Across the world, AS/400 managers wearing dark sunglasses and trench coats are quietly entering restroom stalls in airport terminals. There, they are finding manila envelopes containing IBM announcement documents and tape recorders. When they press "play" they hear the following message:

"Good morning, AS/400 professional. Recently, our operatives unearthed a plot by IBM to confuse hundreds of thousands of your colleagues with its Version 3 price policies. Your mission, should you choose to accept it, is to decipher these price policies...."

While this mission may not be as impossible as those accepted by the great television spy team of the 1970s, it is as full of complications and potential for mistakes. This article helps you crack the secret code of the Version 3 software price policies. It begins with an explanation of how Version 3 prices and terms differ from those used for Version 2 software. Next, it provides examples of a Version 3 software purchase and a migration from Version 2 to Version 3 with all the cost calculations. Finally, you'll be briefed on IBM special offers that could save you money and furnished with guidelines you can use to save even more.

Get Out Your Secret Decoder Rings...

To successfully decipher IBM's Version 3 price policies, it helps to start with the Version 2 policies that we already understand.

Under Version 2, IBM charged for almost all software licenses using a graduated (tiered) one-time charge. These charges were based on the processor group of the AS/400 running the software. IBM arranged the 19 different processor groups by AS/400 model number. For example, models D35, E35, and F35 were all in the same group, so a D35 owner paid the same license fee for a software product as an F35 owner.

While this price scheme made sense when IBM first created it, problems cropped up as the company announced more powerful models. An F35, for instance, is 80 percent more powerful than a D35 and can support many more users, yet its Version 2 software costs the same. Realizing this inequity, IBM decided to base Version 3 prices on two different criteria: the relative performance of the processor and (where relevant) the number of users accessing the software. IBM executives feel this method yields prices that better represent the real value of a program.

As part of its effort to base Version 3 prices on relative processor performance, IBM sharply reduced the number of processor groups from 19 to four. 1 shows the models that fit into each group. The company also decided to charge for Version 3 software in four different ways:

As part of its effort to base Version 3 prices on relative processor performance, IBM sharply reduced the number of processor groups from 19 to four. Figure 1 shows the models that fit into each group. The company also decided to charge for Version 3 software in four different ways:

o A flat one-time charge-For some products, neither the processor size nor the number of users represents the true value of the program. IBM charges a flat fee for these products listed in 2.

o A flat one-time charge-For some products, neither the processor size nor the number of users represents the true value of the program. IBM charges a flat fee for these products listed in Figure 2.

o A graduated one-time charge-For other products, IBM feels that the processor size alone best represents the value of the program. The license fees for such products increase through the four processor groups. 2 also lists these products.

o A graduated one-time charge-For other products, IBM feels that the processor size alone best represents the value of the program. The license fees for such products increase through the four processor groups. Figure 2 also lists these products.

o A user-based charge-Certain products, especially those that run almost entirely on an intelligent workstation, derive all their value from the number of users accessing the software. For these products (shown in 3), IBM bases its charges on the number of users.

o A user-based charge-Certain products, especially those that run almost entirely on an intelligent workstation, derive all their value from the number of users accessing the software. For these products (shown in Figure 3), IBM bases its charges on the number of users.

o A combined one-time and user-based charge-These products (see 3) derive their price from a combination of a one-time charge (either flat or graduated) plus a fee per user.

o A combined one-time and user-based charge-These products (see Figure 3) derive their price from a combination of a one-time charge (either flat or graduated) plus a fee per user.

Since user-based pricing causes the greatest confusion among AS/400 professionals, let's take a closer look at how it operates. The first thing to understand is that IBM counts users three different ways. Each user-based product uses one of the following methods:

o Concurrent users-The number of users that are accessing the program simultaneously at any given moment. Programs that count concurrent users do not monitor who logs on to the program, only how many log on.

o Registered users-The number of unique users that have authorized access to the software.

o Distributed workstation features-The number of copies of a program, or copies of a particular feature of a program, that the AS/400 site downloads to workstations. Typically, programs that count workstations as users run almost entirely on workstations.

Another thing to understand about user-based software is that each program defines a "user" differently based on the job the program performs. For instance, CICS/400 defines a user as a person running the START CICS command, but LAN Server/400 defines a user as a File Server I/O Processor (FSIOP). For further information about the price policies for each user-based program, refer to 3.

Another thing to understand about user-based software is that each program defines a "user" differently based on the job the program performs. For instance, CICS/400 defines a user as a person running the START CICS command, but LAN Server/400 defines a user as a File Server I/O Processor (FSIOP). For further information about the price policies for each user-based program, refer to Figure 3.

Several other details about user-based pricing are important to remember.

o The new processor groups and user-based price policies apply only to Version 3 software. IBM has not changed any prices, terms, or conditions for Version 2 software.

o On programs that have both a one-time and a user-based charge, the one-time charge may include one or more "free" users. Customers need not pay an additional user-based fee for these users.

o Per-user charges are different for each program, but they are the same across all processor groups for each product. For instance, the per-user charge for OS/400 is $400 regardless of the size of the processor.

o Some programs stipulate a maximum number of chargeable users. If you exceed the maximum, you pay nothing for the excess users.

As the previous paragraphs demonstrate, user-based pricing can be quite complicated. To manage the complexities, IBM has built a license-management facility into OS/400 Version 3 that enforces user-based software policies for both IBM and third-party applications. The facility contains two major elements: software keys and the license manager itself. Software keys are encrypted objects that tell the license manager how many users can access each user-based program. The license manager utilizes this information to warn users when they are exceeding their limits. If necessary, the license manager can also limit the number of users to the stipulated maximum.

There is one wrinkle in this enforcement scheme. IBM has announced that it will not deliver software keys for its own applications until the second half of 1995 (see "IBM Delays Software Keys" in last month's Significa for more information). The company made this decision because of the logistical problems involved in quickly shipping hundreds of thousands of keys over a short period of time. Until IBM determines which shipment methods will minimize disruptions to its customers, it is asking systems administrators to manually enter the user limits into the license manager. Under these circumstances, the license manager will warn administrators that they are exceeding user limits on IBM applications, but will not force hard compliance with the limits.

An Example of a Version 3 Software Purchase

Now that we've decoded the secret language of Version 3 pricing, we're ready for our first mission: purchasing a Version 3 OS/400 license.

Let's assume you're buying an AS/400 Advanced Series model 300 to manage your new warehouse and need an OS/400 license for the system. As 3 shows, OS/400 license fees are a combination of a graduated one-time fee and a user- based fee that counts the number of concurrent users. Therefore, we need to look up the one-time fee, calculate the user-based fee, and add the two together to get the license fee. The one-time fee is easy to calculate. As 1 shows, the model 300 is in processor group P20. The one-time OS/400 fee for P20 systems is $4,000 (all Version 3 prices are in announcement letter 294-227 dated May 3, 1994).

Let's assume you're buying an AS/400 Advanced Series model 300 to manage your new warehouse and need an OS/400 license for the system. As Figure 3 shows, OS/400 license fees are a combination of a graduated one-time fee and a user- based fee that counts the number of concurrent users. Therefore, we need to look up the one-time fee, calculate the user-based fee, and add the two together to get the license fee. The one-time fee is easy to calculate. As Figure 1 shows, the model 300 is in processor group P20. The one-time OS/400 fee for P20 systems is $4,000 (all Version 3 prices are in announcement letter 294-227 dated May 3, 1994).

Counting the number of concurrent users takes a little more work. To do the job right, you need to estimate the maximum number of workstations that could simultaneously access the system during each hour of the day.

For our example, let's assume that up to 15 warehouse workstations will connect to the system at the peak hour. During the same peak hour, up to 35 customer service representatives may access the warehouse system for availability information. You also estimate that up to five other users from other parts of the company could simultaneously access the system. This gives you a total of 55 concurrent users. To give yourself room for expansion, you decide to purchase an OS/400 license for 60 users.

Since the one-time charge for OS/400 includes one user, you only need to pay for 59 users on this system. The maximum chargeable number of users for a P20 system is 75, so you have to pay for all 59 users at a cost of $400 per user. The final cost for the OS/400 license is:

 One-time charge (includes one free user) $ 4,000 User-based charge (59 x $400) $23,600 Total charge $27,600 

This example assumes that all of the users are directly accessing the new system. In many cases, however, users access AS/400s through other host systems. In such cases, IBM counts each communications link to the AS/400 as a user. For instance, imagine that the 35 customer service representatives in the previous example are accessing the warehouse system through a second AS/400 and are doing so through a single communications link. In this case, IBM would count all the representatives as a single concurrent user on the warehouse AS/400 and as 35 concurrent users on the second AS/400.

A Road Map to Reversioning

Now that you've successfully managed a Version 3 purchase, you're ready to tackle a tougher mission: the Version 3 reversioning process. Reversioning is the migration of your software from Version 1 or Version 2 to Version 3.

There are three rules of thumb to remember when reversioning your software. First, reversioning to any Version 3 license costs roughly 10 percent of the purchase price for the same license. To illustrate this principle, let's return to the warehouse system we just discussed. This time, however, imagine the system is a model E45 running Version 2 software, and that you already own it. Instead of buying a new license for OS/400 Version 3, you are now reversioning your Version 2 license to Version 3. As in the previous example, your system is in the P20 processor group and you want an OS/400 Version 3 license for 60 concurrent users.

Normally, the one-time charge for an OS/400 Version 3 license in the P20 group is $4,000. However, IBM charges only $400 (10 percent of the customary charge) for Version 1 or Version 2 owners who reversion to Version 3. When you reversion, your one-time charge includes one free user. This means you must pay a user-based charge for the remaining 59 users. Instead of paying the usual fee of $400 per user, you pay only $40 (again, 10 percent) per user. Therefore, the total cost of reversioning is:

 One-time charge (includes one free user) $ 400 User-based charge (59 x $40) $2,360 Total charge $2,760 

The second rule of thumb is that you can either reversion your software to the Version 3 processor group that your system is in or reversion your software to the next higher group at 10 percent of the usual price. IBM created this second option to help certain customers avoid hefty license upgrade charges in the near future. Later in the article, we'll explain the value of this option and when to use it.

The final rule of thumb is that once you have reversioned, you cannot take further advantage of the 90 percent discount. Instead, you must pay normal upgrade fees. Let's look again at the E45 system we reversioned above. As we already mentioned, the E45 is in group P20. If you decided after reversioning that you wanted to upgrade your E45 to a model 310 (which is in the P30 software group), you would have to pay a group upgrade fee. For OS/400, you would pay the difference between the one-time charge for a P20 license ($4,000) and a P30 license ($10,000), or $6,000.

A Further Word About Processor Group Upgrades

Unfortunately, processor group upgrades can sometimes be more complicated than the one in the previous paragraph. To understand these complications, you need to know that IBM calculates most group upgrade prices using the following principles:

o If there is a one-time charge for the software, the upgrade fee equals the difference between the one-time charges for the original group and the new group.

o If there is a user-based charge for the software, customers must pay the per- user fee for any users they did not pay for in the original group, up to the maximum number of users stipulated for the new group.

Since the second principle is confusing, let's illustrate it with an example of an OS/400 group upgrade. Imagine once more that you are the E45 owner in the previous example. This time, however, you have 120 concurrent users instead of 60. When you reversioned your software, you had to pay for only 74 of your concurrent users. This happened because the E45 is in group P20, and IBM charges P20 customers for a maximum of 75 concurrent OS/400 users. Since you got a free user with the one-time charge, you paid for 74 concurrent users.

You now decide to upgrade your E45 to a model 310. Since the 310 is in group P30, you must upgrade your OS/400 license to the P30 level. To upgrade, you must pay the difference between the one-time charges for the P20 and P30 licenses. You must also pay the per-user fee for the users you did not have to pay for in the P20 group, up to the maximum number of users IBM sets for the P30 group (200 concurrent users for OS/400). The calculations are as follows:

 One-time upgrade charge ($10,000 - $4,000) $ 6,000 User-based charge (120 - 75) x $400 $18,000 Total charge $24,000 

The Plot Thickens

Now that we've described all the major pricing policy changes, here are some special clauses that IBM has thrown in to complicate matters since the May 3 announcement. One of these clauses could abort your mission, but the rest could help you achieve it at a lower cost.

Let's start with the "mission abort" clause. If you did not install your Version 1 or Version 2 software on a system before June 3, you cannot reversion it at 10 percent of the typical charge. Instead, you must purchase new Version 3 licenses at the regular price. Without this rule, almost anyone could acquire Version 3 software for 10 percent of the usual fee see "IBM's Software Pricing Snafu," Significa, MC, August 1994).

At first glance, this condition seems to cause problems for people who are currently purchasing software. IBM won't ship Version 3 licenses until late October or November. As a result, people who need new software before the Version 3 ship date would supposedly have to buy interim Version 2 licenses at full price and then pay full price again for Version 3 licenses. Obviously, nobody would accept such a situation. In answer to this problem, IBM is offering free interim licenses for Version 2 software to customers who purchase new Version 3 software.

Next, let's look at clauses that can help you. For starters, IBM is giving everyone who reversions a 70-day grace period after receipt of the V3R1 software. During this grace period, customers can purchase additional users for their V3R1 software at 10 percent of the typical charge. To qualify for this offer, users must place the reversioning order on or before March 1, 1995 and install V3R1 software no later than April 1, 1995.

To illustrate the offer, let's say you reversion a B60 to OS/400 V3R1 and initially order 50 concurrent users. Under the reversioning rules, you only have to pay $40 (10 percent of the usual $400 fee) per user. A few days later, you discover that your calculations were too conservative and that you really need a license for 60 users. During the grace period, you could accommodate the 10 extra users at $40 each.

If you plan on purchasing or upgrading to certain AS/400 Advanced Series models when you move to Version 3, you can take advantage of other IBM offers. If you purchase an Advanced System model 200 or an Advanced Server model 20S or 30S, you will receive a 30 percent discount on one-time and user-based charges for a variety of Version 3 software products, including OS/400. In addition, you can automatically qualify for unlimited user licenses on selected software by purchasing relatively small quantities of user licenses. For more information, check IBM announcement number 394-147 issued on July 26.

You can take advantage of even more offers if you upgrade your existing AS/400 to an Advanced System model 200. You can reversion all your software to Version 3 at the usual 90 percent discount. You can also qualify for unlimited user licenses on selected software by purchasing small quantities of user licenses. For more information, check IBM announcement number 394-183 issued on August 2.

IBM has a special offering for customers who replace their B-series AS/400s with selected Advanced Series models. In many cases, owners of large B-models will purchase an Advanced Series model 310 or 320. However, these models are in processor groups P30 and P40, while the B-series models are in groups P10 and P20. For these customers, reversioning would involve an upwards jump of two processor groups. Normally, IBM lets customers reversion only one group higher at 10 percent of the typical fee. However, IBM will let B-series customers who buy a model 310 or 320 reversion two groups higher at the 10 percent rate.

Tips for Completing the Mission

Now that we've cracked the Version 3 code, here are some principles to follow that will save you money. The first two principles are for customers who reversion their software to Version 3.

o Principle 1-If your hardware upgrade plans will put you into the next higher processor group in the near future, reversion to the higher processor group now at the 10 percent rate.

As discussed earlier, Version 1 and Version 2 licensees who migrate to Version 3 can either reversion to their current processor group or to the next higher group at the 10 percent rate. If you have plans to upgrade your system in the near future to a model in the next higher processor group, you'll save money by reversioning to that group now.

Imagine that you own a model D35 running Version 2 software. The system currently supports 70 users, and a maximum of 60 users access the system at peak hours. You plan on upgrading this system to an F35 or a model 300 within a year. Your D35 is in processor group P10, but the F35 and the model 300 are in processor group P20. You have two choices: you can reversion to the P10 group now, then do a P10-to-P20 upgrade when you upgrade the processor, or you can reversion to the P20 group now. As 4 shows, you'll save $15,750 just on OS/400 by choosing the second option.

Imagine that you own a model D35 running Version 2 software. The system currently supports 70 users, and a maximum of 60 users access the system at peak hours. You plan on upgrading this system to an F35 or a model 300 within a year. Your D35 is in processor group P10, but the F35 and the model 300 are in processor group P20. You have two choices: you can reversion to the P10 group now, then do a P10-to-P20 upgrade when you upgrade the processor, or you can reversion to the P20 group now. As Figure 4 shows, you'll save $15,750 just on OS/400 by choosing the second option.

o Principle 2-If there is any possibility that your user count could increase, order additional user licenses when you reversion.

When you initially reversion, you only pay 10 percent of the per-user fee. Thus, it makes sense to plan for anticipated expansion now at a 90 percent discount instead of paying full price later. This principle is especially important if your user count is already close to the maximum number of chargeable users for your processor group.

The system in 4 illustrates this principle. The D35 owner in the example already has 60 concurrent users. If he reversions to the P20 level, he can purchase licenses for 60 concurrent OS/400 users at $40 each, or order 75 user licenses (the maximum chargeable number) and thereby gain an unlimited P20 license. The 15 extra user licenses cost only $600 (15 users times $40) at the initial reversioning; they cost $6,000 if the customer purchases them after the 70-day grace period.

The system in Figure 4 illustrates this principle. The D35 owner in the example already has 60 concurrent users. If he reversions to the P20 level, he can purchase licenses for 60 concurrent OS/400 users at $40 each, or order 75 user licenses (the maximum chargeable number) and thereby gain an unlimited P20 license. The 15 extra user licenses cost only $600 (15 users times $40) at the initial reversioning; they cost $6,000 if the customer purchases them after the 70-day grace period.

o Principle 3-Regularly review IBM marketing announcements for special offers and discounts that could save you money.

There's gold in those announcements if you're willing to dig through them. If you plan on purchasing or upgrading to a model 200, take a close look at announcement number 394-183 issued on August 2. If you purchase or upgrade your system to an Advanced Series model 200 with processor feature 2030, you can get an unlimited user license to OS/400 Version 3 by purchasing only four additional users. The announcement contains similar price breaks for other processor models and software products.

o Principle 4-Don't wait for a better deal from IBM.

There's a lot of "wait and see" talk circulating around the AS/400 community these days. Many customers think that Version 3 will only be around for a year or so before it's replaced by Version 4. Some feel they can save money by sticking with Version 2 for now and jumping to Version 4 when it ships.

These customers are right on the first count and wrong on the second one. Version 3 is probably a one-year product, but IBM does not want to reward people for skipping it. Company executives are already considering how to price Version 4 software so that those who skip from Version 2 to Version 4 pay at least as much in total charges as those who migrate to Version 4 by way of Version 3. Besides, customers who shun Version 3 will miss out on the vastly improved function and performance that the new software offers.

Mission Accomplished

As they used to say in the old spy shows, "This concludes your briefing." By now you understand Version 3 pricing concepts and terminology. You've applied those concepts to Version 3 software purchases, reversioning, and group-to- group upgrades. You also know about IBM's special offers and discounts, and you've learned important principles that will save you even more money. You've accomplished your first Version 3 mission.

Now you're ready to tackle a Version 3 software acquisition using your own system and real money. We have every confidence you'll succeed. If you run into any problems, you can always turn to this article as a reference source. Unlike those top-secret tape recordings, this magazine will not self-destruct in five seconds.

Lee Kroon is an industry analyst for Midrange Computing.

Unlocking the Secrets of Version 3 Software Pricin

Figure 1 Version 3 Processor Groups

 UNABLE TO REPRODUCE GRAPHICS 
 
 Unlocking the Secrets of Version 3 Software Pricin
 
 Figure 2 Products with One-time Charges and No User-based C
 
 Product Product Type Identifier of Base Charge AS/400 S/38 Utilities 5763-DB1 Flat Language Dictionaries/400 5763-DCT Flat SystemView Managed System Services/400 5763-MG1 Flat Advanced Function Printing Fonts/400 5763-FNT Flat Advanced Function Printing DBCS Fonts/400 5763-FN1 Flat Advanced Function Printing Utilities/400 5763-AF1 Graduated AS/400 BASIC 5763-BA1 Graduated ILE COBOL/400 5763-CB1 Graduated Point-of-Sale Communications Utility/400 5763-CF1 Graduated Communications Utilities/400 5763-CM1 Graduated CallPath/400 5763-CP2 Graduated Cryptographic Support/400 5763-CR1 Graduated ILE C/400 5763-CX2 Graduated SystemView Information Warehouse DataHub Support/400 5763-DM1 Graduated DB2/400 DataPropagator Relational Capture and Apply/400 5763-DP1 Graduated AS/400 Business Graphics Utility 5763-DS1 Graduated SystemView Automation Center/400 5763-ES1 Graduated OSI File Services/400 5763-FS1 Graduated FORTRAN/400 5763-FT1 Graduated RM/COBOL-85 5763-MC1 Graduated Message Queue Manager/400 5763-MQ1 Graduated OSI Message Services/400 5763-MS1 Graduated SystemView ManageWare/400 5763-MW1 Graduated OSI Communications Subsystem/400 5763-OS1 Graduated Application Program Driver/400 5763-PD1 Graduated AS/400 PL/1 5763-PL1 Graduated AS/400 Pascal 5763-PS1 Graduated Performance Tools/400 5763-PT1 Graduated Application Development ToolSet/400 5763-PW1 Graduated ILE RPG/400 5763-RG1 Graduated Neural Network Utility/400 5798-RZK Graduated Facsimile Support/400 5798-RZT Graduated KnowledgeTool/400 Run Time 5798-RZW Graduated KnowledgeTool/400 Development 5798-RZX Graduated TCP/IP File Server Support/400 5798-TAA Graduated * These programs may also include optional features that have user-based pricing. 
 
 Unlocking the Secrets of Version 3 Software Pricin
 
 Figure 3 Products with User-based Charges
 
 Product Name Product Type of Base Type of Identifier Charge Users Counted OS/400 5763-SSI Graduated Concurrent Backup Recovery and Media Services/400 5763-BRI Flat Registered CoOperative Development Environment/400 5763-CDI N/A Distributed workstation feature Application Development Toolset: 5763-CLI N/A Distributed Client Server/400 workstation feature CICS/400 5763-DFH Flat Concurrent Query/400 5763-QUI Flat Concurrent SystemView System Manager/400 5763-SM1 Flat Registered DB2/400 Query Manager and 5763-STI Flat Concurrent SQL Development Kit/400 ADSTAR Distrbuted Storage Manager/400 5763-SVI Graduated Registered /5GB storage Ultimedia Business Conferencing/400 5763-UBI Flat Registered Ultimedia Mail Server/400 5763-UMI Flat Registered Client Access Ultimedia Tools/400 5763-USI Zero Registered AS/400 VRPG/400 Client/2 5763-VRI N/A Distributed workstation feature OfficeVision/400 5763-WPI Flat Registered Client Access/400 Family 5763-XAI Flat Concurrent LAN Server/400 5763-XZI Flat Registered # of Users Additional per Maximum Number of Definition of "a User" in Base User Charge Chargeable Users 1 Yes P10/25, P20/75, Each workstation, P30/200, P40/450 APPC connection or use of TELNET application. 0 Yes/10 media 500 media Each reel/cartridge tape registered, counted in blocks of 10. 0 Yes No Each download of code to a workstation. 0 Yes No Each download of code to a workstation. 1 Yes N/A Each person using START CICS user command. 1 Yes 25 (all groups) Each developer using WRKQRY interface. Each user who interfaces to OfficeVision/400 (OV/400) for data/test merge. 1 system Yes/system 250 systems A system being managed and also the system doing the managing. 1 Yes 25 (all groups) Each developer using embedded SQL. Each user of ISQL/Query Manager functions or RUNSQLSTM CL command. 25GB Yes/5GB storage No/Contact IBM Rep. Each 5GB of client data plus per client above 500GB managed, plus each registered client workstation. 2 Yes No Each download of code to client workstation. 1 Yes No Each person enrolled. 0 Yes No Each download of code to client workstation. 0 Yes No Each download of code to a workstation. 0 Yes P10/25, P20/100, Each person enrolled. P30/175, P40/250 1 Yes 125 (all groups) Each user accessing Client Access/400. 1 Yes No Each File Server IOP. 
 
 Unlocking the Secrets of Version 3 Software Pricin
 
 Figure 4 Two Version 3 Migration Paths
 
 Scenario: A customer owns a model D35 running Version 2 software. He wants to reversion to Version 3 now and upgrade to an F35 or model 300 within a year. The customer can migrate to OS/400 Version 3 (supporting 60 concurrent users) in two ways. Option 1: Reversion to OS/400 Version 3 in processor group P10; then upgrade from P10 to P20 when upgrading the processor. Reversion to P10 at 10 percent of regular prices One-time charge (includes one free user) $50 User-based charge* (24 x $40) $960 Upgrade from P10 to P20 One-time upgrade charge $3,500 User-based charge* (60-25) x $400 14,000 Total Cost $18,510 Option 2: Reversion to OS/400 Version 3 in processor group P20 immediately. Reversion to P20 at 10 percent of regular prices One-time charge (includes one free user) $400 User-based charge (59 x $40) $2,360 Total Cost $2,760 Difference in Costs $15,750 * In the P10 group, customers only pay user-based fees for up to 24 users. In the P20 group, they pay for up to 75 users. In a P10-to-P20 upgrade, they must pay for the additional users over 25 and up to 75.