12/09/2018 What are typical maintenance fees as a percentage of up-front license costs for enterprise software?

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What is the industry standard for Annual
maintenance cost (as a percentage of
What are typical maintenance fees as a percentage development cost) for customized software
of up-front license costs for enterprise software? projects?

How much are software licensing fees?

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How negotiable are software license fees?

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How do revenues break down for an enterprise
Piaras MacDonnell, ITAM and SAM professional. Company Founder and Dad software company between licensing,
maintenance, support, and professional services?
Answered Nov 27, 2016 · Author has 56 answers and 92.9k answer views

Around 22% is the standard set by the big vendors. In a subscription the support Why does maintenance cost of a software often
exceed its development cost?
cost is built into the price.
What is the license cost of the CivilFEM software?
The big vendors are inflexible around reducing their support % as its very high
Which software companies charge the highest
margin and their stock price is linked to it. license fees?

if you have bought a perpetual license (typical for enterprise s/w) you are not How much does it cost to license software?

required to keep paying support so long as you don't want upgrades or support.  Ask New Question
A valid strategy for older products.

There are a number if company's who provide cheaper support (typically 50% of
the big vendor).

As companies move to cloud services they can negotiate new support contracts
or drop support entirely.

Final comment on enterprise support, when structuring the initial agreement

ensure you have an option to do partial cancellations later without penalty.
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Related Questions More Answers Below

What is the industry standard for Annual maintenance cost (as a percentage of
development cost) for customized software projects?

How much are software licensing fees?

What are the typical maintenance fees as a percentage of hardware costs for enterprise
servers?

Do most first year traditional license fees include or add on annual maintenance fee?

How negotiable are software license fees?

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Kruemcke, Product Manager (2016-present)
Answered Jan 25, 2017 · Author has 77 answers and 54.8k answer views
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12/09/2018 What are typical maintenance fees as a percentage of up-front license costs for enterprise software? - Quora

An annual charge of 20% of the license fee list price is a good staring place.
Depending on your business model, you may need to discount the license cost
deeply, but can still get the list price for maintenance.

Maintenance revenue can be a significant source of overall revenue and should

not be treated as an afterthought. You should plan for how you renew customers
for maintenance renewals including things like automatically renewing unless
an action is taken. Setting up a dedicated sales team focused on renewals is
another way to insure a healthy maintenance stream.

Some products have the first one or more years of maintenance built into the
initial license charge while other products make you pay for the initial
maintenance fee separately. Both approaches are valid but you need to make
that decision in the context of your typical discounting for initial sales and on
the market expectation for how you handle this. I mention this because you can
really screw yourself if you include 3 years of maintenance in the initial license
charge and then discount the initial sale by 90%. This results in a revenue hit in
the current year, plus the next three years because you ended up discounting the
license and the maintenance by a huge amount.
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Clark Eller, 20+ Years in High Tech Sales e.g. Oracle, Salesforce, Adobe
Answered Jun 17, 2016 · Author has 238 answers and 263.2k answer views

18–25% of license cost is not uncommon. It should include tech support,

updates, upgrades, bug fixes, patches. Maintenance releases should also be
included as well as major software upgrades (i.e. Oracle 11.5.10 to 12). There are
usually different levels of support up to paying much more to have on site
support. What is not included is consulting or implementation support to install
and test then train and roll out.
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Somak Roy, Industry analyst - enterprise IT, since October 2005

Answered Feb 6, 2011 · Author has 117 answers and 262.1k answer views

18-22% with three exceptions. Software that requires constant updating,

sometimes with information, can go beyond 25%. Maintenance for extremely
standardized software, sometimes delivered as an appliance is often charged
less than 18%. The third exception is rare and happens when the vendor is in a
dominant position - if memory serves, VMware used to charge 25% not so long
ago.

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Joe Francis, Developed Enterprise Software Since 1995
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12/09/2018 What are typical maintenance fees as a percentage of up-front license costs for enterprise software? - Quora
Answered Feb 7, 2016 · Author has 2.3k answers and 6.6m answer views

Pricing are customized according to the product and company, but the most
common scheme I have seen over the last 25 years is that the purchse of the
licence is good for a year with no maintenance fees the first year, the  20% of the
purchase price per year afterwards for support.  Do keep in mind that true
enterprise mission-critical software maintenance fees typically pay for truly
excellent support.  I have been both a developer and a supporter for large
enterprise projects.  I can tell you that providing such support is typically much
more expensive than people think.  Large software companies typically have
staffs of hundreds and perhaps thousands of people to perform this support and
they take it quite seriously, obsessively even, so the 20% fee does actually get
spent mostly on support costs - well, some profitability built in, but not all that
much.
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Jeff Hammerbacher, Professor at Hammer Lab, founder at Cloudera, investor at

Techammer
Answered Nov 17, 2009 · Author has 1.3k answers and 4.9m answer views

Yearly maintenance fees are almost always calculated as 22% of the up-front
license cost for the software; 19% is a typical discounted rate.
15.4k Views · View Upvoters · Not for Reproduction

Mark Neuhausen, Serial Entrepreneur, Tech Partner, Angel Investor

Answered Feb 26, 2016 · Author has 2.4k answers and 2m answer views

It varies all over the map.  5-15%.  I also like the models of annual (or three year)
license fees, no maintenance, and period renewal.  It makes them work hard to
ensure you renew.
3.9k Views · View Upvoters

Mark Bagley, I scout for Enterprise Software in Silicon Valley in my current role
Answered Jul 18, 2016 · Author has 146 answers and 58.9k answer views

Vary, 25% to 40%. A lot basically. That’s why folks are moving to the cloud.
8.8k Views · View Upvoters

Charles Zedlewski, I've spent ~15 years in the enterprise software industry.
Answered Jan 17, 2010 · Author has 105 answers and 304.4k answer views

15 to 22% depending on the level of support provided and the amount of

competition in that particular product category.
14.7k Views · View Upvoters

Jeff Kesselman, I know a little bit about a whole lot, and a whole lot about a little bit.
Answered Dec 20, 2012 · Author has 12.1k answers and 14.8m answer views

This changes drastically if you are licensing a commercial distribution of an

open source
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In that case, all of your license fee can be maintenance and support.

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