I just read this CNET blog post by Matt Asay appropriately named CIOs sick of enterprise software pricing” which was his commentary on a report Forrester Research recently published on enterprise software pricing & licensing. The short version can be summed up in one quote from the report, “software licensing and pricing continues to be marred by complexity, soaring maintenance costs, and a lack of flexibility and alignment with business goals.”
The example he gave was that Microsoft’s pricing book is over 100 pages long. Ouch!
It solidified for me that we try to maintain in our pricing strategy and overall company philosophy: keep it simple. Which I will freely admit is easier said than done. We just lived through this process internally when we revamped our pricing packages for 2008. What started as a 2-hour meeting turned into a 3-week project over the holidays to get it right. The lesson we learned is not to tie yourself in knots over every possible scenario, which I’m sure the bigger you get and the broader your product portfolio and customerbase, the greater the challenge.
We modeled our pricing after a couple of companies we admire – Jive Software (makers of collaboration software) and Atlassian (makers of JIRA). As an example, Jive’s product ClearSpace competes with Microsoft. Now, compare Jive’s pricing page with Microsoft’s 100 page (plus) price book and tell me who do you think will be the easier company to deal with?
While I’m sure most customers are getting tired of complicated pricing – we see it in licensing mod
els as well. We’ve had customers get ecstatic simply because our product isn’t “node locked” (tied to the MAC ID of the computer), or doesn’t require a “dongle key” or connect to a license server at startup to be allocated a key. Who wants to deal with all that? How many people even know what a dongle key is, and why should they? You can laugh, but these models that were prevalent during the 80’s and 90’s are still around. It’s like selling someone a beta max player today for home movies and charging them a ton to service it and pinging them extra for every time their friends come over to watch a movie on it (oh, you want to share it with others, oh well that will cost you more).
As we continue to grow, I’m constantly buying new services, software and products for our company and when I’m on the buying side, I’m instantly reminded just how frustrating it can be when things aren’t outlined clearly to me as a customer. Is our pricing model perfect, no. But I will say we’re open to suggestions and are committed to being as open, progressive and fair with our pricing as possible. It’s what we’d want if we were the customer.