• June 21, 2005
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

A Pay As You Go Software Suite

Airframe Business Software will release version 3.0 of its Airframe CRM Express on-demand suite on Wednesday, launching with it a pay-as-you go pricing model that appears to be the first of its kind in the hosted SMB CRM market. The company will share this pricing schedule with new versions of HR Express and Help Desk Express, to be released in conjunction with the CRM product. The basic price of CRM Express will be $39 per user, per month, with no contract, fees, or commitment. In similar fashion customer self-service will be billed $1 per user, per month. The actual charges, however, will be calculated daily and billed monthly. According to Olivier Delerm, vice president of product marketing, the total flexibility of the pay-as-you go model is the next logical step in pricing. "The standard for hosted CRM has previously been monthly or annual contracts, often prepaid. With CRM systems, it's never certain how quickly and completely a company will accept it, and it's not possible to lower the number of users you're paying for before the end of the contract," Delerm says. "Airframe CRM Express's utility pricing permits companies to give CRM capabilities to five or 10 users and see how it goes, expanding the number of users as needed." The freedom to change the number of seats without altering contract terms or getting caught with a higher monthly fee makes the billing model attractive to organizations with seasonal workers. "If you plan a big marketing push for July and August and will be using summer interns recruited from school, you'll be able to add 10 or 50 seats, not just for those months, but only for the actual days the interns work," Delerm says. "When your campaign ends you no longer pay for those users." The pricing model is also sophisticated enough to allow software add-ons and customizations to be billed per user, he says. Those wishing to see what the product is capable of before taking the plunge have two options. An individual can start using Airframe CRM Express to test it out, at the cost of just one seat. Or, Airframe offers online, interactive, free demonstrations of the system with no user data collected, so testers can simply try out the features anonymously to see if it's something they or their company would find useful. Viewed alongside the rest of Airframe's pricing innovations, the total effect is do away with what Delerm calls the hostage model for CRM vendors, where companies are stuck with the system they choose for the length of a contract. Airframe appears to be first to market with this particular model for SMB hosted applications, but the trend is not new. "This pricing model is certainly in line with what we're seeing from larger CRM players," says Ben Pring, research vice president for Gartner. "Simplified billing makes it easier for customers to get involved, as companies like Salesforce.com have demonstrated." According to Pring, the model is more applicable to SMBs--Airframe's core constituency--but larger enterprises find a simplified price structure attractive as well. In addition, a recent IDC article, "Industry Perspectives on Utility Pricing of Software," discusses the trend at length. The study notes that empirical data demonstrates both interest and skepticism around utility pricing in the software industry. "In terms of on-demand delivery of software in general, IDC believes that this delivery model has the potential to re-invigorate the software industry," says Amy Konray, program director for software pricing, licensing, and delivery, and the report's author. "It has provided a new method for obtaining the type of software that departments of large organizations, as well as medium- and small-sized businesses, previously may not have been able to purchase due to cost or lack of IT resources. IDC believes that the mid-market represents a growth opportunity for software on-demand providers and we see more and more providers like AirFrame target this particular segment." Related articles: Software as Service Is Evolving Slowly but Surely
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