Licensing Optimization

The client was able to capture, and clearly quantify, an additional $28 million in profit in just six months

A software company approached Rubicon for a complete review of their worldwide licensing program so that it would better support the strategic direction of the company.

The Challenge

The company had identified several ambitious objectives for the worldwide licensing program:

Improve their competitive position across all products and geographies,
Motivate their channel to sell volume licensing and address strong price competition
Drive enterprise-level software deployment
Account for differences in behavior across product lines based on stage of market and competitive position (e.g. “push” vs. “pull” products).

The Rubicon Solution

Rubicon developed a data-driven framework for analysis across product and competitive categories. The worldwide nature of the project required that Rubicon factor in the needs of the North American, European and Japanese markets.

More specifically, Rubicon looked at four key variables: pricing, unit/point tiering levels, the competitive nature of the product category, and the margin model. Research demonstrated that the existing volume licensing program did not reflect the market stage, product adoption requirements, or revenue vs. penetration objectives for several product lines.

The Results

Rubicon provided the client with a comprehensive set of recommendations and a revised model for the for its Worldwide Licensing Program which approved by the Board of Directors, including specific recommendations for:

Pricing and licensing tier unit break points by key product lines
Margins by class of product (by revenue maximization vs. penetration objectives
Operational elements such as program terms & conditions.

By optimizing the size and location of volume price breaks through a systematic, rational approach, the client was able to capture, and clearly quantify, an additional $28 million in profit in just six months. Investors recognized this as a fundamental improvement in the business, contributing to a 20 percent increase in stock price over the same time period.