Gartner Research

Tying Software License Cost to Revenue-Based Pricing Metrics Poses a Threat to Predictable IT Spending

Published: 17 March 2015

ID: G00275686

Analyst(s): David McCoy, Lori Samolsky


Blindly licensing software via an unclear revenue-based pricing metric will expose your organization to substantial risk, costs and nasty surprises. Do IT procurement professionals really want to have to explain to their CEO and CFO why revenue growth isn't such a "great idea" this fiscal year?

Table Of Contents
  • Key Challenges


  • Who Dug the Hole?
  • Why Is a Revenue-Based Approach a "Hole Demanding Caution?"
  • Is There Any Benefit in a Revenue-Based Pricing Metric Approach?
  • Gartner's Position Is Clear: The Risks of Revenue-Based Pricing Metrics Outweigh the Focused Benefits


  • Publicize to Your Stakeholders the Risks and Complexities of Revenue-Based Pricing Metrics
  • Prepare Your Organization for Known Revenue-Based Pricing Metric Risks Through a Rigorous Evaluation of Its Existing Contracts
  • Protect Your Organization by Agreeing Contractual Boundaries for Revenue-Based Pricing Metrics Across IT and Non-IT Functions
  • In Conclusion

Gartner Recommended Reading

©2021 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. and its affiliates. This publication may not be reproduced or distributed in any form without Gartner’s prior written permission. It consists of the opinions of Gartner’s research organization, which should not be construed as statements of fact. While the information contained in this publication has been obtained from sources believed to be reliable, Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner research may address legal and financial issues, Gartner does not provide legal or investment advice and its research should not be construed or used as such. Your access and use of this publication are governed by Gartner’s Usage Policy. Gartner prides itself on its reputation for independence and objectivity. Its research is produced independently by its research organization without input or influence from any third party. For further information, see Guiding Principles on Independence and Objectivity.

Already have a Gartner Account?

Purchase this Document

To purchase this document, you will need to register or sign in above

Become a client

Learn how to access this content as a Gartner client.