Before we discuss the components of vendor pricing we should dwell for a moment on value rather than cost. To value something is to estimate it’s monetary worth.
As any of you who have been active in the vendor marketplace know, vendors and their products are not the same so understanding what you are getting for your dollar is as important as how many dollars are required to pay for it.
The usage language may be broadly written, granting the carrier an enterprise license, but may include additional costs as the written premium processed on the system increases. The language may be price sensitive to the introduction of new lines of business and/or new states.
Two important features to understand are: Does the license grant access to the source code? Is there a license term or is it perpetual? The provision of source code is obviously important if the carrier intends to take over maintenance of the system and become independent of the vendor.
Often the largest cost component of a major system acquisition is implementation services. It also is the most difficult to estimate in a reliable way for obvious reasons.
But what if an outsourcing deal is part of the mix? How does this affect the pricing structure and overall cost?