A couple of weeks ago, my friend and colleague Matthew Roche (t), put out a poll about people’s feelings about vendors who don’t publicly advertise the costs associated with their products. In the past, in a disconnected world, when most of your customers had sales reps, and being able to find all of your competitors pricing wasn’t possible, abstracting prices to minimize comparisons made business sense. In an interconnected world, especially given the nature of cloud computing pricing (usually straightforward storage+compute costs), abstracting or hiding your prices just annoys potential customers.
In my roles where I’ve had to set budget, I’ve frequently been frustrated, especially with hardware vendors, in their inability to get me a rough idea of their pricing. I’m not asking for a quote–I understand discounts, volume pricing, etc. I just want to know the number of zeroes in your product costs. I understand different customers have different costs, but make your pricing clear, so I can understand it. As much as I’ve bagged on Oracle for their “aggressive” sales tactics, I’ve always been able to go to their website and get full list of retail pricing for their products. And I applaud them for that.
Why am I writing about this now? I mostly thought the IT industry was beyond this type of pricing, especially given the move towards cloud computing, pricing has become much more transparent. However, last week I was at a very large customer, and we were talking to a vendor who had a very promising technology. The vendor couldn’t give the customer any semblance of pricing–this was a two-fold problem. Their licensing model is so abstracted that I’ve got no idea what I was buying (and you thought DTUs were bad), and secondly, the sales rep could barely give us any idea of what our monthly spend would be for the product.
Part of the modern, connected world is that consumers can quickly comparison shop. For example, 80% of retail customers check pricing online when they are in a store (Regalado, Antonio. “It’s All E-Commerce Now.” Technology Review, November 4, 2013. http://www.technologyreview.com/news/520786/its-all-e-commerce-now/). Enterprise customers are doing the same thing–while that may be frustrating to old school salespeople, it’s the way of life now.
Make your pricing as transparent as possible–if your prices may fluctuate due to other factors like cloud pricing, put in a footnote in your price list, but still make it clear. Your sales message will be all the better.