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154Re: Re: [webanalytics] Re: Pricing of Analytics Solutions (was: Any Info on Pilot Software?)

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  • Eric Peterson
    Jul 30, 2004
      Jim, I have to know, did both companies go for the "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" or did they simply
      agree on reasonable cost-based pricing?

      I ask since a number of people have proposed value-based pricing
      models but I'm not hearing very much about their adoption and success
      ...

      ... and you know me, ever since the "chicken and the unicycle"
      incident I'm a skeptic. Who would have thought that the chicken would
      react that way? ;-)


      ----- Original Message -----
      From: Jim Sterne <jsterne@...>
      Date: Fri, 30 Jul 2004 09:04:55 -0700
      Subject: Re: [webanalytics] Re: Pricing of Analytics Solutions (was:
      Any Info on Pilot Software?)
      To: webanalytics@yahoogroups.com, webanalytics@yahoogroups.com

      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?






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      www.targeting.com 805-965-3184 www.emetrics.org
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      Eric T. Peterson
      Author, Web Analytics Demystified
      www.webanalyticsdemystified.com

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