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Blackboard $$ balancing act November 20, 2006

Posted by ficial in brain dump.
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The BB annual license fee is going up again. Not surprising.

It makes some sense, but with the decent and popular free options out there (moodle and sakai spring to mind) it seems like a dangerous move at first blush. However, it’s a balancing act. If they lose, say, 1% of their existing users over this, then they actually come out about 3.9% ahead with their 5% price increase. In this world where free software is an option a company will never get all the users. Some percent(x) of the users will use the company’s product, and the rest (100-x) will use something else. Say each customer is worth some value (v), then the company is trying not to maximize x, but x * v. It’s perfectly fine if x goes down as long as v goes up enough to compensate (and then some, ideally). It will be interesting to see as time goes on whether that balance point turns out to be 10,000s, 100,000s or 1,000,000 of dollars.

That being said, the free software seems to be getting better very fast, both from and end users perspective and from an administrators/installers perspective. Also, academia generally likes the idea of open source and free sharing – in many ways it’s what academics is all about. Unless BB starts providing a lot of functional improvements to go along with their price increases I think they could lose more customers than they expect over the next few years.

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