You're paying too much for business software
capiche.com
capiche.com
A fair price is whatever a seller and a buyer agree upon, not the rock bottom value that you get when applying sustained pressure to a price point, collectively. You may get a product cheaper and cheaper but probably at the cost of the stability of the seller, which is also of value to a buyer. You may find that if you pay more you are more valued and a seller will do more for you in the future. Or you may be the last to close an important target of a sales person and get a below market price, at least for a while. What's fair? IDK. Just keep thinking and occasionally reopen negotiations in a respectful way if you think you can get more for less. Or switch to another product.
All this will do is boost the threshold at which companies will even bother to negotiate. Too many people negotiating hard on $4k quotes? They’ll stop negotiating anything below $10k because they know the smart competition will do the same. They will be willing to let you walk rather than anchor a lower price.
They know their competition doesn’t have a significantly different cost structure, so by letting competitors undercut in competitive markets, they can afford to build a better product with the higher margins. Unless there are strong network effects creating a winner-take-all situation (and most of those markets have been claimed), this can work.
Don’t play the race to the bottom. Price is only one factor SaaS buyers use, and it’s like #4 on the list. It can even be a negative sign — if you get 3 quotes and one is way lower then the other 2, the lowest usually gets eliminated.
There are cultures where asking for lower prices is not culturally acceptable, and many people feel uncomfortable doing so. This does not mean the product is worth more to them.
Having more information here is a good thing.
Hey, company X pays less! I want to pay the same!
But Company X files very constructive bug reports and has called support only 2 times this year whereas you only whine and call support every other day, so, sorry.
I think there is an is/ought distinction here. What the price is is your definition here: what they've agreed upon.
There are numerous oughts that should be considered as well:
1. Did the seller coerce the buyer (or vice versa)? Without this ought, the mafia gets a fair price when it charges for "protection" services, both parties agree!
2. Does the seller know more than the buyer (or vice versa)? If they both knew the same things, would the price be different?
What is fair? That the supplier makes $58M, on an investment of $2M? Or is it more fair to buy it for $4M, and the buyer has a benefit of $76M?
The fact that you're paying way more than what it costs to produce doesn't mean it's not fair. Depends on the benefits that you get.
Another company may only get a benefit of $40M when buying the software, so it would make sense for the seller not to ask $60M.
So one way to define fair, would be to base the price on the value it brings you, not on the amount of money it costs to produce. But this varies per buyer.
It’s not right and wrong, but it does reflect that this the sellers choice.
Given SaaS is an industry born on the internet, you'd think there'd be more transparency/less information asymmetry, but that's simply not the case.
In talking with tons of software buyers the past few months, I've heard so many stories of huge discrepancies in what people are paying, even for the tools we all think have transparent pricing.
This project is hugely inspired by Glassdoor. As this information starts to become more freely available, it will push the industry toward better pricing tactics, more transparency, and less special treatment. We hope to play a role in making that happen.
Happy to answer any questions!
I think there is MUCH better opportunity in the Enterprise Software space, where margins are ridiculously high, and shady sales tactics are super prevalent. Read: Oracle, IBM, etc. There might also be opportunity to have anonymous users share sales and execution related dirt on Enterprise Software - such as non-performance, technical and security problems, and of course pricing. For instance, try going to IBM or Oracle's Web sites to purchase a "license" for any of their software products. Almost always you'll be directed to contact a sales representative.
One wrinkle in your process is going to be navigating non-disclosure agreements.
In all seriousness, a LOT of Enterprise Software Pricing negotiation (Oracle etc) literally comes down to "what can you afford to pay?" type activities from sales reps. Couple that with super shady maintenance contracts and renewal processes and it really begs for transparency. SMBs get killed every day by sales reps who literally live and die by the lack of transparency in the Enterprise Software Space.
I assume by "freely available" you'll make the information publicly accessible and won't require an email to access?
IANAL but I really hope you’re not storing confidential pricing information along with the email address alongside because I have a feeling you could open yourself up to legal issues in the future.
Yes, this is obviously a risk, just like lots of employees who share their comp packages on Glassdoor are taking a risk. A few things to note: 1) We're finding a ton of really interesting pricing data that is NOT under NDA (including companies that don't use NDAs, as well as companies with seemingly transparent pricing that A/B test so often that everyone is paying something different.
For instance, I think it's likely that glassdoor would be federally protected in the US under section 7 of the NLRA (which protects talking about pay when it's part of a concerted effort to improve pay), and even it's it isn't it's almost certainly protected in California by section 232 of the labor code, which states:
No employer may do any of the following:
a.Require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.
b.Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of his or her wages.
c.Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.
(IANAL)
Edit: Good resource with more information - https://www.dol.gov/wb/media/pay_secrecy.pdf
With this website I'd be far more concerned about legal action, which could compel you to turn over the email and IP addresses associated with numbers that were posted in violation of NDAs.
Of course I already knew that much of the US, or any other market, for that matter, isn't really free market, and I'm well aware of the limitations of the free market, but it's always good to remind ourselves of these things.
Just like you're not free to sell your vote, and not free to sell yourself into slavery, there should probably be other rights that you're also not free to sell.
I guess more prominent startups/companies embrace this as a tool to close or retain customers.
And I'm not saying this is wrong or a bad approach, by the way. It certainly lends credibility if, say, Google is using my SaaS product.
I don't know about expecting, but in most cases where we've been buying SAAS software it absolutely has been negotiable. Above the obvious 10bucks a month type stuff that isn't worth the time.
https://www.darkpatterns.org/types-of-dark-pattern/price-com...
Would that just make people feel better about the prices they are paying?
For regular off the shelf SaaS like dropbox, gmail, slack, surveymonky and just about any other tools that SMBs use the pricing seems very clear: it's always clearly listed on the site.
The unclear pricing is just enterprise software, right?
Are companies that use enterprise SaaS actually sensitive to price? I was under the impression that they're almost never too price sensitive and hence it doesn't make sense to build equivalent products that are cheaper - otherwise we'd see low cost alternative products all over the place.
All of the providers you listed have clearly listed rates, but each of those listed will also willingly negotiate those rates.
At a previous job, the owner of the company required you to request a discount/custom pricing before purchasing anything. It took me a while to get used to it, but more often than not we got price breaks with little friction simply for asking. Even if there were clearly listed prices with self-service checkout and even if there wasn't a "Contact us" price option listed. And this was at a ~30-person company, where most software purchases were only for 3-5 licenses at most.