Enterprise Software: List prices?
Do you enterprise software people list your prices on your website? Most enterprise software seems to require the customer get in touch for a quote. What are you thoughts on this?
4 Answers
Generally not.
In the enterprise software world, the final price of a deal is subject to negotiation in a number of different directions (licensing, services work, support work, payment terms, scope of the project). Companies don't list their prices because in a lot of cases, they price the deal based on what they believe the client company can pay. It's all price discrimination.
E.g. "we believe this deal will save you $5M over the life of the deal. Therefore, we'll charge you $4.5M for it." And the negotiation then begins.
Five years ago, I'd have said that almost all enterprise software vendors did - and should - make all pricing custom, with no price of significance published.
There are all kinds of pricing-theoretic reasons you might take into account - but all of those are subordinate to: the buying department.
Buying departments are trained to believe that the ticket price always has a heap of room to negotiate. And enterprise sales people are trained into effective give-take negotiation tactics layered onto solution pricing.
This is a cosy and self-perpetuating arrangement. It's equally wasteful for buyer and seller, and it creates its own barrier to entry.
But that's changing far, far faster than most of the players even recognise. The 'barriers to entry' part, that is.
There are three lead factors in this.
First, infrastructure is being commoditised very, very fast indeed. Compute, storage and communications are readily available, and pricing has gone 'on the page.' That's not to say there's no room for negotiation - but the starting point is referenceable pricing, not "what are you trying to achieve with this project." Enterprise CTOs are being tasked with moving spend into the cloud. Laggards can use tactical cloudwash, leaders will go deeper. And every piece of infrastructure moved or even considered leads to a discovery process: what do we have, what do we need, how else could we do this?
Second, the myth of the perfect enterprise system looks like staying the other side of the economic slowdown. Top-down, the all-embracing solutions providers have lost a lot of their shine. Bottom-up, innovation in rapidly deployable point or local solutions, 'disposable' systems thinking (build fast for the present purpose) and the increasing importance of social media at the edge and sometimes deep into the heart of the enterprise have moved from being the thorn in the side of IT ("let's hunt out and destroy every Access project") to the source of its value add ("to deliver on that business objective, the fastest way that meets our internal policies is...").
Third, the megatrend that B2B marketing is becoming a bolt-on to B2C marketing rather than a fully distinct domain has its leading edge in IT. The delicate balance is disrupted, and companies deploying transparent pricing can gain competitive edge.
So I wouldn't in all honesty recommend any company newly offering software in an area with established players to adopt the 'call us for pricing' approach, unless the software itself is going to be just a small part of the solution. To me, the default if you're looking to build market presence is now to list price, minimise waste and accelerate learning.
Not every corner of IT will change even in the next decade, but in my view, in a recovering economy, if you can be top quartile for both pace and efficiency, you'll likely avoid the turbulence ahead for companies entirely geared to the old model enterprise.
-
"the starting point is referenceable pricing". I've been thinking something similar recently. It can perhaps attract attention or even provide a competitive advantage when trying to enter an established market. I know its hard for a new firm to compete on price, but with big software there will always be additional needs and prices. The trick, as I see it, is to not loose the prospect before he even contacts you. – Patrick Moloney 12 years ago
two reasons:
- enterprise deals usually involve a salesperson who can talk, close and pick a good wine; a technical person who knows how it all works; and a quote specialist who knows the prices and the intricacies of the product licensing.
- the old negotiation rule - 'who speaks firsts, loses.' As soon as you mention a price the customer will always want to pay less.
