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Cost Attribution and Charging Models. Mark Tysom Product Manager. Background (mainly speculative). Changes to funding expected No confirmation as yet c.2015 funding profile likely to change May fund core network and some services Other services will need to be financially self-sustaining

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cost attribution and charging models

Cost Attribution and Charging Models

Mark Tysom

Product Manager

background mainly speculative

Background (mainly speculative)

  • Changes to funding expected
    • No confirmation as yet
  • c.2015 funding profile likely to change
    • May fund core network and some services
    • Other services will need to be financially self-sustaining
  • Less funding will be top sliced from institutions
    • Giving customers more choice of how they spend it
    • Will want some services, but not others
    • Need to unbundle existing services and price them
service pricing principles

Service pricing principles

Charges cover operational and development costs

Articulate the value to customers

Remain competitive with the open market

JANET Price Point

some certainties

Some certainties

  • Less central funding for us and our customers
  • Need to unbundle services
  • Need to offer product packages
  • Need to price these in accordance with pricing principles
  • Need to do this asap!
introducing charges janet certificate service

Introducing charges: Janet Certificate Service

  • JCS free since 2005
    • c. 750 organisationsto date
  • High demand
    • 28,000 issued over 5 years
    • 9-12k over next 3 years
  • Market intelligence
    • 78% prepared to pay
  • Charging to be introduced
    • Customers notified 1 Nov 2012
    • Charges to begin 1 May 2013
charging options 4 options identified

Charging options: 4 options identified

  • Do nothing
  • Charge per certificate
  • Annual subscription fee
  • Sell in bundles

Each of the above have a number of advantages and disadvantages…

do nothing

Do nothing

  • Pros
    • No reduction in demand
    • Encourages best practice
  • Cons
    • Generates no income
    • Reduces perceived value
annual subscription

Annual subscription

  • Pros
    • Simple to administer
    • Simple to understand
  • Cons
    • Discriminates against low users
charge per certificate

Charge per certificate

  • Pros
    • Generates income
    • Customers pay for what they use
  • Cons
    • Significant admin burden on customers and Janet
    • Doesn’t offer discount to heavy users
sell in bundles

Sell in bundles

  • Pros
    • Customers pay for what they use
    • Rewards heavy users with discounts
    • Simpler to administer than per certificate option
  • Cons
    • Significant development to online portal required
decision announced to customers

Decision announced to customers

  • First free service to move to a charged model
    • Consultation with wider Jisc
    • Exec level sign-off required
    • Very careful customer messaging
    • Tariffs announced on 1st November 2012
    • Grace period of 6 months to obtain free certificates
    • Changes made to portal
  • Customer response
    • Better than expected
    • General “acceptance”
    • Admin burden for collegiate universities
slide14

But…

  • 11/12/12 TERENA announces telephone callback for OV certificates will start on 01/02/13
    • And recommends DV certificates are used instead
  • Publicisedtariffs were derived from OV business model
    • DV less value than OV certificates
    • DV certificates undermine business model
    • Need to introduce an additional tariff
    • Further changes to portal required (£ € $)
    • Expect most customers to choose cheapest option (DV)
    • Could result in 50% reduction in expected revenue