71–80 of 81 posts
You can offer: A. Limited to say 5 years. The world will have changed by then. B. $200k License Fee with 20% Annual Maintenance. Then in a burst of generosity you can waive the License Fee but keep to the Annual Mtce. This is pretty standard, sounds a bit sneaky but focusses customer attention on value.
- For most organizations, using software without a support & maintenance contract is not a viable option, and yearly support & maintenance cost is typically ~20% of the product "list" price of the product. Many customers of large enterprise vendors typically see these costs go up every year. There has been revolts over this but often customer does not have much leverage.
- Unlike SaaS, companies who buy software products, have to pay for implementation and ongoing operations of the software as well. Enterprise products can be quite complex and require one or more people to operate it. Implementation costs alone can be hefty (often higher than software cost itself) and make SaaS a much much better option for the customer.
- Enterprise is littered with products that purchased but never used or no longer used. What looks like a good solution does not work, or requirements change, etc. In short, unlike SaaS where customer has almost no risk, customers take a lot of risk by buying software products outright.
I'd like to offer my opinion as someone who LOATHES the SaaS model. The first and only thing you need to consider is who you're selling to (power systems engineering businesses, as you said) and what they do. They make power systems that need to be reliable and last for fifty years or more. You probably know banks use 30 year old COBOL software to make the world tick. Why? Because it's reliable and rarely breaks. Whe…
>Same goes for power and manufacturing industries, they have old control systems that rarely break, because failures are very expensive. Out of curiosity, how much experience do you have selling to the manufacturing industry? I have no problems drumming up interest for my sales and marketing SaaS product for manufacturing industry. If you found otherwise we should compare notes.
Same manager is probably leasing their $50k car and will just get another when the lease is up. People have a hard time putting value on what they cannot touch.
Well there a lot of tax advantages to leasing compared to buying out right
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This is a valid argument. SaaS is a step in the wrong direction for use cases where continued access to the service is crucial. I do not trust LastPass or similar third party systems with my passwords. Passwords are too important a part of my identity that I should have complete and exclusive control over it. (I use a mix of Text files+TrueCrypt+Timemachine and Dropbox for sync). Same goes for email. I use IMAP to ke…
>my email address is still owned by a third party (Google) and they can lock me out of my identity any time They can lock you out of your past emails, but they can't take your identity away if you use Google Apps for custom domains or MSN Live Domains. You'll still have access to your email address which would probably be "me@firstlastname.com" or something. Actually, if you make it a habit to schedule a weekly outlo…
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What about the new SaaS that 37signals' Basecamp Breeze is trying to put forward? Pay one fee of X$ and have access to it forever. I guess this applies more to single purpose laser focused services that are not expected to change in the foreseeable future.
"Forever" meaning "as long as 37signals exists" ?
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Not sure I understand this sentiment. This same manager would likely be buying a 15k used car outright if he's worried about paying for software over time. The problem that I have with SaaS is that most companies pursuing it's business model fail at the value option. Take Freshbooks for instance - I started using their service 3 years ago for 9$ per month. This got bumped to 14$ per month. I now have to pay 20$ per m…
well...depends on how much growth your org has seen in 3 years. If your people are still using Windows XP with IE 7...sure what you say makes sense. But if your org has seen major growth, lots of new employees requiring all kinds of new platforms and form factors then its a slightly different story.
I'm not talking about large installs for big organizations - I was speaking directly to the value options for small organizations. Most SaaS are designed to funnel end customers into higher profit services for no real reason other then higher profit. Value wise it's not a good deal for the customer.
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well...depends on how much growth your org has seen in 3 years. If your people are still using Windows XP with IE 7...sure what you say makes sense. But if your org has seen major growth, lots of new employees requiring all kinds of new platforms and form factors then its a slightly different story.
My org is just me. My revenue has remained fairly flat over that period. But the cost to access my data has risen rather steeply over that period. Had I purchased a stand alone application to start with, I would have saved 50% of the cost. I'm not talking about large installs for big organizations - I was speaking directly to the value options for small organizations. Most SaaS are designed to funnel end customers in…
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Well there a lot of tax advantages to leasing compared to buying out right
Sure, but there can also be tax advantages to buying outright. Germaine to the discussion of SaaS is the fact that, in the case of packaged software, I can either elect to deduct 100% of the purchase price immediately (up to a certain annual dollar limit) or depreciate it over three years. All other things being equal, a $3,000 deduction this year beats a $1,000/year deduction for the next three years.
Something I'm not sure that you've thought of that might be one way to think about how some people assess part of the value: Just as a hypothetical boundary case: Why should I pay you to do nothing forever? That's effectively the question that gets run in my head when I look at SAAS. That sound quite insulting, so - just to point out again: Boundary case! I don't think you actually are doing nothing forever. However,…
We provide annual subscription for our software ( http://www.infocaptor.com ) but the price for subscription is significantly lower than if the customer decides to go the perpetual route with optional upgrade path. Some do ask for perpetual license and most of them are happy with the annual subscription as it behaves like an installment plan. In either case, the customer hosts the software internally within their int…
Assessing it on its own merits however:
The software just is worth X to me - what I can do with it - and you're trying to guess the price, and perhaps more importantly the surrounding conditions on which I'll accept. What it's worth to me is the upper boundary, I ought never to pay more than that - what it's worth to you is the lower boundary, you ought never to accept less than that (probably what it cost you to get vs your leverage advantage - most likely scarcity) - and what's in between we can deal over. If you have two estimates, one really large and one really low, for what's essentially the same thing, that implies to me that you just don't know what a fair price for what your software does is.
If I know that you consider something to be absolutely cheaper then I also know that your bargaining position is likely dramatically wider than you might like to convince me it is. I know you can go much lower than you do.
As a strategy, having two prices wouldn't work on me. It's too fishy. Perpetual being bad doesn't make subscription good. It just means you value someone choosing sub and are prepared to offer them a substantial discount to get them to do it. Or to put it another way: Why are the permanent terms so much less advantageous to you that you're prepared to charge 'significantly [more]' for them before you agree? My instinct says there's a trick there - you wouldn't be trying to get me to go with the cheaper option so strongly unless there was some long-term advantage for you in doing so, data lock-in perhaps, or the knowledge that people don't, in practice, upgrade as much as you hope.
Why do you value someone choosing sub? If you're trying to get the best of a cost/risk balance in doing so, then it seems like your interests are inherently opposed to theirs.