Price vs value: Four perspectives on Cerb5 pricing
Community, Debate, Open Letter August 20th, 2010
posted by Jeff StandenWe recognize that the value of what we offer is subjective for each potential buyer. A company that has been disappointed by a dozen other projects before discovering Cerb5 tends to feel we’re not charging enough; while a company with a low-volume of email — who could just as easily use Gmail for free to accomplish their workflow — tends to feel we’re charging too much.
Like any prudent company, we’ve made several incremental adjustments to our prices over the past 8 years to better harmonize perceived value and project sustainability. That balance is a moving target.
For perceived value, the project is constantly evolving (e.g. streamlined usability, better performance, and “feature completeness” for a given point in time) which provides a higher return on your investment. Cerb5 can perform more duties for you than past versions, often replacing less efficient patchwork solutions. It may even free some of your team members from tedious drudgery (e.g. filtering junk, dispatching, answering the same questions 15 times, or erratically jumping between disparate activities rather than grouping similar work together efficiently) so they can do more billable work. Our features foster collaboration, and the software encourages your team to cultivate your address book like the asset that it is. We save you time, money, and sanity. The degree of that production or savings determines how much you’d be willing to pay. Our software isn’t a commodity or a status symbol, it’s an investment. It doesn’t start depreciating the moment you install it. As you grow, the production or savings scale with you while our prices remain relatively fixed.
For project sustainability, prices may rise a reasonable amount over time as the project becomes more valuable. Income from upgrades reflects that existing users have a better idea of where the project should be headed than new prospects do; and a healthy project isn’t chasing new prospects at the expense of long-time user feedback. Our team grows and accumulates experience as we support and build. With more experience comes more opportunities, and if it became far more lucrative for our team to disband and work on other things then that’s exactly what our best people would do. Developers, idealistic as we may be, are still capitalists with bills to pay and families to provide for. Commoditization of software would be bad for everyone.
Our prospective buyers tend to fall into one of four opinions, which are probably similar to the breakdown experienced by other software companies:
- “I paid less for the last version.”
These people often received a promotional discount to encourage early adoption, or to help them let go of an end-of-life version. When Cerb4 first released, it was such a dramatic change from Cerb3 that a lot of people in the community weren’t sure what to make of it. The first release certainly wasn’t our complete vision, but we also couldn’t afford to spend several years perfecting it without some real-world adoption and feedback. We encouraged early adopters by offering Cerb3 users an unlimited worker licenses for Cerb4 for about $250. It was a one-time cost, and it included over three and a half years of free updates as we innovated our way toward the present. It’s hard to blame anybody for objecting to that deal ending; but it wasn’t sustainable. That worked out to about $71.42 per year. At that rate, it takes 700 sales to cover a hypothetical $50,000 salary, and the business model discouraged us from implementing the feedback of existing (free forever) users over prospective (“I’ll buy if you do this and that”) clients. - “Your prices are way too cheap and my boss is worried you guys won’t stay in business long enough to push out the next update.”
“If it’s too good to be true…” These people place a very high value on the project. They’re accustomed to paying a lot more in exchange for less than what we’re offering, and they want to be reassured that we have a sustainable business model before they go through the effort of switching to Cerb. While we do occasionally lose a sale for a very large enterprise client because our low price disqualifies us, the fact we’ve been steadily improving the project since January 2002 generally overcomes this objection. - “Your prices are way too expensive; there are a hundred other apps out that cost less, and just as many are free.”
Most people don’t go out of their way to tell us about all their alternatives, they just choose one and we never hear from them again. If someone sticks around to haggle on price they probably have a good idea of the value of the project. Either we convince them that the value is worth the price, or they convince us that they need special consideration (i.e. the essence of business). We offer discounts to educational institutions, registered charities, established open source projects, and cash-strapped small companies. We’re not the cheapest CRM app — there are many cheaper. We’re not the simplest CRM app — there are dozens simpler. We don’t want our primary selling point to be over-simplification. Our goal is to be working on software that you may need to grow into, but that you won’t grow out of. Even after working on this project for eight years there are still so many possibilities, and so much more work to be done. It never fails to surprise us how many other projects think the path to enlightenment is making things ever simpler and simpler. Technology isn’t getting simpler, it’s just getting better at interfacing with humans. In nature, the human brain is the most unfathomably complex thing we know to exist; and yet it’s fairly easy to interface with the one you have, and its capacity for improvement is nearly limitless. The road to the year 2010 is littered with the debris of “simpler” alternatives to the pesky complexity of human thought. - “The pricing is fair. While I’d certainly prefer to get everything I need in life for free, this purchase will pay for itself before long. The sooner I put it to work the better off I’ll be.”
This is where we’re aiming.
From a very early point in our project history, we vowed to write software for ourselves — not because we’re special, but for exactly the opposite reason. Trying to please everyone is a dead-end. We knew there had to be thousands of other companies out there who shared the same frustrations as us, and wanted the same things we did; even if they didn’t know it yet. We were more right than we ever imagined.
-Jeff@WGM



