How Software Vendors Use NDAs to Hide Pricing Information

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Executive Summary

Find out about the issues with HANA and S/4HANA pricing before you negotiate with SAP.

Introduction

This article discusses an important strategy used by some software vendors to enforce pricing secrecy.

Hiding Pricing Information with NDAs

The problem with hiding pricing information is that software vendors use it as a control technique to pry information from the buyers. It also dramatically lengthens the process of finding out the pricing information and reduces the comparability of applications. To function efficiently, markets require published price information. There are some laws in the US on this topic for consumer products, but not for corporations’ products. On several occasions, vendors have sent me non-disclosure agreements (NDA) that covered pricing information. However, this is a misuse of the NDA legal concept, as NDAs are designed to protect proprietary information—technical information, software intellectual property—and not pricing information. The legal phraseology implied that one could be sued for sharing pricing information with a third party if it damaged the company’s business. However, wouldn’t any sharing of pricing information, unless the software vendors were the low-cost provider, “damage their business?” Pricing information is part of what makes markets work and should be published. There is a fascinating story about the lack of quantification of fees in the mutual fund industry, which has significant TCO connections but in a different realm.

Hiding Price Information as a Control Technique

The problem with hiding pricing information is that it is used as a control technique by software vendors to pry information from the buyers. It also dramatically lengthens the process of finding out the pricing information and reduces the comparability of applications. To function efficiently, markets require published price information. There are some laws in the US on this topic for consumer products, but not for corporations’ products. On several occasions, vendors have sent me non-disclosure agreements (NDA) that covered pricing information. However, this is a misuse of the NDA legal concept, as NDAs are designed to protect proprietary information, technical information, software intellectual property, and no pricing information. The legal phraseology implied that I could be sued for sharing pricing information with a third party if it damaged the company’s business. However, wouldn’t any pricing information sharing, unless the software vendors were the low-cost provider, damage their business? Pricing information is part of what makes markets work and should be published.