Why is it important? Oracle’s ability to re-price can effectively eliminate any product pricing discounts off list, should you cancel a partial license set. Even with a price hold, Oracle leverages its support policies drawn into the contract by External Reference (#6 on our List) to re-price your annual maintenance and service support costs to effectively eliminate your discounts and make your costs as high as list price if you terminate partial orders.
If you were to buy 100 licenses at a 50% discount, and you were paying $100,000 of annual maintenance service and support charges, you would think that if you terminated 50 of those licenses (maybe you no longer had the need for them), you could pay $50,000 per year instead of $100,000 per year, but Oracle doesn’t think so. Their standard policy allows them to re-price the annual maintenance service and support costs associated with any order with any partial termination. Their logic is that perhaps they wouldn’t have given such a large discount on that order if the volumes were less.
In this example, under the standard Oracle terms, they would have the ability to ‘re-price’ your annual maintenance and support services costs to $100,000 per year, effectively eliminating any chance you have of getting a support reduction even though you are now only supporting half the number of licenses. This is why, even with a price hold, we strongly encourage all clients to negotiate a provision in the agreement that ties any re-pricing resulting from termination of a partial order back to an effective discount of the price hold in effect. This is fair. In most cases, the originating transaction would have had a slightly better discount than the price hold, so it represents a slight unit cost increase in support for the lesser volume, but not such a huge value grab whereby it completely erodes any discount as is the case with the standard Oracle contract language.
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