openerp-community team mailing list archive

["Enapps :: Vadim Chobanu" <vadim@xxxxxxxxxxxx>]

  Hi Eva, its not a question of what can a company afford. Its a question
of supply and demand.
There are quite a lot of other competing erp solutions on the market that
will bid for 20k to implement a system for 20 users. And by 20 users i mean
that will be 20 employees.
Cheers,

Vadim

Sent from my Windows Phone
 ------------------------------
From: Eva Pinter <epinter@xxxxxxxxx>
Sent: ‎19/‎05/‎2014 08:39
To: Enapps :: Vadim Chobanu <vadim@xxxxxxxxxxxx>
Cc: Marcelo Bello <marcelo.bello@xxxxxxxxx>; Fabien Pinckaers<fp@xxxxxxxxxxx>;
openerp-community@lists.launchpa <openerp-community@xxxxxxxxxxxxxxxxxxx>
Subject: Re: [Openerp-community] How will price per user really work?

Hello Vadim,

I really do not understand how a company that has 20 ERP users, that means,
they have probably more than 20 people working in the company cannot afford
60€ per user per month for their ERP. If I calculate the minimum wage for
the UK, that is around 1200€ per month, I think a company of that size can
add 60€ to the monthly costs of a part of their employees to have a
powerful system that will save them a huge amount of time. 24'000€ for
wages and 1200€ for their core system, or a fee of 5% on the top of the
salary.

It is not unusual for an ERP system for a company of that size to cost 1/2
Mio € to implement, in fact for other ERPs, the implementation costs are
rarely below 50'000€ and this is for the very minimum without any change in
any screen and no custom development.

So, maybe the question is wether the project is an IT project only or
wether this is a full ERP project, that would include streamlining of the
business processes, change management, documentation and training.
To support the customer in setting up the best practices in terms of
business processes should be the focus of every ERP project.

Having implemented other ERPs, and knowing the costs of training and
maintenance (not only from the editor, but also from the consultants) as
well as the costs of any small change in the ERP, I can assure you that the
proposal of 60€ to have the system constantly corrected, maintained and
backuped is a low price to pay.

And frankly, is it the objective of an integrator to undersell his
knowledge?

Best regards
Eva P.

On 19 May 2014, at 06:46, Enapps :: Vadim Chobanu <vadim@xxxxxxxxxxxx>
wrote:

  Precisely, thank you Marcello!

I would struggle here in the UK to charge more than 20k GBP for a 20 users
ERP implementation. And then if they are to pay 20*12EUR*5 apps*12months =
14.400 per year! Not far from the initial implementation costs. But wait -
on top of that the service provider must also make a living - add another
6k a year and there you go: an ERP system that costs every year to maintain
as to implement! If someone can sell that, please send CV to jobs@enapps -
we definitely want you and perhaps will need funding to expand into new
markets.
Out of sync with the reality for sure and i would definitely love to see
that business plan too.

Sent from my Windows Phone
 ------------------------------
From: Marcelo Bello <marcelo.bello@xxxxxxxxx>
Sent: ‎19/‎05/‎2014 02:25
To: Fabien Pinckaers <fp@xxxxxxxxxxx>
Cc: openerp-community@lists.launchpa <openerp-community@xxxxxxxxxxxxxxxxxxx>
Subject: Re: [Openerp-community] How will price per user really work?

Fabien, let's please be intellectually honest here. Your argument:



*"The part of the commission on Odoo Enterprise is usually lower than 4% of
the revenue a partner take on a project. So, their motivation is noton the
commission."*

Basic math for a client with 20 users and 5 apps for 24 months:

   - 20 users x 5 apps x 24 months x $15 = $36,000


   - Partner commission for 24 months (~50%)= $18,000


    If you are right and commission is less than 4% of total partner
revenue for such project than you are saying that total partner revenue
from project for first 24 months = $18,000/0.04 = $450,000+

    With assumptions like that your investors must be soooo excited. Would
be fun to see your business plan.

    Now back to reality, I bet no one here will agree with you that average
partner revenue for the first 24 months of a project for a client with 20
users and 5 apps is close to HALF A MILLION DOLLARS! A quarter of that is
also unrealistic, and you know it.

    So I still think that monthly cost of Odoo after the 24 month period
will increase by 50% because partners DO CARE about their commission,
unless they can game the system which is my next point.

=================================

You really must clarify the discount policy, in the video I watched it was
said that now Odoo invoices DIRECTLY to clients/users and partners get
their commission by invoicing to Odoo. That made me think that you would
now ensure everyone charges the $15/app/user you want to charge and
effectively blocking partners passing their discount on to clients
(especially because you want the full price after the 24 month period so
why let partners give discounts?).

But then you just answered:
> If I apply the discount 50/60% to my customer because I do not care
> about commision and I want to sell an OPW.
> What happen after the two year? The customer have to paid 12€/per
> apps/per user? Or you still make him a discount?
Fabien: We keep the initial price negociated with the customer.

So any partner with half a brain (and an expectation to maintain the client
for more the 24 months) will realize that they should from now on get the
most discount they can get on OPW and pass that on to the client. And then
have a second contract with the client for what it wants to charge to cover
the monthly support the partner provides to the client. This way the
partners will effectively neutralize your idea of cutting commissions after
24 months.

I am sure you thought about that but somehow did not care to explain how
you will really deal with discounts.

Best regards,

Marcelo



On Sun, May 18, 2014 at 11:47 AM, Fabien Pinckaers <fp@xxxxxxxxxxx> wrote:

> Hi,
>
> I just wrote a blog to explain the new pricing:
>     https://www.odoo.com/blog/1/post/158
>
> Please read it before going further in this email.
>
>
> I'll try to answer most questions here:
>
> 1/ How to compute the price?
>
> The price is: # total of users X # of apps bundle X 12€
>
> 2/ Why don't we charge according to real usage? (e.g.: 5 users on CRM, 3
> on accounting, 7 on projects?)
>
> Because it's impossible to predict for yearly contracts! Quoting would
> become a nightmare and a lot of people would abuse from this unclear
> situation. (a customer would start with a low price but three month
> after we would have to upsell him because of the number of users on some
> apps)
>
> Lets take the following use case: a company of 10 users that uses CRM,
> accounting, projects. They have 3 sales person, 4 consultants, 1
> director, 1 secretary and 1 accountant.
>
> When you do a quote for this customer, how many users do they have per
> application?
>   - is the director using accounting and CRM?
>   - can the sales have read access to project for follow-ups to their
>     customers?
>   - can the accounting check sales orders coming from the sales?
>   - is it the secreatary that give access rights to others users?
>
> I checked in our production database. We have 7 persons working in the
> marketing department. If one do a quote of 7 users for the marketing
> application bundle, it's totally under-estimated.
>
> In reality, we have 45 users on marketing application, not 7:
>   - the Professional Service team that built the certification sample
>     exam on the website (survey)
>   - users that train others users on features
>   - managers that need statistics about events, mass mailing, ...
>   - most sales need an access to check prospects on events,
>   - system administrator need an access to allocate access rights and
>     test for others users
>
> 3/ Is it expensive?
>
> Absolutly not. It's 2x to 3x cheaper than the market average. Check this
> comparison of software vendors:
>   https://www.odoo.com/website/image/ir.attachment/537400/datas
>
> Moreover, partners get 50% to 60% discount on the public price. It means
> gold partners pay only 4.8€ / $6 per user and per application. Whatever
> the market, it's super cheap and super competitive.
>
>
> 4/ Is it an increase of the price?
>
> For some customers: no. (1-3 apps)
> For some customers: yes.
>
> The biggest increase would be around 2x more for one particular customer
> that uses a lot of applications. (6) I never saw a company running 10
> apps and if they do, it's normal that they pay 120€ per user because the
> value they get from Odoo is huge. No other product can offer this.
>
>
> 5/ localization & customization
>
> Odoo has a lot of huge advantages compared to traditional ERPs:
>   - higher scope: website, ecommerce, cubes analysis, CRM, ...
>   - better usability, faster implementation
>   - better flexibility: allows custom development and high level config
>
> Odoo also has a few disadvantages compared to traditional ERPs, the main
> one is the localization in some countries. (something we will fix for v9
> as we will massively invest in accounting l18n)
>
> Odoo has a lot of PROS and a few CONs. But the few CONs are largely
> compensated by the PROs. As the product is better, economics tell us
> that the product must be more expensive.
>
> Not only we are not more expensive, but we are at least 2x to 3x
> cheaper. And, if you take the partner price 4.8€ per user and per app,
> we are 6x cheaper than the competition!
>
> I do not know a lot of industry where a product can be 2X cheaper for a
> better quality.
>
> One should not be frustrated about the price.
>
> @marcelo
> > I recently read the posts by the Compiere founder explaining what
> > went wrong after he got VC money. Read it and it will look like it is
> > all happening again.
> Every time we do a change in the community people cry: take care of
> forks, read Jorge's blog, VCs are evil, OpenERP does not understand its
> users...
>
> Odoo is not comparable to Compiere/Tryton/Openbravo or others. The
> sustainability of a product is not related at all with fork threats,
> failure of others open source software or what ever.
>
> The sustainability of every product is directly linked to it's ability
> to create a sustainable model where partners and publishers get enough
> revenues to grow their activities on the product.
>
> This requires a lot of things like: having a great product allowing good
> service margins, a good price for the publisher, happy customers, etc.
>
> >      What kind of business puts potential clients in front of active
> > paying clients? The model is wrong wrong wrong.
>
> What's wrong is to have a pricing so cheap that it does not allow to
> sustain the development of the product, or too few customers because the
> product is not competitive. That's what killed some products.
>
> >       If Odoo was a ready-to-use software then the model would make a
> > lot of sense. But they are ignoring the importance of localization &
> > customization. If I wanted off the shelf software I wouldn't bother
> > going open source.
>
> Our customers don't choose Odoo beause it's open source. They choose
> Odoo because it's better (products and/or servives of partners)
>
> We should stop being frustrated of being open source. It's not because
> we are open source that we should be cheaper. The only thing that
> matters for a customer is to have a great product at an affordable price.
>
> Open Source is not a customer value, it's a way to develop better products.
>
>
> >             Also, this thing that partners will not get any commission
> >         on contracts with more than two years is REALLY nonsense. It
> >         essentially means that the contract will become 50% more
> >         expensive on the 3rd year because the partner will need that
> >         revenue back and of course it will be important for the client
> >         to keep bonds with the partner. It is really sad when companies
> >         pull this sort of crap on their "partners".
>
> My understanding is that partners don't sell Odoo Enterprise because of
> their commissions. They sell it because they need it for their customers
> and because this allows them to sell more services. (and this is how it
> should be)
>
> The part of the commission on Odoo Enterprise is usually lower than 4%
> of the revenue a partner take on a project. So, their motivation is not
> on the commission.
>
> I may be wrong. I am open to discuss this during the community days.
>
>
>
> Hope it helps better understanding this strategic move,
> Thanks for the feedback,
>
> --
> Fabien Pinckaers
> Odoo Founder
>
> Phone: +32.81.81.37.00
> Web: https://www.odoo.com
> Twitter: @fpopenerp
>
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