holder makes available to his customer a copy -- tangible or intangible -- and at the same time concludes, in return for payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right.

And the court also states that the new customer has the right to download a copy from the vendor's Website with all the current updates.

That is a newfound source of cash for government: A report from the Cabinet Office on Government ICT Strategy says that in the UK alone, more than 6.3 million licenses are not used (35 percent of the 18.5 million "held" licenses). Without further research about the underuse of the other licenses, the agencies can convert the 6.3 million unused ones into cash by making them available to other government organizations across Europe. Some smaller European government agencies are already doing that, generating badly needed cash for the seller and substantial savings to the buyer.

This is just the tip of the iceberg forming about the conflicts of international pricing of software licenses. The European Union is very clear about agreements trying to restrict the "fundamental right" to procure goods and services anywhere in the EU: It is illegal! Also, software companies are advised that they have to provide the same support and update offers to any customer in the EU who purchases a legitimate license, regardless of the country of origin.

Services such as UsedSoft are starting to offer an exchange for "used" licenses the same way you can buy and sell your cloud instances on Amazon. CIOs and CFOs need to balance the potential savings against the possibility of damaging their relationship with the software distributors. For government agencies, it is imperative to save taxpayers' money looking on the second-hand market both as buyers and sellers.