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Working at a public university I can say the recent move towards "contact us" pricing without including ANY pricing information has led to us not being able to

by lvspiff 11y ago

Working at a public university I can say the recent move towards "contact us" pricing without including ANY pricing information has led to us not being able to look at many products. The way it works in my state is unless the vendor is already licensed with the university I'm not allowed to contact the vendor except to get a quote. If you start to give me a sales pitch asking questions about needs I am going to cut you off and hang up because its illegal for me to work with the vendor prior to an agreement in place. If your product is over 25K then I have to conduct an RFP which then means your company gets to make a pitch on paper and good luck convincing your product that I want is better than no name product I've never heard of from Oracle/IBM because they can undercut you because procurement has no clue what features/setup costs will be additional in their product that isn't in yours. They just go with what is cheaper. On the other hand you give me up front on your website 1 user pricing I can take that public information and multiply it by the number we need, send it up the chain, make a convincing argument for sole sourcing, and then you will suddenly look like heroes with procurement because they were able to get it "so much cheaper" because I just multiplied what it cost for 1 * 30,000 (e.x.: number of students).

caseysoftware 11y ago
Great points. I've also seen another pattern with per user or consumption-based systems... When something is low enough to experiment with and still fall into the "petty cash" area, an employee can buy a little (or for a month) and test it out. If they're somewhat successful, they can expand it out to their immediate team, still with a tiny budget. As they prove out usefulness/value and expand their users/usage, obviously the cost goes up. But by the time they have to "Get Approval" from someone really high up - like a VP or procurement group - they have X users or Y months of success. Selling it to the higher ups then becomes easier and a more likely sale.
- douche 11y ago
  That was pretty much the Yammer sales strategy, as I observed it. Infiltrate the customer by making it free and easy to sign up an organization, build a user base organically, without having to involve those controlling the purse-strings. Eventually, there's enough people using it that compliance and security becomes an issue, and the business sort of has to pay for the enterprise support to CYA.
  - troels 11y ago
    Credit where credit due - I think Basecamp were one of the early ones to perfect this strategy.
    - DenisM 11y ago
      It's an old hat trick. VP of MS SQL Server was telling the same story about MSSQL around 1999 at a division meeting. For on-premises products it's even more sticky.
enraged_camel 11y ago
Context: I work for a professional services firm. We sell, implement and customize enterprise software for large organizations, including public universities. We NEVER provide pricing upfront. This is despite the fact that our software vendors have their prices listed clearly on their pricesheets. We know the price of a user license. But the first time our clients see the price is after we've performed our due diligence, learned the ins and outs of their business, and are sitting in front of their C-level people presenting the final proposal along with the Scope of Work document that outlines implementation details. The reason we don't provide prices upfront is because it commoditizes the software and therefore our skills and services. It encourages clients to do an extremely shallow feature-by-feature comparison of the competing products. Doing that makes sense when purchasing commodities such as toothpaste or laundry detergent. You can look at two products at the shelf, compare their features, and go with the one that you think is better based on the messaging on the package ("25% more whitening power!"). But enterprise software is not like that. It is very complex and the price of the software is often only a small part of the final price, which is frankly unknown at the start of the engagement. That's why me giving you pricing information wouldn't help you one bit (in fact it could make you look bad to your superiors when the final price is several times higher than what you gave them originally). Here's the thing: most of our clients LIKE the fact that we don't discuss price upfront. They understand that software is a different beast, and its value is dependent upon how well it fits into and/or can be molded into the needs of the business. Only very inexperienced purchasers push us for price, and over the years we've found ways of disarming or at least sidestepping them. The bottom line is that companies who provide price upfront end up competing on price. And history has shown us that that's a race to the bottom.
- lvspiff 11y ago
  Totally understand and agree with your observations as a pro services firm. That is the funniest part of the university I work at - say your company implements a solution for us like Product X. Well then all the sudden we can explore your ENTIRE product/service catalog with you without consequence because we have an agreement with you (for whatever). So even though you sold us product X we can also look into service Y where I'm not as concerned with cost but getting the right one. To say however they LIKE not discussing price upfront seems a bit disingenuous - yes I would want to discuss the service first but I am going to want an idea of what its going to cost to put that into my budget/grant/etc to see if it fits, especially if funded by the state. My university may be different though as I've found out many times over. I imagine getting that first contract though wasn't easy - as that initial connection had to likely come through an RFP? and what is the ratio of RFP submission to actual customer?
voltagex_ 11y ago
Agreed - people are going to face a lot of the same issues in any state or federal government organisation in many parts of the world. If SpaceX posts pricing publicly [1], you really have no excuse as a tiny SaaS startup. [1]: http://www.spacex.com/about/capabilities http://www.spacex.com/about/capabilities
- noahmbarr 11y ago
  There's a reason prices are always hidden in jewelry store display windows. There's a little price tag on each item, but it's always tucked out of sight. IMHO, there's pro's/con's to publicly listed pricing. There's definitely no hard and fast rule. Some con's to consider: [1] It anchors prospects at certain price points (can be good and bad), [2] It might scare people off before you can value sell them and justify your pricing. With enterprise SaaS, it entirely depends on: [1] what you're selling, [2] who you're selling to, and [3] the buyers' journey you're looking to accommodate / create.
- vehementi 11y ago
  I can't find the link but the reason pricing is hidden is because you do this "It costs $10,000" ...if they don't balk: "per month" ...if they don't balk: "per user" ...if they don't balk: "per CPU"
  - retube 11y ago
    ... if they don't balk: "per register" ;)
- XorNot 11y ago
  WOW. I did not know they did this. But that is awesome. When trying to buy things even with a substantial budget in research, "contact us" was the most irritating thing - I don't need the damn up sell, but I do need to know whether you're thinking 10k or 50k.
  - jandrese 11y ago
    I hate when the salesguys are then put off because you made them go through the apparently difficult process of generating a quote and then didn't buy their product. If you had given me even a ballpark price up front I wouldn't have wasted your salesman's time!
lifeisstillgood 11y ago
My takeaway - have a gov/edu pricing section that is clear, RFQ friendly, aimed at internal "champions" and absolutely unconnected to the prices I will charge enterprises really useful insight thanks
Johnny555 11y ago
Even in the private sector, I assume that "call for pricing" is another way to say "If you have to ask, you can't afford it", and I often skip those vendors if I can't find even ballpark pricing - just tell me if it's $5 a seat or $500 a seat we can work out the exact pricing later.
pbreit 11y ago
That's a problem with your university, not "contact us" pricing.
- noja 11y ago
  It's a problem for the SaaS vendors who are missing out on public sector contracts.
  - notahacker 11y ago
    It's a problem for the university if the procurement rules really are that explicit and dumb. I mean, just imagine what you'd get if you need custom work done and had to put the phone down on anybody that has the temerity to try to discuss scope with you. "We had to turn down all these companies with relevant expertise because they wanted to talk to us, but it's OK, we've found a price for this guy on Elance and he's $5 per hour. We're not sure how long he'll take but he's definitely the cheapest option."
  - pbreit 11y ago
    If that is the customer mentality, I'm not sure they are missing out. Problematic customers can be death.

by lvspiff 11y ago

caseysoftware 11y ago

Great points. I've also seen another pattern with per user or consumption-based systems... When something is low enough to experiment with and still fall into the "petty cash" area, an employee can buy a little (or for a month) and test it out. If they're somewhat successful, they can expand it out to their immediate team, still with a tiny budget. As they prove out usefulness/value and expand their users/usage, obviously the cost goes up. But by the time they have to "Get Approval" from someone really high up - like a VP or procurement group - they have X users or Y months of success. Selling it to the higher ups then becomes easier and a more likely sale.

douche 11y ago
That was pretty much the Yammer sales strategy, as I observed it. Infiltrate the customer by making it free and easy to sign up an organization, build a user base organically, without having to involve those controlling the purse-strings. Eventually, there's enough people using it that compliance and security becomes an issue, and the business sort of has to pay for the enterprise support to CYA.
- troels 11y ago
  Credit where credit due - I think Basecamp were one of the early ones to perfect this strategy.
  - DenisM 11y ago
    It's an old hat trick. VP of MS SQL Server was telling the same story about MSSQL around 1999 at a division meeting. For on-premises products it's even more sticky.

enraged_camel 11y ago

Context: I work for a professional services firm. We sell, implement and customize enterprise software for large organizations, including public universities. We NEVER provide pricing upfront. This is despite the fact that our software vendors have their prices listed clearly on their pricesheets. We know the price of a user license. But the first time our clients see the price is after we've performed our due diligence, learned the ins and outs of their business, and are sitting in front of their C-level people presenting the final proposal along with the Scope of Work document that outlines implementation details. The reason we don't provide prices upfront is because it commoditizes the software and therefore our skills and services. It encourages clients to do an extremely shallow feature-by-feature comparison of the competing products. Doing that makes sense when purchasing commodities such as toothpaste or laundry detergent. You can look at two products at the shelf, compare their features, and go with the one that you think is better based on the messaging on the package ("25% more whitening power!"). But enterprise software is not like that. It is very complex and the price of the software is often only a small part of the final price, which is frankly unknown at the start of the engagement. That's why me giving you pricing information wouldn't help you one bit (in fact it could make you look bad to your superiors when the final price is several times higher than what you gave them originally). Here's the thing: most of our clients LIKE the fact that we don't discuss price upfront. They understand that software is a different beast, and its value is dependent upon how well it fits into and/or can be molded into the needs of the business. Only very inexperienced purchasers push us for price, and over the years we've found ways of disarming or at least sidestepping them. The bottom line is that companies who provide price upfront end up competing on price. And history has shown us that that's a race to the bottom.

lvspiff 11y ago
Totally understand and agree with your observations as a pro services firm. That is the funniest part of the university I work at - say your company implements a solution for us like Product X. Well then all the sudden we can explore your ENTIRE product/service catalog with you without consequence because we have an agreement with you (for whatever). So even though you sold us product X we can also look into service Y where I'm not as concerned with cost but getting the right one. To say however they LIKE not discussing price upfront seems a bit disingenuous - yes I would want to discuss the service first but I am going to want an idea of what its going to cost to put that into my budget/grant/etc to see if it fits, especially if funded by the state. My university may be different though as I've found out many times over. I imagine getting that first contract though wasn't easy - as that initial connection had to likely come through an RFP? and what is the ratio of RFP submission to actual customer?

voltagex_ 11y ago

Agreed - people are going to face a lot of the same issues in any state or federal government organisation in many parts of the world. If SpaceX posts pricing publicly [1], you really have no excuse as a tiny SaaS startup. [1]: http://www.spacex.com/about/capabilities http://www.spacex.com/about/capabilities

noahmbarr 11y ago
There's a reason prices are always hidden in jewelry store display windows. There's a little price tag on each item, but it's always tucked out of sight. IMHO, there's pro's/con's to publicly listed pricing. There's definitely no hard and fast rule. Some con's to consider: [1] It anchors prospects at certain price points (can be good and bad), [2] It might scare people off before you can value sell them and justify your pricing. With enterprise SaaS, it entirely depends on: [1] what you're selling, [2] who you're selling to, and [3] the buyers' journey you're looking to accommodate / create.
vehementi 11y ago
I can't find the link but the reason pricing is hidden is because you do this "It costs $10,000" ...if they don't balk: "per month" ...if they don't balk: "per user" ...if they don't balk: "per CPU"
- retube 11y ago
  ... if they don't balk: "per register" ;)
XorNot 11y ago
WOW. I did not know they did this. But that is awesome. When trying to buy things even with a substantial budget in research, "contact us" was the most irritating thing - I don't need the damn up sell, but I do need to know whether you're thinking 10k or 50k.
- jandrese 11y ago
  I hate when the salesguys are then put off because you made them go through the apparently difficult process of generating a quote and then didn't buy their product. If you had given me even a ballpark price up front I wouldn't have wasted your salesman's time!

lifeisstillgood 11y ago

My takeaway - have a gov/edu pricing section that is clear, RFQ friendly, aimed at internal "champions" and absolutely unconnected to the prices I will charge enterprises really useful insight thanks

Johnny555 11y ago

Even in the private sector, I assume that "call for pricing" is another way to say "If you have to ask, you can't afford it", and I often skip those vendors if I can't find even ballpark pricing - just tell me if it's $5 a seat or $500 a seat we can work out the exact pricing later.

pbreit 11y ago

That's a problem with your university, not "contact us" pricing.

noja 11y ago
It's a problem for the SaaS vendors who are missing out on public sector contracts.
- notahacker 11y ago
  It's a problem for the university if the procurement rules really are that explicit and dumb. I mean, just imagine what you'd get if you need custom work done and had to put the phone down on anybody that has the temerity to try to discuss scope with you. "We had to turn down all these companies with relevant expertise because they wanted to talk to us, but it's OK, we've found a price for this guy on Elance and he's $5 per hour. We're not sure how long he'll take but he's definitely the cheapest option."
- pbreit 11y ago
  If that is the customer mentality, I'm not sure they are missing out. Problematic customers can be death.