This document outlines 4D's new licensing structure for Standalone Deployment Licensing. First we outline the history and rationale of the current licensing model. Then we will look at our reasoning for a change to the model. We will outline the model and the rationale for the new model.
The current pricing model for standalone user deployment is based on an unlimited deployment-licensing scheme. This scheme was started in 1996 with the release of 4D SDK. It was felt at the time that for 4D to succeed, ACI (now 4D) had to move to such a licensing scheme. ACI's philosophy at that time was to build a pricing model based on profitability through development tool pricing and as a result to lower deployment pricing. This followed the general industrial thinking at that point in time. In the mid 90's there were many independent "tools" vendors such as PowerSoft, Symantec, Gupta (later Centura) and Borland with Delphi. All these tools followed a model of a high cost for the development license and then a low (or free) deployment cost. These tools focused on their development capabilities and did not in general offer a bundled database. In hindsight with the demise (or virtual demise) of these independent tools vendors it is seen that a long-term profitable business could not be attained with such a strategy. According to a recent report by International Data Corporation, Inprise's sales of its traditional development tools have fallen 63 percent, from $20 million in 1997 to just $7.5 million in 1998. Symantec, which makes the bulk of its revenue from antivirus and PC utility software, saw its tool revenue drop 29 percent, from $22 million in 1997 to $15.7 million last year.
4D provides an unlimited license for its runtime engine by purchasing the appropriate license for each platform (i.e. Mac and Windows). The price in the US for this product 4D Engine, is $999 per platform. Once this product is purchased, a developer can deploy unlimited copies of the engine. Our research shows us that the “average” developer who purchases 4D Engine deploys 25 copies per year. Therefore the average cost for a single deployment, assuming single platform deployment, is $40 per copy. (For those deploying in a mixed Mac and Windows environment, this price doubles to $80 per copy as both engines need to be purchased). Of course there are developers who are deploying in the thousands of units and their costs are measured in cents per unit. It can be seen that the current model is biased towards developers who deploy thousands of units and penalizes small developers who deploy a limited number of installations.
With the current model, standalone deployment licenses contribute less than 5% of 4D's business; this is despite the fact that more 4D Standalone copies are being deployed than any time in the history of the company. Before the change to the unlimited model, standalone deployment licenses contributed over 30% of the total revenue. Of course it could be argued that times have changed and that most customers have moved to client-server technology, however this is not what is being borne out by our market research. Our research shows us that of course there has been a large move to client server but also a continually increasing of deployment standalone database solutions.
In addition the cost of the development tool has dropped considerably from the mid 90's to the current time. The full developer suite of products that used to retail in the $2,500 to $3,000 mark, now have a list price of $799. So instead of the return coming from development tools the market has swung the opposite direction, in that development tools have become cheap and companies strive to make their money from deployment revenues.
(Please note that the following model only applies to 4D Engine (6.5 and 6.7) sold after the launch of 6.7. Current holders of 4D Engine 6.5 will continue of course to have the same rights as now to distribute their 4D Engine 6.5.)
So, if we look at the current model we see two issues, one that developers deploying a small number of licenses pay the same as those deploying large numbers and the desire for 4D to receive an equitable return for the mass deployment of our technology. 4D has decided therefore to implement an annual subscription fee, which will allow the developer the opportunity to buy in at levels that are appropriate to their business needs:
The following is the proposed pricing:
| Per Year | 10 | 25 | 100 |
| Runtime License | $650.00 | $ 900.00 | $ 1,800.00 |
| Unit Price | $65 | $36 | $18 |
When a developer purchases 4D Engine, they will have to buy in at the different unit levels. They will be provided with the 4D Engine software for both Macintosh and Windows platforms and can deploy on annual basis the number of units for the version they purchased. Once licenses are deployed no further payment is required to 4D. Example if a developer purchases a 25 User License this year and wants to deploy another 25 users next year (a total of 50 users), they just need to purchase the 25 User License again next year. Updates to previously deployed customer are not considered a new deployment unless there is a change to the 4D Engine version number. (Changes such as 6.5. -> 6.5.1 are not considered as a change in version). If numbers greater than 100 units per year are required, an OEM program is available.
One of the biggest uses of 4D Engine was to provide demonstration copies to customers to allow the sale of either fully functional standalone or 4D Server software. The new Model allows for anyone with a licensed copy of 4D Engine (10,25 or 100) to distribute an unlimited number of demos irrespective of what number of units were purchased. It is important to note that the demonstration copy must be a demonstration of an application that the sale of, will result in sales of either 4D Runtime Licenses or 4D Server software. Example building a catalog and distributing it free of charge to promote the sale of the items included in the database would not be considered a demo under the terms of the license.
Additional products such as 4D's Plug-Ins and Web Extension License will also be priced according to this model. Their pricing is as follows:
| Per Year | 10 | 25 | 100 |
| 4D Write | $650 | $900 | $1,800 |
| 4D Draw | $650 | $900 | $1,800 |
| 4D Oracle | $990 | $2,000 | $5,000 |
| 4D ODBC | $990 | $2,000 | $5,000 |
| WEL* | $6,000 | $11,250 | $24,000 |
*WEL - Web Extension License (formerly known in the US as the Internet Extension License)
Again, those wishing units larger than 100 units per year can contact 4D for OEM details.
All products can be bought as now in individual units (1), please check the www.4d.com web site for details on their current pricing.
With this change we will also remove the need to be a 4D Partner to purchase 4D Engine licensing.
In the standalone market, the two biggest competitors are Access and Filemaker Pro. They both allow unlimited distribution of their products upon purchase of a special developer edition. However the software allowed to be distributed is only the interpreted version of the database. Developers purchasing 4th Dimension Standard Edition already have the rights to distribute an unlimited version of their interpreted database, this functionality will remain in this product, thus ensuring that 4th Dimension provides a low cost solution for developers wishing to distribute non-commercial products. However 4D offers functionality over and above our competitors allowing the distribution of a compiled and merged application (Single Double Clickable Executable), this is what the new model concerns.
In the Client Development Market this new model actually reduces the costs quite substantially for those wishing to deploy applications that connect to SQL databases such as Oracle. For Example, a developer wishing to deploy a 25 user system that connected to Oracle would under the old model (6.5) have had to purchase $5974 worth of software (4D Engine and 25 4D for Oracle User licenses). In contrast with the new model, this would now cost $2,900, over a $3000 saving!
Examples:
A developer wishes to sell their customer 10 copies of a merged application
on Windows.
This developer would need to purchase the 10 user license. However if the
developer knows that they will be doing further deployments this year then
it may be more prudent to purchase the 25 user license option.
Windows
Pentium II minimum
800 X 600 monitor resolution
Windows 2000, Windows XP.
256 MB RAM minimum
MacOS:
G3 or better processor
800 X 600 monitor resolution
Mac OS X v10.2.8 or later
256 MB RAM minimum
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