Pricing Through The Looking Glass

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Has someone gone and changed the rules again while I wasn’t looking? It’s supposed to be customers who go around grumbling about the cost of IT being too high and vendors who get on a defensive high horse about how customers don’t really understand the full economics of the industry.

Now we’ve got vendors falling all over themselves to tell customers that they’re paying too much and would they please let vendors cut the cost of their computing! Alice In Wonderland had nothing on this!

It all started with Oracle’s Larry Ellison last year when his every conference keynote address revolved around him pleading with the customer to pay less. You’ve got to be ready to pay less for your computing, he told audiences - the catch being that the way to do it was to sign up for all the latest Oracle software in whatever shiney brainwave he was running to that particular week.

Now this week we Sun’s Scott McNealy - who earlier this year confessed that Ellison was a major factor in influencing his strategic thinking! - doing a kind of Ellison-lite routine. "We are overcharging in our industry by an order of magnitude," or by up to 10 times, he said.

Fair enough, Scott, don’t think too many people are going to argue with you there. The solution? Well, wouldn’t you know it, a new (and rebadged) suite of software that also has the delightful side effect of undermining Microsoft Windows sales if Sun is lucky.

We have rather been here before of course. Remember when Sun offered the StarOffice application suite free of charge in a bid to take the floor out from under Microsoft Office. There was nothing much to tell between the functionality of the two products, but the ‘something for nothing’ approach bombed and Sun ended up having to charge for the software in order to get some decent take-up going. Customers want to pay for software it seems and are inherently suspicious of something that comes without a (visible) price tag.

All eyes must now be on Microsoft to see where it stands. We’ve already been through the ludicrously complicated pricing and licensing sumersaults that CEO Steve Ballmer understands and maybe the rest of us will one day. These, we are assured, make life better for the customer. If more customers understood them, then maybe we could make a judgement call on that, but hey, it’s early days.

Meanwhile it’s interesting to note that Microsoft CRM is set to enter the UK market on the back of flexible pricing, probably starting at a lower-than-the-US rate of £250 per named user. Maybe it’s time to take a leaf out of Alice’s book and all start to believe three impossible things a day.

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