The Price War
Fresh off of our Zack Chase intelligence gathering session we realized we needed finally come up with firm pricing for our awards platform.
I felt the pain of a sales call last week for conference. “So did you just come up with that number randomly?” — the truth was yes, but there was some awkward and noticeable backpedaling. Timmy had just told the prospect that the price of our conference software was based on the number of attendees and the number of programs. When both of those were halved, somehow the price still stayed the same.
The problem actually wasn’t the pricing — it was being confident and comfortable in how our pricing works. I set a price floor of $4,000 for conferenceCMS. We probably should have just told that to the client — “you guys fall into our minimum plan.” Instead we tried to make them feel valued and it backfired.
Anyways — this motivated us to come up with proper pricing for awardsCMS. Tim, Zack and myself all wrote out in a massive google doc some competing price plans. Tomorrow we’re going to have a ‘meeting’ to try and square all of this away.
My opinion is that since we’re not putting prices on our website — we need a clear way internally to be confident about the pricing we give prospects. More importantly we need to deal with a lot of the price questions that have come up.
Tim’s Plan
TIM S. – The Standard, see: http://www.sitefinity.com/purchase
| Standard (click here to sign up) | Professional (call us) | Enterprise (call us) | |
| Yearly License Fees | |||
| Year 1 License Fee | $3,000 | $5,500 | $10,000 |
| Subsequent Year (30% off) | $2,100 | $3,850 | $7,000 |
| Features, Data and Support | |||
| Data Usage (video uploads) | 10GB | 500GB | 2TB |
| Domains | 1 | 1 | 1 |
| Themed Site | Optional add-on +$500 | included | included |
| Single Sign On | Optional add-on+$1000 | Optional add-on+$1000 | included |
| Multi Organization Rollup Competition | Optional add-on +$3000/year | Optional add-on +$3000/year | included |
| Winners Gallery | Optional add-on+$1000/year | Optional add-on+$1000/year | Optional add-on+$1000/year |
| AMS Data Sync | Optional add-on+$5000 + $2000/year | Optional add-on+$5000 + $2000/year | Optional add-on+$5000 + $2000/year |
| Support | Regular24 hour response time through ticketsUpgrade to Elite for $1000. | EliteDedicated Phone SupportOptional add-on +$1000/year per admin | EliteDedicated Phone SupportOptional add-on +$1000/year per admin |
| Initial Contest Implementation | Optional add-on+$1000 per contest | 1 includedOptional add-on+1000 per contest | 1 includedOptional add-on+1000 per contest |
Zack’s Plan
BASIC – “CLICK HERE TO SIGN UP”
| Base w/ a default template | $3000 per year |
| Respond to ticket in 1 business day | |
| Access to training documents / documentation | |
| Unlimited submissions, unlimited programs that you can set up yourself |
BASIC + EVERYTHING ELSE ADDED ON IF NEEDED (LINE ITEMS)
| Theme | $200 one time |
| Program Setup + Unlimited support | $1000+ (est based on program size) |
| Streaming video | $1000 per year |
| SSO | $1000 one time |
| Role up w/ chapters | Talk to us |
| Public Vote | $1000 per year |
| AMS Two-Way Data Sync | Talk to us |
My Plan
Price Discussion
We typically assess a fee to a client based on the complexity of their awards programs. We work with you in good faith to ensure we have a clear grasp of your programs and then we issue a flat rate for the year which includes unlimited support and unlimited usage.
[[During the call you should have figured out the answers to most of the questions below]]
I can give you a rough estimate based on what we’ve talked about
– You have 2 major programs and get about 800 entries between both of them
– The entry forms for both programs are straight forward
– You have just 1 round of judging
– You don’t get video uploads and really just 1 or 2 admins on your end
– That comes to a year 1 fee of $5,300 with subsequent years at a 20% discount.
“So…what if we get a lot more than 800 entries”
– As mentioned we take your word on your program size. Your year 1 costs won’t go up. If you get say 2,000 or 3,000 entries, then in year two we might ask for a modest fee, but we’d let you know way in advance.
“Can we use this system for other awards programs”
– Our policy is to give unlimited support to those programs we have discussed together. Having said that, we don’t put on any restrictions, and many clients do end up using the system for a lot more than they originally planned on. We are happy to answer basic questions on programs you have setup by yourself, but if you need the full service of our implementation team, we might ask for a nominal fee for other programs. I think the key here is that there are no surprise costs and on the same note there are no surprise restrictions.
“$5,300 is over our budget, is there any wiggle room on price?”
“I’ll see what I can do, ….was there a high water mark”
“Yea – $4k tops”
—- next call—–
“I was able to get my manager to sign off on waiving the skinning fee, and taking another 15% off” ($4,250). Renewal fee would be $3,500.
Step 1: Tell us About your Competitions / Programs (See Pre-Contract Worksheet)
| # of Entries | First 2500 included$1000 for each additional 2500 | |
| # of Entry Forms | $500/each | |
| # of Rounds of Judging | $500/each | |
| Public Vote | $500 each | |
| Winners Gallery | $750 each |
Step 2: Choose Features Needed
| Basic Features | $3,000 |
| + Streaming Video (waivable) | $1,000 |
| + National / Regional / Chapter | $5,000 |
| + Supported Admins (2 included) | $1,000 each |
Step 3: Any One-Time Add Ons?
| SSO (waivable) | $1,000 |
| AMS Data Sync | $5,000 |
| SIte Skin (waivable) | $300 |
| AMS Data Sync Adjustment | (varies $100-1000) |
Step 4: Your Pricing
– Year 1 = Steps 1, 2, 3
– Year 2 = Steps (1, 2) with 20% discount
Pre-Contract Worksheet
| Program / Competition | # of Entry Forms | # of Judging Rounds | # of Entries | Public Vote? | Winners Gallery? |
Some quick opinions
Tim’s plan: My opinion is that we don’t have the right kind of market segments to create plans. With all the add-on options and with our sample size of clients always picking different combinations, there is no “Enterprise” plan. Everyone is a Basic + or a Pro -. I also don’t think we should put anything like this on our website. No one falls into any of these buckets. Tim highlighted Sitefinity, but my thoughts are that most people who buy Sitefinity DO fall into a major bucket.
– Do I need load balancing: No — ok I can get standard, YES — I can get pro. Do I need more than 5 concurrent users? Yes – I need enterprise. It is pretty clear. With Tim’s it is always N+1 or N-1. Not consumer friendly.
If we are to put something on the website — I would opt for a table like this. Segment people by audience type, and give them an understanding of their starting point. Not sure this is a good idea though.
| Magazine / Newspaper | Collect entries online for one or more contests. Automatically generate and showcase winners in an online gallery. | Starts at $3,000 | get a quote |
| Broadcaster | Forget about mailing DVDs with our support for streaming audio and video | varies | get a quote |
| Trade Association | Ditch the binders and run recognition programs and committee / board nominations online | varies | get a quote |
| National Organization | Avoid the duplication of efforts. Have chapters winners automatically roll up into a national competition. | Starts at $7,500 | get a quote |
| Scholarship | Simplify the entry and selection process with a unified system for students and judges. | Starts at $3,000 | get a quote |
| Corporate Grants / Prizes | Collect entries and have a panel of judges review online. Run a public vote to help select the top candidate(s). | varies | get a quote |
| IT Manager / DIY | Run unlimited competitions using our platform. | Starts at $3000 | get a quote |
My Opinion on Zack’s Plan
It’s actually pretty similar to mine. His emphasis is people should pay based on hours they consume. My thoughts are that sounds like a consulting company, rather than a product company. What happens in year 2 when they consume less hours. His opinion is that means less support for us, so less time spent. Might sound fair, but I think this is a flaw in the model. We built a product and we service that product. We should charge based on value given, not based on our costs — otherwise we’ll be stuck in consulting land forever. Our markup is really based on the fact that year 2 has less support than year 1.
Tomorrow should be interesting. 3 stubborn people + Timmy + Marc to go over all of this. I’ll report back on what we decided to try.
