Impact of Pricing on the Purchase Decision
We here at Dovetail have debated the impact of pricing on the decision making process for years. Recently, due to the current recession, some customers have deferred any decisions awaiting better times. Denis Pombriant addressed the impact of pricing on the purchase decision in a recent blog post titled The Subscription Economy. In it, he suggests that companies whose products aren’t being purchased might not be meeting the biggest feature need of the prospect – payment terms. He goes on to say that during these tough economic times, “finding creative ways to finance a buy may make all the difference.”
Budgetary constraints have certainly contributed to the popularity of on-demand pricing models, or pay as you go. But many companies, while looking for ways to reduce their up-front investment, aren’t ready to move their data outside of their four walls. So, what can they do?
As Denis suggested, look for vendors who are willing to work with you. What you will find is that smaller, private companies have that flexibility. Take our company for example. To adjust, we have been very flexible in our pricing. We have worked with many of our customers to find win/win outcomes. For example, to meet some companies’ budgetary issues, we have split perpetual license fees between two years. We have priced deals so they are term licenses (avoiding use of capital budgets), with a purchase option at the end that easily allows the company to turn their term licenses into perpetual licenses, avoiding the on-going costs of continually paying for licenses.
The key is to treat your customer like a partner, not trying to extract every last penny out of them, but work with them to create a long-term relationship.
Until Next Time,
Stephen
