Tip to Maximize Your Protected List Price Prior to a Dynamics GP 2013 Upgrade

Microsoft has announced all kinds of licensing changes for the new Dynamics GP 2013 release. Many of the a la carte modules that customers paid extra for in the past will be included free in Dynamics GP 2013. So a thrifty company might reason, “why not deactivate that extra functionality now to lower my overall system list price so I can pay a lower annual enhancement fee, and get it free when I upgrade.”  Well Microsoft is a step ahead of you. They have put a rule in place about lowering your Protected List Price. BUT that doesn’t mean there isn’t still some wiggle room.

Here is the gist of “LMT Upgrade Protected List Price Policy”:

Customers who purchased Microsoft Dynamics GP prior to October 1, 2012 are eligible for a License Migration Transition (LMT) Upgrade. Customers doing a LMT Upgrade to Microsoft Dynamics GP 2013 are restricted from reducing the value of their Protected List Price (PLP) for 36 months prior to the LMT Upgrade. Before being allowed to do the LMT Upgrade, customers with reduced PLPs must repurchase any combination of users and functionality to reestablish the highest PLP in effect within the last 36 months. (But no earlier than July 11, 2012).

For example:

On December 1, 2012 Customer A has a Microsoft Dynamics GP 2010 system Protected List Price of $36,000. Their Dynamics GP annual Enhancement fee is calculated at 16% of this list price at: $5,760 per year.

Part of that $36,000 is Payroll for 101-250 users for $5,000.

They could deactivate the Payroll module in their Microsoft Dynamics GP 2010 system because they know they will get unlimited Payroll for free in Microsoft Dynamics GP 2013. This will lower their PLP to $31,000. They could reason that they would save $800 per year on their ongoing Enhancement fees.

BUT when they try to upgrade to Dynamics GP 2013 Microsoft will force them to get back to $36,000 as their highest PLP since July 11, 2012.  

Here is the insider tip. They do not have to reinstate payroll in order to get back to the highest PLP. They could deactivate payroll for $5,000, then buy 3 additional Business Essentials users for a total of $6,750.  Now their PLP is back up to its highest point PLUS when they upgrade they have 3 additional licenses that will be included in their LMT Upgrade.

In this scenario they will have added 3 extra user licenses to their Dynamics GP 2013 system but will only be paying Enhancement fees on $1,750 instead of $9,000. ($9000 is the cost for three additional users in Dynamics GP 2013). This is a savings of $1,160 per year on Enhancement Fees.  (Note: I hope I got all figures correct, math has never been my best subject, but you get the idea…)

The biggest tip I can give to all our Microsoft Dynamics GP clients is to sit down with us prior to your Microsoft Dynamics GP 2013 upgrade so we can review your specific scenario and goals. Then we can recommend the best strategy to get the most savings.

By Anya Ciecierski, CAL Business Solutions, www.calszone.com