I help hundreds of technology buyers each year to understand the impact of technology changes on their software contracts, but I also get questions from software providers about how best to price their products. Some are bringing new products to market and want to know how to maximize revenue, while others are struggling with obsolete metrics such as per processor and want to update their pricing for the modern mobile, cloudy world. The answer is usually to find licensing metrics that make their pricing value-based while balancing simplicity and fairness. The more value a customer gets from your product, the more they should be willing to pay for it. If you make your pricing too simple then you won't match value sufficiently closely, which will cause you to price yourself out of some deals and leave money on the table in others. If, OTOH, you try to match value too precisely you risk making your pricing so complicated that buyers will reject it, and you, completely.

For example, suppose you have a product that will help people do their jobs better, so you decide that charging for each user will be a good approximation for value. The potential problem is that not everyone will use your product the same, in terms of depth of functionality and/ or frequency of access. Your single per user price will be unfair to companies with long tails of light, infrequent users, for whom you'll therefore be too expensive. Conversely your pricing will be unfair to you when the customer is mostly power users. To make your pricing fairer you could have different prices for different categories of user, but then you risk being criticized for being too complex.

I’ve spent the past two days with about 2,000 new friends. Polycom’s annual sales conference provided a drumbeat of messages about what is to come from the vendor. As Kate Hutchison, Polycom’s chief marketing officer, talked about the future, you could feel the certainty of an organization that has set its mind to a task. I sensed a certain swagger from everyone with whom I interacted that echoed Kate’s desire to see the company push the limits of human collaboration at work. CEO Andy Miller left no doubt that the company was committed, describing the unalterable market forces that have shaped his vision for the company and letting everyone in the room know that he intended to assemble a rogue’s gallery of industry goliaths to drive Polycom forward — inviting Dreamworks, HP, IBM, and Microsoft to contribute to his keynote address to hammer home this point. Sue Hayden, VP of global alliances and programs, has been charged with making this so — and, based on my conversations with her about companies from Apple to Motorola to Siemens, she will.

Polycom is committed to five things moving forward: being easier to work with, being easier to use, being more innovative, assembling more complete business solutions, and pursuing the business models their customers prefer. The values that Polycom put forth include:

• Being easier to do business with. Polycom is simplifying the process for buyers — working to make ordering products and services easier. There is now a tool for systems managers to enable zero-touch configuration. The company’s commitment to channels and end users was on display all week.

Avaya announced its intention and agreement to purchase Radvision today. These two technological powerhouses have the combined brainpower to put together some of the most advanced unified communications solutions in the world. Radvision’s experience in building complex modular communication components plus Avaya’s strength in delivering complete, reliable communications solutions is an appealing combination. The strengths of this combination include:

• Breadth of open technologies. Radvision’s H.323 and SIP stacks will combine neatly with Avaya’s Aura architecture to enable a wide range of interoperable communications solutions from varying vendors built on multiple old and new technologies.
• Video portfolio. Radvision’s Scopia videoconferencing portfolio (from  desktop to telepresence) extends Avaya’s current partner-driven video endpoint model.
• The cloud. Radvision’s service provider relationships gives Avaya a firmer footing from which to sell cloud solutions to service providers.

Issues that management will have to deal with in the combined company:

• Cultural fit. Avaya’s consensus-driven and collaborative culture may not provide the direction Radvision’s developers got used to within Radvision’s traditional command and control structure.
• Revenue growth. Radvision has been on a slide. The Avaya/Radvision combination will have to open new markets and increase win rates to pay back the $230 million purchase price — approximately three times Radvision’s annual revenue.

IBM, as always, put on a really big show at Lotusphere this year. More than 5,000 attendees from all walks of IT and business came together to find out how IBM could help them execute their business strategies — and IBM promised to help them make their business social, and thus more personal and effective. Every IBM executive that I heard present or spoke with had one thing in mind: how to help customers evolve the culture of business from one where employees hoard information and rely on their own ability to solve problems to get themselves and their firm ahead to one where sharing information and insight enables better decision-making and better customer service.

Over two and a half days, I talked to (or heard presentations from) dozens of companies leveraging social technologies to accelerate their business, including:

• A global management consulting firm that is using an internal social platform to enable project teams to find and engage process and industry experts for client work — rather than having staffing managers rely on their personal networks — and which plans to extend that platform to support document creation and client delivery processes.
• A snack food company that created a public social platform to engage competitors in a process to eliminate a threat to raw material supply across their industry — rather than working on their own to solve the problem for their supply chain only.
• A retail bank that uses an internal social platform to optimize routing of customer inquiries to banking products experts located at other branches or central sites — rather than relying on branch personnel who may not know the answer or promising to respond to the customer later.