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151Re: [webanalytics] Re: Pricing of Analytics Solutions (was: Any Info on Pilot Software?)

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  • Eric Peterson
    Jul 29, 2004
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      I think you may have missed the essence of Jarid's point. Of course
      each vendor has different expenses/overhead/etc., how could they not?
      The cost of doing business in Provo is very different than costs in
      places like New York, San Diego, San Francisco and Portland.
      Regarding technology choices and ASPs, it is my understanding that
      there are more and less expensive deployments of analytics
      infrastructure but even for "expensive" deployments the costs are
      decreasing year-over-year, thus bringing the bottom-line for each of
      the top-tier vendors closer together.

      My take on Jarid's comment was more an expression of concern about the
      volatility of pricing in the market today, and yes, I do agree with
      you that to some extent you pay what you're willing to pay (what you
      can negotiate). However, when does the rampant discounting cease and
      stabilization re-emerge into the analytics marketplace? Given the
      extremely competitive landscape that some of the nice folks that
      follow this discussion are forced into I try and be sympathetic -- of
      course you want to win high margin business, that only makes sense.
      Still, again considering competitive pressures, one is sometimes
      tempted to tell companies prospecting for analytics solutions to
      either tell the vendor "you're leaning towards a competitor" or wait
      to the end of the quarter and hope they're short on their number --
      horrible advice for everyone involved, but it may be the surest path
      to the best price. This is, after all, why people shop for cars at
      the end of the year.

      Speaking of cars, would you be comfortable knowing that because your
      neighbor was more "popular" than you are (e.g., had a better known
      brand) they paid 50% less for the same car with the same features?
      Would you be happy knowing that simply because your neighbor was more
      seriously considering a competitors car than you were, that they paid
      30% less to own the vehicle year-over-year-over-year?

      If you would be, can I sell you my car? ;-)

      A chief concern in companies of any size looking at analytics
      solutions is always price. Isn't it reasonable to expect some type of
      stabilization in price as features also begin to stabilize? I know, I
      know ... the feature "war" is far from over ... but isn't it fair to
      expect that vendors will develop reasonable "list" pricing based on
      market demand and competition and stick to that pricing to a greater
      extent than we see currently? At my day job I keep track of vendors
      who are dodgy with pricing - those who are well-known to dramatically
      drop prices to win business - and I have a tendency to look at those
      who shift pricing dramatically as "less stable". One of the best
      "customer win" case studies is always the "we won the business on the
      same terms at a higher price" which demonstrates A) that the vendor
      has limits on discounting and B) they vendor has done an excellent job
      conveying the value proposition associated with their

      Oh, you also make a good point about "buying" unprofitable business to
      grab marquee customers - certainly happens. Can anyone with more
      business experience that I cite any companies in the history of
      technology who did this successfully (and are still around today)?
      I'm skeptical that this is a good long-term strategy - more inclined
      to think it is a very poor short-term strategy - but I'm always
      willing to learn. Anyone?

      So, sorry if I'm again up on a soapbox here ... I blame John Kerry and
      the DNC ;-)

      G'nite folks.

      On Thu, 29 Jul 2004 18:10:17 -0000, Mary <holowebs@...> wrote:
      > Jarid,
      > It's called "sales". Discounting is done in every tech sector out
      > there. You don't think Oracle drops their price when they're trying
      > to beat out SAP on a large scale, heavily contested opportunity?
      > And it's not only data storage but also bandwidth, redundancy
      > hardware, customer support, etc. that is provided. Each of the top
      > ASPs have different architectures supporting their service and thus
      > costs can vary greatly. Other factors also come into play, such as
      > economy of scale, G&A expenses, and the like. These cos. can also
      > be in various stages of the biz cycle, i.e. some may be more apt to
      > offer a price they know is unprofitable to win a marquis customer
      > which they hope they can build on or to grab marketshare. As far as
      > different customers paying different cost per view for like volumes,
      > that just comes back to good old negotiation skills on the part of
      > the purchaser coupled with how willing the vendor is to sacrifice
      > profit for a win...
      > --- In webanalytics@yahoogroups.com, "jarid" <jarid@y...> wrote:
      > > (Long time listener, first time caller...)
      > >
      > > In terms of pricing of analytics solutions, I can only speak for
      > the
      > > ASP model. But, I have no problem paying "per pageview". To me,
      > the
      > > incremental costs to the vendor are based on my "usage", and
      > > my "usage" is how much data of mine they need to store. So,
      > > pageviews seems a relatively simple way of communicating/charging
      > for
      > > that.
      > >
      > > But, what really gets me are the HUGE price differentials between
      > > vendors, and in some cases WITHIN the same vendor. Rumor has it
      > some
      > > vendors will drop their prices over 50% during negotiations. This
      > > leads to customers paying greatly differing prices for the same
      > exact
      > > service. Now the vendors might argue that each customer is
      > unique,
      > > and requires different levels of service and functionality. But
      > when
      > > one customer is paying x per pageview, and another is paying 2x,
      > and
      > > yet another is paying .5x, all for the same volume of pageviews,
      > > something is wrong...
      > > --Jarid
      > >
      > > P.S. Eric you can stop badgering me to participate now... ;)
      > >
      > >
      > >
      > > --- In webanalytics@yahoogroups.com, Jeff Seacrist
      > > <jeff.seacrist@w...> wrote:
      > > >...
      > > > But it certainly raises an interesting question -- What does
      > this
      > > group
      > > > believe is the most "fair" way to scale the pricing of analytics
      > > solutions?
      > > >
      > > > Jeff Seacrist
      > > > Director of WebTrends Product Marketing
      > > >
      > > >
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      Eric T. Peterson
      Author, Web Analytics Demystified

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