WSO2 has announced its ‘Fair Pricing for Governments’ initiative. It is aimed at making the fees that central and local government departments pay proportional to the average citizen’s salary. This will be done through a transparent pricing model that will also expose and help eliminate other charges. Among those are arbitrage costs and the risk of corruption. It will ensure that the public sector gets what it needs at an affordable price.
It’s a major change to how software is sold. Pricing uses a range of models that range from per-user to the amount of system resources the software consumes. This means that a local government body supporting 10,000 citizens with an average salary of £20,000 pays the same for software as a neighbouring body with 15,000 citizens on an average £30,000 salary. That sucks money away that should be spent on other local services.
Dr Sanjiva Weerawarana, Founder, CEO and Chief Product Officer at WSO2, said, “Our goal is to facilitate software independence and help governments worldwide access high-quality, ethical digital services.
“We believe that fair pricing must reflect the economic context in which governments operate. By aligning fees with national income levels and applying a consistent, transparent framework globally, we are taking a concrete step toward enabling more equitable digital modernisation.”
Fairer pricing is ethical pricing
WSO2 is staying true to its core principles of ethical technology practices and inclusive modernisation. This is what open-source companies often espouse but fail to monitor and deliver. But setting a variable pricing model is not easy. How do you work across a country where the variance in average salaries can be substantial? Just as important, how granular do you go?
Let’s look at some different examples.
Across the UK, the average salary by region, a larger measure than the local authority, can be extreme. The average UK salary, according to Statista, is £39,039. Look deeper, however, and that ranges from £49,692 in London to £34,403 in the North East. Within those numbers, there will be further disparities once you start to drill into different towns and areas.
In the US, California is even more disparate. The average salary by city ranges much more widely than in the UK. In San Francisco, it ranges from $95,000-$104,000. Los Angeles is £72,384-$75,000. Meanwhile, in Fresno, it plummets to just $56,921-$60,000. Yet the city council in Fresno will often be paying the same amount for software as San Francisco does.
But getting the granularity of numbers is difficult. For the UK, we were able to use Stastista. For California, it meant using a range of recruitment sites, which is why the salary range.
How is WSO2 going to tackle this?
WSO2 has created an index-based pricing methodology. It takes the World Bank Country Income Classifications, using W3C government membership fees as a baseline for calculation. It then aligns its subscription fees with those to allow the public sector to choose how it wants to be billed.
They can choose to negotiate and try to get a better deal, or they can accept a new standardised, non-negotiable discount that reflects national income levels. The release gives an example of how this will work at the country level.
“High-income countries will receive a 20% discount; upper-middle-income countries will be eligible for a 35% discount; lower-middle-income countries will receive a 50% discount, and low-income countries will be entitled to a 62% discount.”
What will be more interesting is how this plays out below the country level, for example, local governments for states and cities. In the UK, WSO2 is available to all local authorities through the Digital Marketplace. That has multiple programmes and frameworks that determine costs. Will WSO2 tune those frameworks for the different buyers in different regions or stay with a single national pricing model?
Enterprise Times: What does this mean?
This is an interesting and even exciting move by WSO2. Being willing to link software costs to affordability is more than good business. It’s ethical and great optics. What is exceptionally interesting is that private equity company EQT, which owns WSO2, has signed off on this. It shows significant faith from EQT that this is the right move, at least for WSO2.
It will be interesting to see how EQT monitors this and what KPIs it has set for WSO2 in terms of income and market growth. If successful, will it then greenlight this to other companies it owns? Several of those in the technology sector, such as SUSE and Open Systems, are also open-source companies. WSO2 works closely with both of them. Will they adopt the same pricing approach?
While this ethical pricing sits well with technology companies, can it be rolled out further? Just as importantly, will this now be a starting point across the open-source industry for more ethical pricing on their paid-for services?
It also opens the door beyond public services. Will WSO2 start to roll this model out to its SME base in those different categories of countries? That could be a major boost to technology adoption.
It will take time for this to play out and for the granularity of this change to be seen. Whatever happens, changes to pricing models come along rarely in technology and almost never in favour of the customer. WSO2 is bucking the trend here. Let’s see if anyone else chooses to follow them.
