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Understanding Open Value Item descriptions and pricing – Part 2

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Understanding Open Value Item descriptions and pricing – Part 2

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Part #2: Understanding the Open Value Pricing Structure

In yesterday’s “Understanding Open Value Item descriptions and pricing – Part 1” post, I talked about how to understand what the various part descriptions meant in Open Value to help you understand which item is the right one for your clients needs.  In this Part #2 of the post, we’ll look at how the pricing works for each of the SKUs and how it is determined, since there have been several questions about this from Partners in the past.

Let’s start with the basics.  As discussed in my “Is Software Assurance an optional item or something automatically included in the licenses themselves?” post from July:

When you initially purchase software through Volume Licensing, you have two options depending on what you want:

1)     (L) which is a License to run the software.

2)     (L+SA) which is a License to run the software + Software Assurance benefits

The third licensing option you have is as an add-on or renewal.  This is:

3)     (SA) which is Software Assurance only. 

Each of these components has a price.  The License (L) is a one-time price to acquire the rights to install and use the software you are purchasing.  The Software Assurance (SA) is an annual maintenance and benefits offering that you choose to include or not include.  So let’s look at how this reflects in Open Value.

First, remember that Open Value always includes Software Assurance.  If you want a License only without Software Assurance, you would purchase that through the Open Business licensing program.  Because of this, we will refer to the Open Business pricelist to determine the Estimated Retail Price of the License only.  Let’s use Office Professional Plus in our example again as we did in Part #1 of this post:

  • Part #: 79P-00123 – Office Professional Plus 2007 (L) only – ERP: $478.00 (Open Business)
  • Part #: 269-09061 – Office Professional Plus English SA 1YR Acq Y1 Addtl Prod – ERP: $140 (Open Value)

As you can see, the License has a one-time ERP of $478 and the Software Assurance has an annual ERP of $140.  Using these numbers you can determine what the prices of the various Open Value offers should be, including with (allows payments to be split over term of agreement) and without spread payments (paid up-front):

  • Purchasing a new Office Professional Plus (L&SA) with spread payments in the 1st year of an Open Value Agreement would be: $159 ($478/3yrs. remaining) + $140 (1st year of SA) = $299.  If you look at Part # 269-09046, which is the Office Professional Plus with spread payments acquired in year 1, the ERP is $299.  You would then use this same Part # in year 2 and 3 for the remaining two payments.
  • Purchasing a new Office Professional Plus (L&SA) with spread payments in the second year of an Open Value Agreement would be: $239 ($478/2yrs. remaining) + $140 (1st year of SA) = $379.  If you look at Part # 269-09047, which is the Office Professional Plus with spread payments acquired in year 2, the ERP is $379.  You would then use this same Part # in year 3 for the remaining payment.
  • Purchasing a new Office Professional Plus (L&SA) in the third year of an Open Value Agreement would be: $478 ($478/1yr. remaining) + $140 (1st year of SA) = $618.  If you look at Part # 269-09048, which is the Office Professional Plus acquired in year 2, the ERP is $619.  The extra $1.00 you see is the rounding of the License price since $478/3 = $159.33, not actually $159.00.
  • Purchasing a new Office Professional Plus (L&SA) with up-front payments in the 1st year of an Open Value Agreement would be: $478 + $420 (L+ 3 yrs. of SA) = $898.  If you look at Part # 269-09050, which is the Office Professional Plus with up-front payments acquired in year 1, the ERP is $897.  You actually save $1.00.
  • Purchasing a new Office Professional Plus (L&SA) with up-front payments in the 2nd year of an Open Value Agreement would be: $478 + $280 (L+ 2 yrs. of SA) = $758.  If you look at Part # 269-09049, which is the Office Professional Plus with up-front payments acquired in year 2, the ERP is $758.

So as you can see, understanding what you are actually purchasing (L, L+1 yr. SA, L+2 yrs. SA, L+3 yrs. SA, SA only, paid up-front, or spread payments), can help you understand where the pricing came from and how it is determined.  This also shows why purchasing an item in year 2 is not just ½ of purchasing something in year 3 (1/2 the coverage time) since you still need to account for the License cost, which is a one-time cost, not an annual price.

Hopefully this helps clear up some of the questions on how Open Value prices for each of the SKUs is calculated. 

Thank you and have a wonderful day,

Eric Ligman

Microsoft US Senior Manager

Small Business Community Engagement

This posting is provided "AS IS" with no warranties, and confers no rights

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