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Value Chains – which component provides the biggest value?

As I just tweeted, working out the route to market is easy, working out the optimum pricing strategy is harder. As we move forward with LC&SFI (Lead Capture and Salesforce.com Integration) project, I am debating about which part of our value chain has the biggest pricing opportunity? Perhaps you could help me find the answer!

Our value chain:

  1. Exposure through edocr.com – edocr Essential is currently priced at £250 per annum (experience shows this is considered too low)
  2. Lead Capture within edocr.com – launch planned for 1st April
  3. Download sales leads from edocr.com – launch planned for 1st April
  4. Make the leads available within salesforce.com – launch planned for 1st April

Given the pricing strategies adopted by salesforce.com partners, item (4) above could be the most expensive. Let’s be honest! Its not the actual cost of providing this service, but understanding how others have gone about pricing such applications, will dictate the outcome.

Here is an example. I just tried to install a free application from Appirio to synchronise calender on salesforce.com with my Google calendar. A simple application I hear you say! Yes, the version I tried to install (and failed miserably as there is something wrong with my salesforce.com account in terms of installing apps from AppExchange) is free, but the premium version starts from $2500. And that’s a hefty price to pay simply to synchronise Google calendar!

This shows that we need to seriously get some advise on how to price enterprise applications. This also raise number of further queries:

  1. Could item (4) above be few times more pricey than all the items combined?
  2. Should the price of all items be increased to reflect price of item 4 eventually?

Getting the pricing right is becoming more and more important!

Published inedocr.com
  • Lee Williams

    You need to understand the Economic Value to the Customer EVC, this will be made up from the value of the lead in terms of the Customer Profitability or Life Time Value and the conversion rate of the leads. Obviously you won't know this for each customers, however you should have an idea of the 'convertability' of the leads and the general market that your customer is working within. From this you can deduce the relative value. You then need to understand where else their leads are generated, as this will highlight the 'acquisition cost' of their end customer. If you are too expensive they may not take you, in addition if they are currently overwhelmed with leads then this may not be a valued option either. I've recently worked with 2 companies who cannot handle a large increase in demand, as such the impact of your platform's demand creation will also have to be considered.

    Try to consider the 'purchasing' experience for your potential clients, what other platforms/software solutions do they buy in this way and what prices do they pay, how are they managed – this will be setting their expectations.

    I'd consider the 'puppy dog' sale approach. Set them up for free for 6 months, let them get used to the leads coming in, then set your prices once they are dependant and you are able to value the service more accurately.