Cost Attribution and Charging Models

Mark TysomProduct Manager

– 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

Background (mainly speculative)

Service pricing principles

JANET Price Point

1. Charges cover operational and development costs

2. Articulate the value to customers

3. Remain competitive with the open market

Service portfolio model

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!

• JCS free since 2005– c. 750 organisations to 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

Introducing charges: Janet Certificate Service

1. Do nothing

2. Charge per certificate

3. Annual subscription fee

4. Sell in bundles

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

Charging options: 4 options identified

• Pros– No reduction in demand– Encourages best practice

• Cons– Generates no income– Reduces perceived value

Do nothing

• Pros– Simple to administer– Simple to understand

• Cons– Discriminates against low users

Annual subscription

• Pros– Generates income– Customers pay for what they use

• Cons– Significant admin burden on customers

and Janet– Doesn’t offer discount to heavy users

Charge per certificate

• 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

Sell in bundles

Preferred option: certificate bundles

• 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

Decision announced to customers

• 11/12/12 TERENA announces telephone callback for OV certificates will start on 01/02/13– And recommends DV certificates are used instead

• Publicised tariffs 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

But…

Revised tariff

Janet, Lumen HouseLibrary Avenue, Harwell OxfordDidcot, Oxfordshiret: +44 (0) 1235 822200f: +44 (0) 1235 822399e: Service@ja.net

Questions..?