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Recently we had a company voice their objections to the pricing structure of ProWorkflow. Although we have many companies quite happy with the pricing, occasionally someone objects. It’s not the objection to price that is the issue here. It was more that customers often have a lack of education about the basis for the pricing – they simply think it’s a number, and don’t understand the justification.

I’ve asked permission from this company to republish the email conversation as it sheds some light on talking to ‘price driven’ customers. Here’s the email… (Read from Top down)

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CUSTOMER: Hi ProWorkflow team!

Just checking to see how much a 2 user license would cost running ProWorkflow on my own server.
Thank you.

– CUSTOMER

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Hi CUSTOMER,

Thanks for the enquiry…

We have a standard price of $20 per staff login per month, with code customers we change it so instead of paying per month, you can pay 3 monthly, 6 monthly or yearly. You can always get in touch with us to increase/decrease this number.

So it would be $40 per month x the recurring period you would like, so if you want to pay 6 monthly then it is $240 per 6 months.

– PROWORKFLOW

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CUSTOMER: Hi ProWorkflow team!

I am afraid that I will not be able to justify $480 per year recurring. You have written a fine piece of software but there are other much less expensive options, one being ??????? which is free for up to 10 users (they also offer a QB link for extra $). Others would include ???????, ????????? and ????????  (PWF Note: Whatever you do, someone always does it cheaper!)

I know that you used to have a perpetual licensing model. I could justify the $480 as a one-time purchase and would be happy to pay for upgrades periodically. (PWF Note: Maybe, but on that model R&D is unsustainable)

I don’t expect you to change your pricing for me  just wanted to provide some feedback.

Thanks much.

– CUSTOMER

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CUSTOMER: Hi ProWorkflow team!

Thanks for the feedback… Just some background though so you see where were coming from.

We have been developing the ProWorkflow solution for a long time. We listen to our customers and it has become clear over time that different customers have quite different needs. Our customers differ significantly in how they manage their projects, staff and processes. There Is no standardized way to manage projects and staff, each business tends to evolve a process that works for them using a mix of different systems and tools. Our aim is to continually develop a flexible solution that meets most needs, but the fine balance between ease of use (usability) and having every feature is ever present. So is the trade off between cost, features and service.

Different customers also look for differing levels of product support. Some are happy with a ‘next working day’ response, others want it now. Some want a one off fee, others want recurring – these differences are largely driven by the variation in the different business models used by our customers.
So the service and features required differ from customer to customer, and often what a customer needs today changes tomorrow.

A ‘single solution’ simply did not deliver what our customers are asking for. So we have moved to introduce Standard, Professional and Advanced product offerings that bundle features and services to better match customer needs as they have been expressed to us.

Customers can choose whichever option suits them best, switching as their needs change.  So they can use the $30 Advanced version, then switch down to the $10 Standard version for a few months. This flexibility is the reason behind the 3x packages.

Regarding recurring VS perpetual licensing though…

Customers have asked for more  features, service and support.
– This costs ProActive, not only up front in infrastructure, but also ongoing per account. Ie: A perpetual license is fine, but if you ever need support, it needs to be in place, as does the R&D team so that there are upgrades being developed to offer. This all has a cost ongoing to ProActive that scales, regardless of whether a customer has perpetual licensing. So the one time fee doesn’t work as a sustainable model.

Product delivers value ongoing.
ProWorkflow delivers ROI not just once, but ongoing, for many years. Our licensing reflects this.

Underlying quality, reliable technology has increased in cost
All our technology partners have increased in cost. A free model would not allow us to recoup this.

I really cant speak for the other companies, only ours, but I can tell you that we’ve done a great deal of research into the cost of R&D, infrastructure  and support resource as well as the ROI the solution delivers. Were happy with our pricing now as we can build a sustainable company. Many of these other cos are eating into VC funds to win customers, or using free accounts as a marketing tool, hoping to get new customers to Spread the word. That’s not sustainable long term so we avoid that.

I hope that’s shed some light on our scenario  ;-)

Kind regards,
– PROWORKFLOW

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CUSTOMER: Hi ProWorkflow team!

Thanks for such a detailed response. I totally understand where you are coming from. It is logical. (PWF Note: Awesome! They understand!)

My complements again on a great product. I have evaluated something like 35 alternatives. (PWF Note: This is normal – the amount of solutions people try prior to PWF) Not-withstanding your comments I think you have hit the nail on the head. It amazes me that some folks can spend so much time and energy and still get it wrong. (PWF Note: Agreed!)

Best wishes for continued success.

– CUSTOMER

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SO that is the conversation! Always remember that when talking to price sensitive customers, the issue is seldom about price, rather they often just think it’s a random figure, not based on anything and easy to change. Also focus on explaining the reasons behind the pricing.

A SaaS customer is a relationship. So keeping honest and open and educating the customer is the best way to get them on board.

About the author:
Julian Stone, CEO – Project Management Software visionary for: ProActiveSoftware.com, ProWorkflow.com & Julian101.com
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Republishing Note:
Anyone is welcome to republish this article as free online content, provided that the paragraph below is included in the full form as shown.
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About The Author:
Julian Stone begin_of_the_skype_highlighting     end_of_the_skype_highlighting is the CEO of ProActive Software, developers and creators of the leading web based project management software http://www.proworkflow.com.