Oracle FAQ Your Portal to the Oracle Knowledge Grid

Home -> Community -> Mailing Lists -> Oracle-L -> Re: TERM LICENSES - ANY Experience

Re: TERM LICENSES - ANY Experience

From: Tim Gorman <>
Date: Sun, 01 Jun 2003 07:24:37 -0800
Message-ID: <>

This is my understanding of the situation for the US only; your mileage may vary and I could be very much out of date. But I don't think things have changed a lot...


The perpetual licenses are supposed to be a one-time payment for the
software, after which you have rights to the software going forward into
"perpetuity".  Yes, forever is a long time;  we'll see...

The 4-year and 2-year "term" licenses are merely leases on the software that
expire.  After the term is over, you no longer have a license.  The 4-year
term license usually costs 60% of the perpetual license and the 2-year term
license usually costs 35% of the perpetual license.  The upsides of the term
licenses are obvious:  less upfront cost.  The downside should be equally
obvious:  you have to make another decision and potentially another payment
in 2 or 4 years.  Oracle sales folks hate going through the decision process
again, so they try not to mention the term pricing if they can.

The rationale for term licensing is either startup companies or other
uncertain projects.  Why pay for "perpetuity" when you are unsure that you
are still going to be around in several years?

Of course, there is some game theory involved.  Oracle changes its licensing
schemes every once in a while, and market conditions can always shift.  If
you pay 35% now, you might have more favorable terms and conditions in two
year's time.  On the other hand, those shifts in conditions can also work in
Oracle's favor and against you, so you may end up missing an opportunity to
lock in now.

You rolls the dice, you takes your chances...

If you think you're going to use the software for only 2- or 4-years total,
then obviously the term licensing is a good deal overall.  However, let's
say you use the software for 6 years overall (after which you switch to
freeware PostGreSQL, which by now has features comparable to Oracle15z).  If
you buy three successive 2-yr term licenses, you have paid 105% of a
perpetual license (i.e. 35% times three).  And so on...


Another thing to note:  besides these license costs, you have to factor in
the on-going support fees, which are charged annually for the duration of
the license.  They are still (I believe) 22% of a perpetual license.  Note
that support fees are not discounted into terms the way licenses are.  You
are always charged a percentage of the full (perpetual) license cost, not of
your discounted term license cost.

Of that 22%, 15% goes toward allowing you free upgrades of the software and
7% goes toward the use of Worldwide Support (i.e. MetaLink et al).  So, when
you pay the initial license, you are licensing one version of the software.
In order to be able to upgrade your license, you have to pay the 15% annual
fee.  In order to use MetaLink, you have to pay the 7% annual fee.

Nice business to be in, no?

Hope this helps...

on 6/1/03 1:14 AM, at wrote:

> We are concerned on licensing especially as we are setting up a
> Disaster Recovery Site. During our Investigation it seems that
> TERM licensing can come out cheaper. Anyone have any idea on
> this or any disadvantages of leasing the software as opposed to
> owning it,
> thanks
> Sam
-- Please see the official ORACLE-L FAQ: -- Author: Tim Gorman INET: Fat City Network Services -- 858-538-5051 San Diego, California -- Mailing list and web hosting services --------------------------------------------------------------------- To REMOVE yourself from this mailing list, send an E-Mail message to: (note EXACT spelling of 'ListGuru') and in the message BODY, include a line containing: UNSUB ORACLE-L (or the name of mailing list you want to be removed from). You may also send the HELP command for other information (like subscribing).
Received on Sun Jun 01 2003 - 10:24:37 CDT

Original text of this message