Beware of Software Without Pricing
How many times have you found yourself browsing the internet, looking for project management or enterprise resource planning (ERP) software that promises to help your business thrive? You read through all the features or watch some conceptual videos, and it all sounds great. However, there’s always that one major qualifying question: How much does it cost?
Chances are you’ve successfully navigated to the “Pricing” page only to find yourself asking, “Why is there no software pricing?” It says “Submit your information for a free quote!” What is it that they’re hiding? Do you really want to give up that information before you even know if it meets your price point? Imagine the sales calls, emails, and follow-ups that will ensue, even if you decide against the product.
What are They Hiding?
Channel Partners: In short, they’re hiding the fact that they are taking you for a ride or cannot disclose pricing. These companies may be using “channel partners” to distribute product. The company sells the solution to these distributors at a heavily discounted rate, so that these distributors can charge a higher price and turn a high profit. In exchange, they take the burden off of the original company. To protect the channel partner, the company will not use upfront pricing.
Outdated Software: Another reason for hidden pricing is that their software is old, outdated, or under-performing. It is a red flag if screenshots or videos of the software currently in use are not showcased on the company’s website. To make up for it, the forced contact for a quote allows a sales team to move in for the hard sell. They have all the answers to make it seem that their outdated solution is better than it really is. It is also a way for the company to grab every penny for work that was completed a long time ago.
Additional Fees: The sales team may also be hiding additional fees to get you in the door. Those features you liked may cost more. Necessary setup, initial implementation, and training? More fees. Upgrades and support packages may also incur additional fees. Of course, you won’t be aware of this until you’re halfway through the transaction. By then, you may not realize you’re in too deep.
If you are brave enough to look past the hidden pricing, you will submit your information for a quote. The sales team will call, with a cost justification that may make sense at first. It may seem as though you will get a square deal because you get a quote constructed just for you. The reason they cite: “You won’t have to pay for what you don’t need.” But how can you tell if the next guy is getting the same thing for less?
Overcharging: There is a reason for this tactic disguised as customization. In reality, they’re calculating how much money they can charge in proportion to what your business makes! Maybe they jack up the base price to make a “discount” more appealing. Or perhaps they ask what your budget is, and then miraculously everything you want fits your maximum budget!
Loopholes: It is a common tactic for companies to quote based on the size or amount of projects for which you will use the software. However, you’ll soon find yourself tracking your projects outside of the solution to avoid the cost. Using these loopholes defeats the purpose of the solution in the first place.
False Value: Other tactics include charging by number of employees and devices, or even your annual revenue! Surely you wouldn’t value someone else’s product based on the results of your own hard work and not theirs. What if only some of your employees are using the solution, and what if a single user needs the solution on multiple devices? Suddenly you are paying a false value for the software.
Good Pricing Practices
Visible Pricing: How can you tell you are getting a good value? The easiest way to tell is the company’s pricing transparency. You should be able to see upfront pricing and how it is calculated. Even if there are optional features that may accrue additional costs, they too should be listed. Ideally, the company should provide a tool for you to configure a solution and calculate a hard number cost. Taking it one step further, you should have a hard number and be able to complete a purchase without the need to pick up the phone.
Clear Services: Another way to judge a good value is to see what is included with your purchase price. Necessary services such as initial setup, implementation, support, updates, and upgrades should be included. While it may be necessary to charge additional rates for optional services such as IT services, on-site implementation and additional training, these costs should also be upfront, clearly broken down, and readily offered. You shouldn’t ever feel that a company has taken your money and dumped you unless you pay more.
No Long-Term Contracts: A good company will never keep you trapped in a long-term contract for software. As a customer, you should be able to judge at any time if the software is worth your hard-earned money. By making it so the company must retain your business on a regular basis, both parties can be mutually benefited. The company must continually listen to you, provide improvement, and maintain great service. In the digital world annual updates are too infrequent, especially if you’re stuck in a multi-year contract. You should always feel that you are getting the most out of your money, and if you aren’t, you should be able to cut ties at any time.
Pricing should not be a secret. You wouldn’t make a grocery budget, fill the cart, ask the price for each item, and then be forced to make a decision at the register. The same holds true for software. Good pricing practices should always keep you in mind. Your experience should always be clear, simple, and fair.