Anecdotal - for a large publicly traded financial services who wants to manage their book of record software (i.e. the software that holds the truth of "dear client you hold this many assets"), you're looking at $3-5M/year in license costs.
Depending on the business context of a ML solution for a company like the OP describes, you're likely looking at $500k+, but this is pure speculation and requires more information about the customer situation (e.g. is the ML solution going to save the company money or help them sell more).
A financial company I used to work for had a legacy software product used by banks, that the banks themselves had estimated would cost something on the order of $50 million to replace.
The product licensing fees reflected that fact and it was basically a cash cow for the company.
There’s a market for that though. If I am running a startup to generate video meeting summaries, the price of the models might matter a lot, because I can only charge so much for this service. On the other hand, if I’m selling a tool to have AI look for discrepancies in mergers and acquisitions contracts, the difference between $1 and $5 is immaterial… I’d be happy to pay 5x more for software that is 10% better because the numbers are so low to begin with.
My point is that there’s plenty of room for high priced but only slightly better models.
I remember asking a friend who wrote software why it cost what it did. Their answer $20k is the amount an average middle manager can sign off without running it up the chain.
There is no 'ballpark' price, it's mostly dependent on how valuable your product is to them. How much time or money does it save them? What are the alternatives (in terms of other software or non-action, etc.)
On top of that, what are YOUR costs to host and support the software? And, if you haven't considered that larger businesses often require significant hand-holding in terms of support and training, you need to factor that in also.
The only thing I can really say is that getting large businesses to pay can be a PITA, especially at first. You might want to understand how/when they pay new vendors (I've dealt with some large Corp that process new vendors once per quarter. Come in on the 2nd week of the quarter and its going to be a while before you get paid at first).
Yup, and I think that'll quickly uncover the reality that LLMs do not generate enough value relative to their true cost. GPT+ already costs $20/month. M365 Copilot costs $30/user/month. They're already the most expensive B2B-ish software subscriptions out there, there's very little market room to add in more cost to cover payments to rightsholders.
> As a general rule, any software which requires "contact us" is going to be somewhere between $50k and $750k, generally annually, (usually for a fully-loaded site license on the high end)
I'm working at a VC funded startup and fielding calls with "contact us" pricing, and while I've certainly seen some of those numbers floated, I saw just as many reasonably priced options that wanted to get on a sales call to try and upsell/make the case for going with them.
There's an old rule of thumb I read somewhere (can't remember where) that says the maximum amount of money you could charge for "consumerish" software sold in the enterprise was the per-purchase limit on the average manager's corporate credit card. As soon as you went over that it meant getting approval up the org chart chain, and getting approval up the chain meant having a dedicated sales staff to work that chain. As soon as you need that sales staff, the price of your software need to go up to pay for the additional staff. In other words, it's just as hard/expensive to sell a $2,000 product as it is a $20,000 product, so charge $20,000.
I'd like to preface this with the fact that I have next to zero experience about the topic of pricing/charging for such service's, so what I say might sound naïve, but…
Is it really that expensive, though? I mean I can see it being expensive if you use it inside a product you offer for free, but if it's a commercial product, I imagine the pricing isn't that much especially if you consider that using your own infrastructure for this type of machine learning and image scanning would be much much more expensive.
>They sell an enterprise version of Julia for $1500 per year.
$1500 per year
You can't support 100 people strong developer collective on proceeds from licensing of such product at all, given how small that commercial "data science" market is.
Which leads to another paradox (that I think I first saw Joel Spolsky point out, but I can't find the reference). Business software - and consulting services - always costs $20 either or $200,000. If it costs $20, you just buy it and use it. Once it gets over a certain price point - around $1000 or so - it requires approvals before it can be purchased. This leads to vendors having to develop full in-house departments dedicated to navigating those approval processes, so the price of the software has to be hiked to account for the additional headcount.
I have no insight into the actual company's thinking, but in general there's not necessarily any relationship between the cost to provide a feature of software and the amount that is charged to use it. It's usually more about willingness/ability to pay. If most of the people who need access to the raw data have a certain use case that means they're willing to pay for the expensive plan, that's a good reason to charge for it, assuming your goal is to make money as a business.
Some good points here, but doesn't help the frustration as a potential customer.
The old adage when the price listed says '$ call us', it's a big number. For a certain class of application (ERPs, CMS, etc), sure does make sense, because pricing is very complex. At the opposite end of the spectrum, I would be baffled by a company that tells me the cost is tens or hundreds of dollars, but this doesn't exist.
The middle ground is products that are in the low hundreds to several thousands of dollars. There's a number of times where I have come across something that appears to fulfill a need I have, but that I could also do myself (whether by spending a week or because there's an open-source version that does 80% to base on).
Keep in mind there's always extra friction and admin overhead to dealing with commercial software, which has to be considered as part of purchasing: does it need a license to run on my build server? Does it have any kind of per-user charge, requiring extra system work to track? Are there redistribution licensing problems? Is there some stupid DRM that's going to cause me grief? Are you capable of dealing with a separate technical user (me) and paying user (my accounting department)? Am I going to have to deal with annual renewals? etc..
So if it turns out the direct cost is less than building it myself, it's a much easier decision. If it's significantly higher, now I have to really weigh the above against the opportunity cost and risk.
When I can't even see where in the spectrum the software lies, but I'm going to have to spend at least 30 minutes on the phone with some sales person to figure that out (plus probably deal with them periodically harassing me for the next year), the whole thing is that much less appealing.
I tend to move on to the next one, and only come back if there are no remotely similar options. It makes me sad a bit because there's no way this company can know they lost me as a customer merely by putting '$ call us' (even if the price would have been acceptable).
As you already know, this is typical for "enterprise" software due to the idea that potential customers will immediately click away if the price seems too high, so you need to let your customer know what value is in your software before they immediately walk away.
One take-away from this is the old "if you have to ask, you can't afford it", and another is that they're automatically filtering out lower-value or price-sensitive customers.
However, an obvious counterpoint is that Atlassian built a multi-billion-dollar business around up-front pricing, and even seem to still offer that up-front pricing today.
As a general rule, any software which requires "contact us" is going to be somewhere between $50k and $750k, generally annually, (usually for a fully-loaded site license on the high end), but there are definitely exceptions above and below. Certainly there are companies in some industries (WorkDay, Oracle, SalesForce, etc) that are known for being extremely expensive, and there are certainly many companies that would like to get into an upper tier but just aren't quite there yet, and smaller startups (esp non-VC funded) are often on the low end.
Depending on the business context of a ML solution for a company like the OP describes, you're likely looking at $500k+, but this is pure speculation and requires more information about the customer situation (e.g. is the ML solution going to save the company money or help them sell more).
reply