Re: OO benefits? (was Re: Fast400 Value to iSeries community is less than zero ) -- MIDRANGE-L

> > If you buy my argument that LANSA, MRC, BCD, Cool, Seagull,
Jacada, (yada,
> > yada, yada...;-) DON'T exhibit these qualities and/or are NOT
> > "affordable" --> it must not be possible.  If it was possible,
then these
> > ISVs would be marketing it already.  (OR they just don't see a
market where
> > I see one, but that's pretty hard to believe.)
>
> There is at least a third possibility: Simply that vendors feel
profits are better at
> higher price points. As long as the market allows selling one
item for $1000, there's
> good reason to think you'll make more profit than if you sold
1000 of them at $1. Only
> when the market refuses to pay the $1000, is it worth it to the
seller to lower the price.
>
> That is, just because it isn't done isn't sufficient to rule it
impossible.

You know, I realized this past year that I have never gotten any
profits from my company, just a salary. What little profit we have
made has gone back into the company.

I decided that I would like to make a profit, and I am working to
do so.

Speaking to your argument, its only worth it to lower the price if
you can make a profit at that lower price. I have a couple of
great products that I can't sell, because there aren't enough
people to buy it at a price where I can sell it and support it (or
I have not found them, anyways.)

And pardon me for saying so, and don't take this the wrong way,
but it's partly your own fault that software costs so much.

I can give you several reasons why.

The first is the extended sales cycle. I sell a report archiving
system for the AS/400. You guys are all aware of the IRS
requirement that you keep all of your reports for at least three
years - anything that demonstrates the state of your accounting
transactions that reflects in any way on your taxes. No, it
doesn't count to be able to go back and regenerate a report from
your history files at a later date. History files can be modified,
changed and changed back. They want source documents in paper or
electronic form, captured at the time of their creation.

You public guys have some auditing requirements that say similar
things.

Archiving is cheaper than paper by far - especially if you have to
handle it later. It's also more convenient. I'm not trying to sell
my product here,  I'm trying to point out that this is a
no-brainier decision. If you have an AS/400 you ought to have some
archive system, even if it is only AS/400 based. Keeping a digital
copy of your business records offsite in two or five places makes
a lot of sense, especially if they are on a 50-cent CD.

So every AS/400 site over P05 size should have one of these - but
most don't. When the software vendor finally gets your attention,
you often spend more money evaluating the software than the
software costs. And it often takes six months to several years to
make the decision - in which time period you have paid for the
product once or twice in lost savings, and you still don't have
it.

All that time we have to pay our salespeople and office support
staff, lights and phone bill, and it all comes out of what the
software costs.

The second reason is that our prospects seem to evaluate unknown
software on price. If you don't know the brand, price equals
value. We did the good thing and priced our software as cheaply as
we could, thinking that would make it more attractive. It works
fine unless a competitor enters the picture. The prospect sees
that their product costs three times as much, and we start getting
the cold shoulder. We can beat them on features and ease of use,
support for multiple hosts and universal clients, but it's too
late to raise the price. "It must be better because it costs so
much more."

Oh yeah, the third reason: "they came to visit us".  Today we can
demo any product over the internet immediately with just a web
browser on your end. We can show it to you as many times a you
like, we will come visit you at install time, and we have a thirty
day moneyback guarantee. If we come to visit you, somebody is
going to end up paying for it - in higher price software. If it
takes ten different prospect visits for each sale (I mean to
multiple prospects), then you have just added at least ten
thousand dollars to the software cost.  (This is not as big an
issue as it used to be.)

I hope this doesn't sound like I'm whining. I appreciate all of
you, and I don't mean to say you are acting irrationally. There
are good reasons for all of this. I'm just trying to point out
that the frictional costs of selling are a high percentage of the
cost of your software.

Maybe that is part of the justification for tiered pricing -
bigger companies take longer to sell . (I don't use tiered
pricing).