You're paying too much for business software(capiche.com)
capiche.com
You're paying too much for business software
https://www.capiche.com
55 comments
I work in a niche area of consulting focused on SaaS sales / pricing.
All this will do is boost the threshold at which companies will even bother to negotiate. Too many people negotiating hard on $4k quotes? They’ll stop negotiating anything below $10k because they know the smart competition will do the same. They will be willing to let you walk rather than anchor a lower price.
They know their competition doesn’t have a significantly different cost structure, so by letting competitors undercut in competitive markets, they can afford to build a better product with the higher margins. Unless there are strong network effects creating a winner-take-all situation (and most of those markets have been claimed), this can work.
Don’t play the race to the bottom. Price is only one factor SaaS buyers use, and it’s like #4 on the list. It can even be a negative sign — if you get 3 quotes and one is way lower then the other 2, the lowest usually gets eliminated.
All this will do is boost the threshold at which companies will even bother to negotiate. Too many people negotiating hard on $4k quotes? They’ll stop negotiating anything below $10k because they know the smart competition will do the same. They will be willing to let you walk rather than anchor a lower price.
They know their competition doesn’t have a significantly different cost structure, so by letting competitors undercut in competitive markets, they can afford to build a better product with the higher margins. Unless there are strong network effects creating a winner-take-all situation (and most of those markets have been claimed), this can work.
Don’t play the race to the bottom. Price is only one factor SaaS buyers use, and it’s like #4 on the list. It can even be a negative sign — if you get 3 quotes and one is way lower then the other 2, the lowest usually gets eliminated.
Negotiation over pricing for SaaS products often comes down to who can put in enough time, or who is willing to ask for lower prices.
There are cultures where asking for lower prices is not culturally acceptable, and many people feel uncomfortable doing so. This does not mean the product is worth more to them.
Having more information here is a good thing.
There are cultures where asking for lower prices is not culturally acceptable, and many people feel uncomfortable doing so. This does not mean the product is worth more to them.
Having more information here is a good thing.
OK but it may lead to such a conversation:
Hey, company X pays less! I want to pay the same!
But Company X files very constructive bug reports and has called support only 2 times this year whereas you only whine and call support every other day, so, sorry.
Hey, company X pays less! I want to pay the same!
But Company X files very constructive bug reports and has called support only 2 times this year whereas you only whine and call support every other day, so, sorry.
> A fair price is whatever a seller and a buyer agree upon
I think there is an is/ought distinction here. What the price is is your definition here: what they've agreed upon.
There are numerous oughts that should be considered as well:
1. Did the seller coerce the buyer (or vice versa)? Without this ought, the mafia gets a fair price when it charges for "protection" services, both parties agree!
2. Does the seller know more than the buyer (or vice versa)? If they both knew the same things, would the price be different?
I think there is an is/ought distinction here. What the price is is your definition here: what they've agreed upon.
There are numerous oughts that should be considered as well:
1. Did the seller coerce the buyer (or vice versa)? Without this ought, the mafia gets a fair price when it charges for "protection" services, both parties agree!
2. Does the seller know more than the buyer (or vice versa)? If they both knew the same things, would the price be different?
It depends on how you define fair: suppose you can save $80M by spending $60 million on software, which the supplier costs $2 million to produce and sell.
What is fair? That the supplier makes $58M, on an investment of $2M? Or is it more fair to buy it for $4M, and the buyer has a benefit of $76M?
The fact that you're paying way more than what it costs to produce doesn't mean it's not fair. Depends on the benefits that you get.
Another company may only get a benefit of $40M when buying the software, so it would make sense for the seller not to ask $60M.
So one way to define fair, would be to base the price on the value it brings you, not on the amount of money it costs to produce. But this varies per buyer.
What is fair? That the supplier makes $58M, on an investment of $2M? Or is it more fair to buy it for $4M, and the buyer has a benefit of $76M?
The fact that you're paying way more than what it costs to produce doesn't mean it's not fair. Depends on the benefits that you get.
Another company may only get a benefit of $40M when buying the software, so it would make sense for the seller not to ask $60M.
So one way to define fair, would be to base the price on the value it brings you, not on the amount of money it costs to produce. But this varies per buyer.
Fair pricing would mean everyone is charged the same price. Sellers could easily accomplish this by refusing to “discount”, but they don’t. So the current situation must be to the advantage of sellers.
With business software it's more complex...it isn't just a download link being sold...it's support: help choosing the right products, getting things set up, having someone to call when things go wrong, continued updates, possible customization, etc. The actual "fair price" depends quite a bit on what the buying company looks like.
Volumes, updates, support could all be part of a uniform published pricing, which would mean everyone pays the same price. But vendors prefer to extract as much as they can from each customer.
It’s not right and wrong, but it does reflect that this the sellers choice.
It’s not right and wrong, but it does reflect that this the sellers choice.
Exactly. The most demanding customers easily cost an order of magnitude more in business and support resources.
"Fair" is a value judgement and a weaponized word that people use during negotiation to anchor something to their interests. (Source on this idea is, um, that famous negotiation book by the FBI hostage negotiator)
Hi all! Founder of Capiche here. Excited to share what we've been working on here.
Given SaaS is an industry born on the internet, you'd think there'd be more transparency/less information asymmetry, but that's simply not the case.
In talking with tons of software buyers the past few months, I've heard so many stories of huge discrepancies in what people are paying, even for the tools we all think have transparent pricing.
This project is hugely inspired by Glassdoor. As this information starts to become more freely available, it will push the industry toward better pricing tactics, more transparency, and less special treatment. We hope to play a role in making that happen.
Happy to answer any questions!
Given SaaS is an industry born on the internet, you'd think there'd be more transparency/less information asymmetry, but that's simply not the case.
In talking with tons of software buyers the past few months, I've heard so many stories of huge discrepancies in what people are paying, even for the tools we all think have transparent pricing.
This project is hugely inspired by Glassdoor. As this information starts to become more freely available, it will push the industry toward better pricing tactics, more transparency, and less special treatment. We hope to play a role in making that happen.
Happy to answer any questions!
The new breed of SaaS providers seem to be providing pretty good transparency in pricing. Most, if not all, provide pricing directly on their pricing pages. The only difference might be in bulk or large users pricing, but mostly pricing in those SaaS spaces seems transparent.
I think there is MUCH better opportunity in the Enterprise Software space, where margins are ridiculously high, and shady sales tactics are super prevalent. Read: Oracle, IBM, etc. There might also be opportunity to have anonymous users share sales and execution related dirt on Enterprise Software - such as non-performance, technical and security problems, and of course pricing. For instance, try going to IBM or Oracle's Web sites to purchase a "license" for any of their software products. Almost always you'll be directed to contact a sales representative.
One wrinkle in your process is going to be navigating non-disclosure agreements.
I think there is MUCH better opportunity in the Enterprise Software space, where margins are ridiculously high, and shady sales tactics are super prevalent. Read: Oracle, IBM, etc. There might also be opportunity to have anonymous users share sales and execution related dirt on Enterprise Software - such as non-performance, technical and security problems, and of course pricing. For instance, try going to IBM or Oracle's Web sites to purchase a "license" for any of their software products. Almost always you'll be directed to contact a sales representative.
One wrinkle in your process is going to be navigating non-disclosure agreements.
The testimonials they already have on there are from Sendgrid, Twillio, Mixpanel, Asana; all of these companies are "transparent" in their up-front pricing, but you can sure as hell call them up and get a discount, and that's the frustrating bit that they're trying to solve.
Whats to solve though? You just phone them up, or email them in my experience. I think at least 3/4 cases when I drop some company an email I get a startup discount. Even if they weren't on this list, I'd still try my luck.
Not associated with Capiche FYI, but how much would you pay for someone to call all of your SaaS providers and negotiate discounts based on the information Capiche obtains (or find similar SaaS tools to what you're using who will negotiate if someone you're using won't)? Possible monetization strategy for them, especially if they can automate a lot of the email workflow for doing so.
Capiche team member here. Agreed—but there is a trend towards increasingly obscured pricing as apps go upmarket, at least with adding “enterprise” plans with undisclosed pricing as the top tier, even with Slack and other newer, better apps. Even apps with clear pricing can be confusing when they have metered components, as new users have no way to reasonably estimate their usage. We’re hoping both to push for clearer pricing and help users set expectations.
Are you worried about the size of your market then? Because organizations that would qualify for enterprise pricing plans for a lot of these SaaS providers are probably pretty limited - Capiche?
In all seriousness, a LOT of Enterprise Software Pricing negotiation (Oracle etc) literally comes down to "what can you afford to pay?" type activities from sales reps. Couple that with super shady maintenance contracts and renewal processes and it really begs for transparency. SMBs get killed every day by sales reps who literally live and die by the lack of transparency in the Enterprise Software Space.
In all seriousness, a LOT of Enterprise Software Pricing negotiation (Oracle etc) literally comes down to "what can you afford to pay?" type activities from sales reps. Couple that with super shady maintenance contracts and renewal processes and it really begs for transparency. SMBs get killed every day by sales reps who literally live and die by the lack of transparency in the Enterprise Software Space.
Given, I've not been involved in many of these large contracts for a while. But every time I've dealt with one of these before, at a size you seem to be mentioning here, its been under NDA.
This is definitely true for the newest wave of SaaS, but the dirty secret is that pricing is almost always more flexible than you'd think. So far I've only come across two companies that seem to never bend their publicly listed pricing.
but if non-transparent pricing was such a problem, wouldn't those customers simply use a competing product that does have transparent pricing? how can non-transparent enterprise software companies continue to have customers if their customers really care about this issue?
> This project is hugely inspired by Glassdoor. As this information starts to become more freely available
I assume by "freely available" you'll make the information publicly accessible and won't require an email to access?
I assume by "freely available" you'll make the information publicly accessible and won't require an email to access?
Perhaps! But for now, we're limiting access to those who are willing to contribute to the community. For those people, the information will be "free as in beer".
This also seems inspired by broker markets that exist for all kinds of complex product purchasing. Not intended as a dig (because you clearly found that it could be used here!) but I think that way of looking at what you're doing makes it seem not so strange. Best of luck, I will try to think of this when I have the next occasion for it's use :)
Hi awwstn. Using the term "founder" leads me to assume this is a company. What business model are you intending for Capiche, or am I wrong in assuming this?
Which SaaS company has the most variance in price?
You’re basically inviting people to break non disclosure contracts that are often a part of pricing negotiations.
IANAL but I really hope you’re not storing confidential pricing information along with the email address alongside because I have a feeling you could open yourself up to legal issues in the future.
IANAL but I really hope you’re not storing confidential pricing information along with the email address alongside because I have a feeling you could open yourself up to legal issues in the future.
Founder of Capiche here!
Yes, this is obviously a risk, just like lots of employees who share their comp packages on Glassdoor are taking a risk. A few things to note: 1) We're finding a ton of really interesting pricing data that is NOT under NDA (including companies that don't use NDAs, as well as companies with seemingly transparent pricing that A/B test so often that everyone is paying something different.
Yes, this is obviously a risk, just like lots of employees who share their comp packages on Glassdoor are taking a risk. A few things to note: 1) We're finding a ton of really interesting pricing data that is NOT under NDA (including companies that don't use NDAs, as well as companies with seemingly transparent pricing that A/B test so often that everyone is paying something different.
Glassdoor is different, disclosing your salary is often (depending on jurisdiction and details) protected by law, and many companies don't have a NDA that purports to prohibit it in the first place.
For instance, I think it's likely that glassdoor would be federally protected in the US under section 7 of the NLRA (which protects talking about pay when it's part of a concerted effort to improve pay), and even it's it isn't it's almost certainly protected in California by section 232 of the labor code, which states:
No employer may do any of the following:
a.Require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.
b.Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of his or her wages.
c.Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.
(IANAL)
Edit: Good resource with more information - https://www.dol.gov/wb/media/pay_secrecy.pdf
For instance, I think it's likely that glassdoor would be federally protected in the US under section 7 of the NLRA (which protects talking about pay when it's part of a concerted effort to improve pay), and even it's it isn't it's almost certainly protected in California by section 232 of the labor code, which states:
No employer may do any of the following:
a.Require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.
b.Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of his or her wages.
c.Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.
(IANAL)
Edit: Good resource with more information - https://www.dol.gov/wb/media/pay_secrecy.pdf
Correct. But employers have WAY more leverage to take "under the table" action against employees than vendors do, without filing a lawsuit or in any way tying the punitive action to a Glassdoor post.
Sure, but that just means with glass door you shouldn't post enough information publicly that your current employer can identify you.
With this website I'd be far more concerned about legal action, which could compel you to turn over the email and IP addresses associated with numbers that were posted in violation of NDAs.
With this website I'd be far more concerned about legal action, which could compel you to turn over the email and IP addresses associated with numbers that were posted in violation of NDAs.
It's not really Bob's fault/liability of Alice gives him confidential information is it? (The exception to the rule being government data)
When Bob tells Alice she should do it, and compensates her for doing it, there's potential liability under a principle called "tortious interference". It's not a definite thing, but I think it's fair to say it's a risky idea to build a business on.
But when Jennifer notifies Alice that Bob is giving her information he shouldn't, and to please stop sharing it with others, Alice loses plausible deniability, especially if she ends up selling that information.
I find it a bit odd that in an economic system that claims to be capitalist, which is supposed to revolve around the free market, contracts that are directly meant to make the market less transparent (and thus less free) are totally legal.
Of course I already knew that much of the US, or any other market, for that matter, isn't really free market, and I'm well aware of the limitations of the free market, but it's always good to remind ourselves of these things.
Of course I already knew that much of the US, or any other market, for that matter, isn't really free market, and I'm well aware of the limitations of the free market, but it's always good to remind ourselves of these things.
You're free to make contracts with NDA clauses. You're free to buy from companies that have licenses with NDA clauses. And, most importantly, you're free to offer your services with the most transparent license you can imagine, so that you'll gain tons of contracts from the competition.
But those NDA contracts on price information make the market non-transparent, and transparency is essential for a free market.
Just like you're not free to sell your vote, and not free to sell yourself into slavery, there should probably be other rights that you're also not free to sell.
Just like you're not free to sell your vote, and not free to sell yourself into slavery, there should probably be other rights that you're also not free to sell.
Exactly, that's why all this "free market" talk from its proponents is a bunch of hypocritical BS.
I don't know if this is intentional, but the testimonials keep changing before I've had a chance to finish reading them. Bad UX imo. Why put em there if I can't read them properly?
we're pushing a fix for this ASAP!
I think people in the software business tend to assume that the main cost in large projects to do things like implement a new ERP system are licensing costs - which hasn't been my experience. Licensing costs are significant, but they are often pretty small compared to the cost of paying a partner help you implement a new system, as well as internal costs to backfill staff etc.
It's crazy the number of people expecting our SASS pricing to be negotiable. We offer one fair pricing to everyone and have no time to make special case pricing for every single user.
I guess more prominent startups/companies embrace this as a tool to close or retain customers.
I guess more prominent startups/companies embrace this as a tool to close or retain customers.
This is basic sales. Increase the price 10%. Offer everyone who asks a "special" 10% discount. Bonus points if you can convince the client you really fought for that special discount because they're such a great customer.
In my experience, most SaaS startups are all about "gettin' them logos!" The more "logos" (other well-known companies that use their product) they can pile up and tout on their website, the better. And so they'll make significant deals to get a well-known name signed.
And I'm not saying this is wrong or a bad approach, by the way. It certainly lends credibility if, say, Google is using my SaaS product.
And I'm not saying this is wrong or a bad approach, by the way. It certainly lends credibility if, say, Google is using my SaaS product.
Logos would be one way to measure success for a sales team but rarely the only one. Most times, there is a quota the salesperson has to hit, and there is a standardized discount schedule they are pre-approved to offer against in order to hit that quota.
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> It's crazy the number of people expecting our SASS pricing to be negotiable.
I don't know about expecting, but in most cases where we've been buying SAAS software it absolutely has been negotiable. Above the obvious 10bucks a month type stuff that isn't worth the time.
I don't know about expecting, but in most cases where we've been buying SAAS software it absolutely has been negotiable. Above the obvious 10bucks a month type stuff that isn't worth the time.
thats probably because you don't have many users. 10 bucks a month with 1000 employees is already a big number.
If companies aren't charging a transparent rate it's because they know they can defraud a segment of their users and charge 6 - 50 times more than the next person pays for the same thing. It belongs on darkpatterns.org but perhaps is covered already with price comparison prevention:
https://www.darkpatterns.org/types-of-dark-pattern/price-com...
https://www.darkpatterns.org/types-of-dark-pattern/price-com...
Okay, what if the SaaS companies start posting anonymously as customers, and claim to be paying exorbitant prices?
Would that just make people feel better about the prices they are paying?
Would that just make people feel better about the prices they are paying?
I do like the concept: it's quite interesting to see what decision maker's opinion on pricing is.
For regular off the shelf SaaS like dropbox, gmail, slack, surveymonky and just about any other tools that SMBs use the pricing seems very clear: it's always clearly listed on the site.
The unclear pricing is just enterprise software, right?
Are companies that use enterprise SaaS actually sensitive to price? I was under the impression that they're almost never too price sensitive and hence it doesn't make sense to build equivalent products that are cheaper - otherwise we'd see low cost alternative products all over the place.
For regular off the shelf SaaS like dropbox, gmail, slack, surveymonky and just about any other tools that SMBs use the pricing seems very clear: it's always clearly listed on the site.
The unclear pricing is just enterprise software, right?
Are companies that use enterprise SaaS actually sensitive to price? I was under the impression that they're almost never too price sensitive and hence it doesn't make sense to build equivalent products that are cheaper - otherwise we'd see low cost alternative products all over the place.
> For regular off the shelf SaaS like dropbox, gmail, slack, surveymonky and just about any other tools that SMBs use the pricing seems very clear: it's always clearly listed on the site.
All of the providers you listed have clearly listed rates, but each of those listed will also willingly negotiate those rates.
At a previous job, the owner of the company required you to request a discount/custom pricing before purchasing anything. It took me a while to get used to it, but more often than not we got price breaks with little friction simply for asking. Even if there were clearly listed prices with self-service checkout and even if there wasn't a "Contact us" price option listed. And this was at a ~30-person company, where most software purchases were only for 3-5 licenses at most.
All of the providers you listed have clearly listed rates, but each of those listed will also willingly negotiate those rates.
At a previous job, the owner of the company required you to request a discount/custom pricing before purchasing anything. It took me a while to get used to it, but more often than not we got price breaks with little friction simply for asking. Even if there were clearly listed prices with self-service checkout and even if there wasn't a "Contact us" price option listed. And this was at a ~30-person company, where most software purchases were only for 3-5 licenses at most.
Wow, what's that font in your logo?! That brings back a lot of memories!!
Could be Plantain by CastleType or Vulpa by Schizotype Fonts
A fair price is whatever a seller and a buyer agree upon, not the rock bottom value that you get when applying sustained pressure to a price point, collectively. You may get a product cheaper and cheaper but probably at the cost of the stability of the seller, which is also of value to a buyer. You may find that if you pay more you are more valued and a seller will do more for you in the future. Or you may be the last to close an important target of a sales person and get a below market price, at least for a while. What's fair? IDK. Just keep thinking and occasionally reopen negotiations in a respectful way if you think you can get more for less. Or switch to another product.