What do the new Sage pricing options mean for you?
First off, let’s get this out in the open: any pricing options discussed in this post are purely speculative at this point. Sage has announced that there will be new options introduced over the next 12 – 18 months but the details have not been released yet.
So as long as we know we are playing the speculation game, let’s begin…
The prevailing speculation is that pricing will be aligned with subscription models and represent a monthly or annual fee model that allows the user to have access to their desired Sage software solution as long as the fees are kept up. This pricing model is in line with the majority of (maybe that should read “all”?) new internet-based software publishers these days – you pay an “as you go” price.
As a software publisher, this makes a ton of sense as it provides an even, smooth, predictable revenue stream that allows the organization to maintain consistent operations and budget activities such as marketing, sales, research and development, operations, capital expenditures, etc. This model is far preferred to the current model of a large initial expenditure by a customer and then they may or may not stay current on the annual support (which entitles customers to current software versions and some level of support).
From the customer perspective, this makes a ton of sense too and it’s one of the reasons that SaaS (Software as a Service) is becoming more popular. Just as this model provides the predictable financial model for the software publishers, the customers also has the same benefit of smooth expenditures vs a large initial implementation cost of services and software.
Ultimately, customers will typically pay more for the software with this model over their total usage as it works much like renting vs owning property.
The interesting thing is that this model works whether the software is in “the cloud” or installed at the customer’s website. Sage is making a push to providing off premise options (I’m not getting into the “what is the cloud” debate here) to give customers the freedom of choice and the theoretical pricing model will work for all options with, of course, some variation in pricing depending on the selection.
For Sage and their customers and prospective customers, the new model is a very good thing. Sage wants to provide options that customers are asking for these days and give the customers the flexibility to do business the way they want. It makes a lot of sense from this angle.
Customers are spending a lot more time on their own these days researching options and making their choices without the assistance of VARs (Value Added Resellers / Sage partners). When they are ready to buy, should Sage say “Whoa … hold up there, chief. You need to talk to one of our partners.” before committing the sale?
For their sake, I hope they wouldn’t do that. Customers have choices and are going to want to do business with vendors that make it easy to do business. Every last one of us follows this rule in life.
So for Sage resellers … what does that mean? Well – Sage historically has a great track record as a partner-centric organization. This might change but I don’t think it will in the near-term.
On the Accpac side of the business, there is a good track record of customers signing up with Accpac Online, the Sage-hosted version of Accpac and being assigned to local resellers to assist them with configuration, training and ongoing assistance. With the current launch of the MAS Online, from what I’ve heard the same model is being used. It’s a rare customer that can configure and setup their accounting or CRM system without some expert guidance.
For the short-term anyway, it seems that margins and end-user relationships are still safe with the channel.
That being said … I think if resellers keep doing business as usual they are going to find themselves in the soup in the coming decade. I encourage every partner in the channel to sharpen their saws and shake things up. Attend the Firm of the Future sessions. Think through how to take your services to the next level. Figure out a niche. Do something – anything – because the status quo is gone for good.
I occasionally hear partners speak as if Sage is somehow unique in facing these dilemmas and decisions and maybe the grass is greener with other publishers. This is not the case at all.
It’s every last publisher. Think about it: all new software companies are starting off going direct as internet based, cloud, subscription models. Sage, Microsoft, SAP are actually operating at a disadvantage with decades of inertia keeping them from changing course overnight. But it’s coming.
Again – the above is 100% speculation but if I look into my crystal ball, it sure seems like a winning play for Sage and Sage customers.