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153Re: [webanalytics] Re: Pricing of Analytics Solutions (was: Any Info on Pilot Software?)

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  • Jim Sterne
    Jul 30, 2004
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      At 10:29 PM 7/29/2004, Eric Peterson wrote:
      Oh, you also make a good point about "buying" unprofitable business to
      grab marquee customers - certainly happens. 

      One (unnamed ~$60b) client of mine decided to standardize
      on one (unnamed) web analytics tool across their entire enterprise.
      We're talking about a lot of licenses. Very visible company. Very
      marquee. Very 800 pound gorilla.

      The gorilla could pretty much name their price but they're
      smarter than that. Instead of talking about price - or even
      value - they talked about the web analytics company's their
      financial situation, their plans for expansion and their prospects
      for success.

      The gorilla was looking at this relationship as a partnership.
      Almost as you would an acquisition. "What's the point of
      browbeating them into a price that puts them out of business?"
      my client said. "We need them to be successful - but we
      don't need them to take us to the cleaners."

      So we have two pricing models we can work with:
      Cost-Based Pricing - It costs this much to make and
      we deserve some profit, and Value-Based Pricing.
      What's the value of the product?

      True value-based pricing works like this: We'll measure
      how much you're selling today and map out your growth
      trend over the past X months/quarters. That way we can
      plot what your anticipated sales will be in the next X months/
      quarters. Then we'll install my software/implement my service,
      measure the additional sale you make over and above the
      projected numbers, and you pay me X% of the uplift. You
      win, I win, we all go get an ice cream cone.

      So - buy vs. build... cost vs. value ... vendor A vs. B
      Who said this stuff was going to be easy?

      Jim Sterne                      Target Marketing of Santa Barbara
      www.targeting.com     805-965-3184      www.emetrics.org
      Consultant, Author, Speaker on Measuring Website Success
        Subscribe to "Full Sterne Ahead" and "Sterne Measures"
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