RE: FTE-based pricing

["Stefanie Wittenbach" <Stefanie.Wittenbach@utsa.edu>]

We have paid by use for services such as OCLC, where next year's 
bill is based on last year's usage.  That was what I was 
suggesting in terms of usage-based pricing over FTE based 
pricing.  FTE counts do not reflect the use of our electronic 
resources.  It would be interesting to see a study of actual 
users for a given database that is billed by FTE.  If usage 
pricing were based on ranges of uses it would be predictable, 
just as FTE pricing is frequently based on a range--up to 10,000 
students is a price and 10,001-19,999 is another price, etc. 
The same could work for usage-based pricing. Stefanie

-----Original Message-----
[mailto:owner-liblicense-l@lists.yale.edu] On Behalf Of David
Groenewegen
Sent: Monday, October 16, 2006 7:52 PM
To: liblicense-l@lists.yale.edu
Subject: Re: FTE-based pricing

I've always opposed it because it a budget nightmare - there's no 
easy way to anticipate use, and defining 'use' is, in any case, 
very tricky. For instance, if a database is hit because of the 
default setting on a federated search tool, is that 'use'? How 
long does a user need to look at a record to have "used" it?

An example of why usage based pricing is uncomfortable for 
libraries. For many years we used FirstSearch pay by the search 
for a selection of databases we could afford full subscriptions 
to. Every year we would allocate a generous number of searches 
(more than the year before) and every year we would run out 
before we expected to. And we would have to scrape up more money 
to get more searches. Gradually it became easier, cheaper and 
less work to either get the databases on subscription, or cancel 
them.

The analogy to telephones or electricity doesn't really work, 
because in this case the user isn't paying and never sees the 
bill, so they have no incentive to moderate their use. Instead a 
library may find themselves in the position of being half way 
through the year and suddenly having to tell users "Sorry, we've 
almost run out of budget on that resource, so stop using it" or 
worse "We have run out of budget, and we can't afford any more 
until the next budget cycle, so you'll have to use something 
else. I hear Google is very useful."

Or they may find that their successful promotion of the resource 
means that next year they can't afford the new price. And taking 
popular resources away for budgetary reasons is never fun, 
because the users don't care about your problems. They just want 
that resource that they liked last year, and that you trained 
them to use.

David Groenewegen
ARROW Project Manager
Monash University Library
Monash University
Victoria 3800
AUSTRALIA
David.Groenewegen@lib.monash.edu.au


Sally Morris (Chief Executive) wrote:

> What is people's view on usage-based pricing (or at least a component
> of the pricing model)?  It would seem to be the fairest way of
> reflecting actual use, if that's the issue rather than potential use.

> Some have argued, however, that it would discourage use - though I
> can't see that use of telephones or electric lights is affected this
> way...
>
> Sally Morris, Chief Executive
> Association of Learned and Professional Society Publishers
> Email: sally.morris@alpsp.org
> Website:  www.alpsp.org